Kia ora All!

Hope you are all well, here are a few updates and upcoming things including an “Ask Me Anything”!:

  • We are closing off our ‘for purpose’ organisations survey tomorrow – thanks to the 41 people who have filled it in already, and you can still fill it in here: https://forms.office.com/r/icNn4kyGuw

  • Watch this space … on 5 October am planning an impact event… more to come.  This will be an online conference.
  • For any accountants, I’ll be sharing at an event soon in May on avoiding risks, staying safe and supporting your clients: legal advice – info is here https://www.brightstar.co.nz/events/52nd-one-stop-update-accountant-business/agenda
    • Capital raising dos and do nots– key questions you should ask about your money raising options
    • Contracts and the key provisions that you should be aware of
    • Legal structure options – which are best? Companies, Trusts, Incorporated Societies and what this means for your organisation
    • Director Duties: What do you need to know as an accountant in business – and are they changing?

  • Recently hosted a session for Entre on Founders and things they have learned over here, it may interest you too!  There are now more than 340 episodes of seeds at www.theseeds.nz

I am up at Hanmer Springs, at a strategy session for Parry Field Lawyers over two days, here is a photo from Conical Hill!

Thanks,

Steven

The tax benefit of making donations: How does it work?

We help set up many charities and are often asked about the tax benefits. We go into this in our “Charities in New Zealand” book, but want to outline some key points here.

Charities benefit from receiving donations and donors often benefit from the ‘feel good factor’ of helping out worthy causes. Registered charities do not pay tax and their donors can benefit further by applying for a ‘tax credit’ to get a third back, either by applying directly to IRD or by way of ‘payroll giving’.

 

Direct donations

People often make donations to charities directly. The donor can then submit the receipt to IRD who will issue a ‘tax credit’, which effectively returns 33.3% of the donation to the donor. Find out more about claiming tax credits for direct donations.

 

What is payroll giving?

Payroll giving occurs when employers enable their employees to make donations directly from their gross wages. The tax benefit is that the amount of PAYE or withholding tax the employee pays is reduced by the amount of their donation. They also receive a ‘tax credit’ from the donation, which is 33.3% of the donation value.

Payroll giving is therefore a bit simpler as the donor does not have to submit their donation receipts to IRD to claim the tax credit.

 

What needs to be in place for payroll giving?

Employers will only be able to offer this service if they file their payroll taxes electronically. They can either use the myIR online service, or attach files from their own payroll software.

Even if an employer has the ability to use payroll giving, it is discretionary. Employers may also use their discretion to choose how the donations will operate, for example, they may designate specific charities that can be donated to, and they may designate a minimum donation amount.

Only ‘donee organisations’ can receive payroll donations.

 

What is a donee organisation?

IRD maintains a list of donee organisations. Charities are added to the list if they use at least 75% of their funds within New Zealand (that is, they operate “wholly or mainly” here), or for the public good if an organisation is not a charity. For more on the threshold, you can check to see if a charity is on the IRD donee organisation list here.

 

Other resources:

The IRD has put together this excellent guide to payroll giving.

It is also possible to claim tax credits on donations to charities supporting overseas causes.

We help with charity set ups and answering questions all the time. If you would like to discuss further, please contact one of our team on stevenmoe@parryfield.com,  michaelbelay@parryfield.com,  sophietremewan@parryfield.com, or yangsu@parryfield.com at Parry Field Lawyers

Kia ora koutou katoa

My thoughts are with all of you in difficulty as a result of the cyclone and storms.

Welcome to the first Impact email of the year – to kick start the year we have created a short survey as we thought it might yield some nice perspectives – was talking to MBIE on some of these questions and they are curious what you all will say!  You can access it here and we would like responses by Friday 24th March:  https://forms.office.com/r/icNn4kyGuw  Also, could you tell others you know about it or put in any newsletters you know of?

Also, this year am on a mission to make the law more accessible so will be doing an “ask me anything” on legal questions soon – am open to questions on anything and so far have had some on the FMA and capital raising, Confidentiality Agreements and overseas charitable work – real variety!  Send your difficult questions by hitting reply.  More info and a video is at this LinkedIn post or you can register for the zoom session on 31 March here.

This year will hold the Impact Calls on a more ad hoc basis – when an issue comes up or someone to talk to – so be watching out for them too!

Our law firm now with 80 staff just moved back into central city Christchurch and was profiled in this stuff article, may interest you as talks a lot about the earthquakes as well and what it has been like returning.

By the way I had a great break over Christmas travelling in Europe, and feel ready for the new year!  How was your break – does it feel like a long time ago?

Ngā mihi nui

Steven

Christchurch CBD

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Rolleston

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