Earlier in the year IRD published an official issues paper “Taxation and the not-for-profit sector".

This paper considers several areas including:

  • Charity Business Income Tax Exemption
  • Donor controlled charities
  • Income tax exemptions for not-for-profits which are not charities
  • Simplification of the tax treatment for ‘volunteers’ paid Honoria and the like

A few of the issues raised was whether it was still appropriate for charitable ‘businesses’ to be exempt from tax and if this provided an unfair commercial advantage and how not-for-profits currently treated their income.

For not-for-profits there is no general tax exemption. They either need to use the charity exemption, some specific exemptions such as for amateur sport promotors or the deemed $1,000 deduction. The paper considers if some of these need to change.

In May, a further draft operational statement was released looking at mutual transactions of associations and how this applies to clubs and societies.

Submissions closed on the issues paper on 31 March. On Wednesday IRD released the anonymised submissions. These run to 3,554 pages and had to be split into 17 separate PDF. This shows how important any changes to this space will be.

While the total number of submissions is daunting, a nicer 4-page summary has also been provided highlighting the key themes which is a far easier read.