Government scraps controversial plan to tax charities’ business income

The government has dropped plans to tax the business income of charities because reform would be too complex, saying it will instead focus on enforcing existing rules.

The Inland Revenue Department (IRD) outlined plans in February to tax not-for-profits’ business income if it was unrelated to their charitable purpose, with a view to including it in this year’s Budget in May.

But the plan was put on hold in April after critics labelled it a cash grab and warned there could be devastating impacts on New Zealand’s 29,000 registered charities.

At the time, Finance Minister Nicola Willis acknowledged the scale of concern – with 900 submissions received during a tight five-week consultation period – saying “it’s really important we get these changes right”.