IRD recently shared two sets of slides regarding their consultation with charities at the end of 2025.
In this note, we summarise some of the key points they make on a variety of topics. We recommend reviewing the slides yourself (contact Partner, Steven Moe, if you’d like a copy) but this could provide a starting point to show areas that may be of interest.
Donor-controlled charities
- Many submitters did not support introducing a bespoke donor-controlled charity regime in the form proposed, preferring better enforcement of existing charity law and fiduciary duties.
- Concerns were raised that the proposed definition is too broad and could capture low-risk entities, including certain Māori organisations, iwi entities and widely held structures.
- There was support in principle for a minimum distribution rule to ensure tax-benefited funds are regularly applied to charitable purposes.
- However, a 5 percent asset-based distribution rate was generally viewed as too high in the New Zealand context. Submitters preferred an income-based approach, flexibility, exemptions and multi-year averaging.
- Integrity measures targeting circular arrangements and non-arm’s length transactions were supported conceptually, but many submitters were concerned about complexity and compliance costs.
- A cap on donation tax concessions for donations to donor-controlled charities was the least preferred option and was seen as a blunt instrument that could dampen large-scale philanthropy.
Membership subscriptions and member transactions
- Inland Revenue has indicated that many member trading and service transactions are taxable under current law, which may bring additional organisations into the tax net.
- Submitters expressed concern about compliance impacts, particularly for volunteer-run organisations.
- There was strong support for clear, practical guidance with examples.
- Many favoured retaining non-taxable treatment for genuine membership subscriptions, with a focus on the substance of transactions.
- Some submitters suggested clearer legislative distinctions between commercial trading and social or mutual member activities.
Tax-free threshold
- Officials have proposed increasing the long-standing $1,000 tax-free threshold, potentially to $10,000.
- There was broad support for increasing the threshold to reflect inflation and reduce compliance costs for smaller organisations.
- There was little support for a cliff-face approach that would remove the concession entirely once a threshold is exceeded.
- Alternatives suggested included an abating threshold and alignment with financial reporting thresholds.
Filing requirements and RWT exemption
- Submitters generally supported simplified filing requirements for small not-for-profits, particularly given their volunteer-led nature.
- Education and proportionate compliance responses were preferred over punitive measures.
- Concerns were raised about proposals to increase oversight of resident withholding tax exemptions if this shifted compliance costs onto financial institutions.
Donation tax credit simplifications
- In-year donation tax credit refunds were broadly supported as a way to improve donor cash flow and potentially support increased giving, provided participation remains voluntary and does not increase administrative burdens on charities.
- Allowing donors to allocate their donation tax credit directly to the donee organisation was viewed by many as a potentially more impactful reform.
- Practical issues were noted, including donor anonymity, stewardship considerations and whether an allocated credit should itself qualify for a further donation tax credit.
If you have any questions regarding the information above, please contact one of our team.
Published February 2026.
