Charities/NFP - Parry Field Lawyers

We often get asked by charitable trusts to help vary their trusts and we are always happy to assist. In fact in the past year we have helped dozens through the process and assisted in preparing the documents needed.

A question often comes up though – whether the changes could unwittingly lead to what is known as a ‘resettlement’ of the Trust. We are going to answer what that is and why this may be relevant to your charitable trust in this article.

Why might a Trust vary its Trust Deed?

The desire to vary the Trust Deed itself could be for a variety of reasons. Some reasons we often hear from a group are:

the document itself is very out of date – perhaps even written on a typewriter;
the actual processes described in the Trust Deed are not even followed;
the way Trustees are appointed or removed could use a refresh;
the situation itself has changed – something fundamental is no longer the same; or
other reasons, such as having a rotation of Trustees with term limits would be beneficial.

These are all very good and common reasons to update a Trust Deed. Perhaps some may even apply to your charitable trust.

A requirement to consider if rules are “fit for purpose”?

In fact, due to the recent changes to the Charities Act 2005, Trustees need to confirm that the rules they have are “fit for purpose” every three years (see section 42G which is at the end of this article). This includes not just a review of the Trust Deed but policies and procedures as well.

While we recommend a review of your charitable trust’s Trust Deed, it is also worth noting that if you decide to amend the purposes – which might seem like a good idea, then it could affect the Trust so much that it amounts to a ‘resettlement’, which might have consequences that are not intended.

The reason is that the Trust was set up for one purpose, or purposes, and if those purposes change enough, then it might result in the new purpose(s) being so different that the Trust itself has been resettled – in other words, a new Trust takes over from the original one.

Let’s consider how this might play out with a practical example.

Penguins or Children?

Jane has always loved penguins and wanted to help preserve them since she was a little girl. She sold her tech company and decided to set up a charitable Trust by endowing it with $25 million dollars. While she was the donor and set up the Trust itself, she asks 4 trustees to provide the governance of the new trust.

The Trust starts a rescue centre and works for 10 years for this purpose seeing thousands of people visit and get educated as well as saving many penguins every year. The Trust purchases a large property to run a recovery centre for the Penguins.

However on the 10^th anniversary the Trustees consider their Trust Deed as a result of attending some training by Parry Field Lawyers on how they need to make sure it is “fit for purpose”.

They have a strategy day away and among many parts of the Trust Deed they consider the purposes as well. The Penguins are important but they realise that actually they are about education of the public about the environment – the Penguins are just one way that happens.

The Trustees decide to vary the purposes to emphasise the education of young children about the natural environment, and change the name of the recovery centre for Penguins to the “Environmental Education Centre for Children”.

The renewed focus is received well by everyone – except they forgot to include Jane, the donor. Jane disagrees with the new focus and sends a strongly worded message to the Trustees, as well as filing a Court application challenging the decision and describing it as a resettlement. The Attorney General takes an interest in this as well and the accountant – who they had not involved – mentions that there may be some major tax consequences as well…

Hopefully the point of this is clear. Resettlement happens if the property of a trust is put into a different trust – this can happen if the purposes themselves change.

There could be two major consequences:

a donor or former trustee or someone else interested might bring a claim that the variation was not valid, and challenge it in Court; or
there could be tax consequences because if there has been a resettlement then that might trigger a transfer of the property the Trust holds (with tax resulting, potentially).

(Note that we are not tax specialists so you need to talk to an accountant – there are even more implications that they can outline for you but we just want to alert you to the issue.)

So what should you do?

For Trustees considering modifying their purpose they need to check that the purposes are essentially the same as they were before.

This will be a question of degree – but going too far introduces dangers. It is worth spending time thinking about this issue though rather than changing the purposes without being aware.

But what about practical risk?

In our experience there is a “who cares” question – in other words, if you did vary the Trust Deed then is anyone going to actually object? Is there an equivalent of the Jane in the story – or have they long since gone?

Our job is to point out the risks but it may be that the Trustees take on board the issue, consider it and then decide that they want to proceed anyway.

Either way, we hope this information has provided more clarity on why this can be an issue and how to consider it.

If you’d like to talk about your situation then feel free to get in touch with us.

The new section which introduces a requirement to consider if your rules are fit for purpose:

42G Duty to review governance procedures

(1) A charitable entity must review its governance procedures (whether those are set out in its rules or elsewhere) at least every 3 years.

