Charitable giving made easier for donors and volunteers

The Government has given the go-ahead to tax changes designed to make charitable giving of money and volunteers’ time easier for all concerned.

“The Government will proceed with the introduction next year of a voluntary payroll giving system that will enable people to donate to charitable and philanthropic causes through work-based payroll deductions,” Finance Minister Michael Cullen and Revenue Minister Peter Dunne announced today.

“Complementary changes will clarify and simplify the law on how reimbursements and honoraria paid to volunteers in the non-profit sector are to be treated for tax purposes, thus removing long-standing problems and associated compliance costs for volunteers.

“Both sets of changes, which have been the subject of extensive consultation and have received strong public support, will be included in the next taxation bill, which is scheduled for introduction in late June this year.

“The changes announced today build upon the foundation laid by last year’s Budget for a progressive strengthening of the culture of charitable giving in New Zealand,” said Community and Voluntary Sector Minister, Ruth Dyson.

“New Zealanders are generous in giving money and time for charitable and philanthropic purposes. An estimated one million people take part in voluntary activities of one kind or another, and donations to charities and other non-profit organisations amount to over $350 million a year – a figure that includes just those people who claim tax rebates for their donations,” she said.

Mr Dunne said “Budget 2007 removed the caps on the dollar amounts of charitable donations that are eligible for tax relief. As of this month, individuals can claim tax rebates up to the level of their taxable income, while companies and Maori authorities can claim deductions for donations up to the level of their annual net income.

“The changes announced today constitute the second step in the process.

“Payroll giving will make it easier for people to make regular, voluntary contributions to their chosen charities and provide charitable organisations with a low-cost source of funding.

“Payroll giving will be voluntary for employers as well. It will operate through the tax PAYE system and will be available to employers who file their employer monthly schedules electronically, which will make the scheme easier to administer.

“Clarifying the law relating to the taxation of honoraria for voluntary work and reimbursements of volunteers’ expenses will make life easier for both volunteers and charitable organisations, who often incur unnecessary compliance costs in trying to understand what their tax obligations are.

“One of the long-standing problems for volunteers and the charitable organisations that use their services is that the law is unclear about how reimbursement payments made to volunteers should be taxed.

“A similar problem has arisen over payments of honoraria to volunteers – particularly if a portion of an honorarium is intended to reimburse the recipient for costs incurred.

“It is now time to remove these uncertainties, to remove tax barriers to people giving generously of their time.

“The Government is also looking at a range of further ideas to foster New Zealand’s culture of charitable giving. For example, we are looking at the idea of making it possible for people to claim tax deductions for non-monetary donations, such as artworks and other property.

“Similarly, we are reviewing the question of whether imputation credits should be refundable to charitable organisations, which are not able to use them under current law.

“Charitable giving, whether of time or money, makes an invaluable contribution to the wellbeing of our country, and the Government is committed to supporting and fostering it,” Dr Cullen and Mr Dunne said.