Neil Sands
Finance Minister Nicola Willis has ruled out introducing a tax on charities – at least for the moment – after widespread criticism from the sector.
The IRD proposed sweeping changes to the tax regime for New Zealand’s 29,000 registered charities, including taking a cut of profits that were unrelated to their altruistic purpose and tightening controls on donor-controlled charities.
The IRD allowed just five weeks for consultations, which critics said was insufficient for such a complex issue. They also said the move was nothing more than a revenue grab, designed to boost government coffers.
Willis conceded on Tuesday that the comprehensive objections to the proposal had forced a rethink and the charities tax would not be included in this year’s Budget, which will be delivered on May 22.
“We had a short consultation period – more than 900 submissions – and what officials have advised us is that there are some real complexities to work through,” she told reporters after making a pre-Budget speech in Wellington.
“I’d hoped that we could make the changes by the Budget, but actually it’s really important we get these changes right.”
She said the estimated revenue from such a tax was only $50 million, far less that originally envisaged.
“For that sum of money, it wasn’t worth taking the risk,” she said.
Willis did not rule out revisiting the proposal once the complexities revealed in the consultation had been addressed.
“I want to work through it carefully. I’m very committed to making sure we’ve got a fair system with high integrity. We will be making changes in this space, but I don’t want to rush it and get it wrong,” she told NewstalkZB.
Charities lawyer Sue Barker, who wrote a 143-page submission dismantling the IRD’s proposal, described the backdown as “a huge relief, at least for now”.
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