Wayne Schache is the Operations and Finance Director at the Baptist National Support Centre and is part of Titirangi Baptist Church in west Auckland.
In November 2024, the Government announced a tax and social policy work programme, including reviewing elements of charities and not-for-profits. Inland Revenue (IR) opened a consultation process around taxation of the not-for-profit sector, considering the possibility of taxing business income that is unrelated to charitable purposes. Submissions closed on 31 March 2025. Read more about this in Delwyn Shaw’s informative article – Taxation and the church: Submissions are open.
Following the short time framed consultation on the Inland Revenue’s review of the taxation of non-related business income of not-for-profits, and the submissions made (read the Baptist Union of New Zealand’s submission here), the Finance Minister, Hon Nicola Willis revealed on Monday 28th April she would not be making tax changes to tax charities in the 2025 Budget.
The Government had openly been investigating changing the way charities are taxed so businesses that operate as charities are treated like businesses and pay company tax.
“I can confirm that [no changes are coming at the Budget] because we are continuing work in this area.”
“We had a short, sharp consultation with the charities sector and that has thrown up two key things: that is the potential revenue the Government would get from this is pretty small ... at the most, $50 million a year, so it’s not essential to our Budget that we hurry these changes through.”
“What officials have advised is the consultation has uncovered a lot of complexity about definitions and rules and how charities would react in practice,” Willis said.[1]
This could mean changes are coming in future, but not at the current Budget.
“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 said.
One of New Zealand’s top tax accountants suggested that the lower additional revenue than expected, and the complexity (and cost) of implementing a new regime were the likely contributors to the review being put on the back burner. And while it’s not off the stove top completely – it’s perhaps one of those “we told you so!” moments.
[1] Nicola Willis on ‘billions’ in Budget cuts and savings – no charities tax this year - NZ Herald, 29 April 2025.
Image credit: Catharina Siraa
