Getting more from your investment in NZ businesses

December 3, 2019

Philanthropy New Zealand is continuing to lobby for the implementation of an imputation credit refund scheme for charities who invest in New Zealand companies.Chief Executive Sue McCabe says, “we surveyed members and found there to be strong support for this kind of scheme. The current situation is inconsistent with charities’ tax-exempt status and unfair to a sector that makes a massive contribution to the well-being of New Zealanders.”PNZ and a member group is now seeking a follow-up meeting with the Minister for Revenue Hon Stuart Nash to discuss an imputation credit refund scheme in more detail and intends to advocate more widely on this issue in 2020.  This follows an initial meeting with Minister Nash late last year.

The member survey also revealed mainly positive support for a minimum distribution of funds being expected from charities claiming imputation credit refunds.  Accumulation is a topic of interest in New Zealand and was raised in last year’s Tax Working Group. It relates to trusts and foundations attracting tax concessions but not distributing their funds for public benefit.

PNZ and a core group of members (including representatives from J R McKenzie Trust, the Tindall Foundation, Nikau Foundation, Rātā Foundation, Foundation North, and Perpetual Guardian Trust) believe that any set rate of distribution would need to be appropriate to the New Zealand setting and different charity types (which was the main issue raised in the survey feedback) and reviewed post implementation.  Member feedback suggested an annual distribution rate of between 2-3% of equity might be appropriate.

There was also support amongst survey respondents for the proposal that public accountability for an imputation credit refund scheme would be increased by ensuring that eligible charities are registered with Tier 1, 2 or 3 accounting standards and publish audited accounts.

We would welcome any views on this issue directly or you can head to our Members hub to discuss this on our Research & Policy forum.

Please let us know if you wish to be involved in any forward engagement.  You are also free to share this article with those you think will be interested.

What are imputation credits?

Dividends paid by companies to shareholders can have imputation credits attached.  This means the company passes on any credit for tax paid at the company level to shareholders.  Shareholders can then use that imputation credit to offset other income tax.

But, tax-exempt charities currently miss out on this benefit because they do not pay other income tax.

 Charities Act review – submission and template

May 6, 2019

We have submitted Philanthropy New Zealand’s submission on the Review of the Charities Act 2005 to the Department of Internal Affairs. You can find our submission here.  Thank you to everyone who provided input into the development of this submission.We have also written a template submission for you to download, use and adapt should you wish to support the key points that we will be raising in our submission.The more voices on the key issues, the better. Our collective voice will then have a bigger impact on Government decision makers.  Even if you don’t put in a submission, just sending a letter stating that you support Philanthropy New Zealand’s submission (or another organisation’s) will give our submission more weight, and is more likely to result in changes that the sector are happy with.A special thank you to the Combined Community Trusts of New Zealand for providing funding to Philanthropy New Zealand to develop this submission. We’d also like to acknowledge the work of Sue Barker and Dave Henderson as their analysis of the issues and advice made the development of our submission much easier.