Govt looking at charity sector

Tax-exempt charities may have to justify sitting on millions of dollars in funds
Stuff co.nz 11 July 2021
A huge North Island farming conglomerate and a small Christchurch business selling recycled doors and windows have one key thing in common.

Trinity Lands and Musgroves are both registered charities, exempt from paying income tax and using their profits to fund religious activities and do other good works.

They are among 28,000 charities that last year spent $18 billion, own $65b in assets, and potentially face new rules as a result of a review of the Charities Act.

Aimed at improving public trust and confidence in the sector, proposed changes could see charities having to justify accumulating large reserves, in some cases millions of dollars.

The Department of Internal Affairs Te Tari​ Taiwhenua​ is overseeing the review, which finally resumed in May after a year-long hiatus because of Covid-19, and there are concerns about its narrow scope.

It will not consider whether it is still appropriate for businesses registered as charities to be exempt from tax.

Nor is it going back to basics and looking at “charitable purpose,” currently defined as relieving poverty, advancing education or religion, and other activities beneficial to the community.

Community and Voluntary Sector Minister Priyanca​ Radhakrishnan says an amendment to modernise the Charities Act is likely to be drafted next year, and it may include changes to the appeal process for Charities Registration Board decisons that “will better enable case law to develop around charitable purpose”.

Radhakrishnan says transparency about the finances of businesses registered as charities is important, and it is a fine balance between supporting charities to do vital work in the community, while ensuring the public retains trust and confidence in the sector.
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