(2) When conducting a review under subsection (1), the charitable entity must consider whether its governance procedures:

(a) are fit for purpose; and
(b) assist the charitable entity to achieve its charitable purpose; and
(c) assist the charitable entity to comply with the requirements of this Act.

We often get asked about what income (including business income) is exempt from taxation by our many charity clients.

In New Zealand, registered charities benefit from various tax exemptions. Inland Revenue released an interpretation statement (IS24/08) clarifying the rules around tax exemptions under section CW 42 of the Income Tax Act 2007. This exemption allows certain income that a charity derives from business activities to be non-taxable, provided specific requirements are met. Here’s what charities need to know about this important exemption:

What is Business Income for Charities?

A charity’s income is categorised as either business or non-business income. Business income includes any income a charity earns through commercial activities, such as running a store or providing services for a fee. For example, if a charity operates an op shop or a café to fund its charitable purposes, the income generated from these activities can qualify as business income. This income may be exempt if certain conditions are met under section CW 42. On the other hand, non-business income, such as donations and gifts, are generally tax exempt under a different provision (section CW 41).

The Business Income Exemption

Under section CW 42, a charity’s business income can be exempt from tax if all of the following conditions are met:

The entity carrying on the business is a registered charity – The exemption applies only if the business is conducted by a charity that is registered under the Charities Act 2005.
Charitable purposes must be carried out in New Zealand – To qualify for the exemption, the charity must apply its income towards charitable purposes within New Zealand. If any of the charity’s purposes are outside New Zealand, the income must be apportioned, and only the part used for New Zealand charitable purposes is exempt.
The entity is a “tax charity” – This includes registered charities.
Control restrictions – There must be no individuals or entities with control over the charity’s business who could divert the charity’s income for private benefit. Any breach of this control restriction would make the charity’s business income fully taxable.

Territorial and Control Restrictions

An important aspect of the exemption is the territorial restriction. If a charity’s purposes are not limited to New Zealand, the charity must apportion its income between New Zealand-based activities and those outside the country. Only the portion supporting New Zealand activities will be tax-exempt.

Additionally, the control restriction ensures that the charity’s business income is used solely for charitable purposes. If any person or entity can direct or divert income for personal gain, the entire business income will become taxable.

Key Takeaway for Charities

Charities involved in business activities should carefully assess their operations to ensure they meet the conditions for the business income tax exemption. This includes maintaining registration as a charity, focusing charitable efforts within New Zealand, and ensuring compliance with the control restriction. Failure to meet these conditions could result in the loss of the tax-exempt status for business income.

We can help charities that operate both in and outside New Zealand to document and implement business income-splitting practices to ensure compliance with the IRD’s guidance.

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This article is intended for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please contact a qualified legal professional. Reproduction is permitted with prior approval and credit to the source.

Succession planning is a critical component of effective governance for any board, whether it’s for a corporate entity, charity, or for-purpose organisation. In New Zealand, where governance practices are guided by both legal frameworks and best practice principles, succession planning ensures that a board remains dynamic, diverse, and capable of steering the organisation into the future. This article outlines some practical considerations to keep in mind when developing a succession plan for your board.

1. Primary Responsibility of the Current Board

Succession planning is one of the board’s most important responsibilities, ensuring continuity and stability during leadership transitions.

(a) Evaluating Leadership Roles

Start by assessing the current leadership. Who is your Chair and how long have they been in the role? It may be time to consider appointing a deputy Chair who can learn the ropes now and ensure a smooth transition when the time comes for the current Chair to step down. Planning ahead mitigates risks associated with abrupt leadership changes and maintains strategic continuity.

(b) Emphasising Diversity of Thought

When considering successors, resist the temptation to simply replicate the existing board members. Instead, focus on bringing in new perspectives. Diversity of thought fosters innovative solutions and more resilience. Actively seek out individuals who bring different experiences, skills, and viewpoints to the table. We have also created a Board Skills Matrix which you can access over here.

(c) Mapping Out a Succession Plan

A clear, structured succession plan is essential. Consider implementing a rotation schedule for trustees, this could be legally enshrined in your Trust Deed. For instance, a trustee might serve for a term of three years, renewable for another three years, with a maximum of three terms (3+3+3), after which they must stand down for at least a year. This ensures regular infusion of fresh ideas while maintaining experienced leadership.

(d) Encouraging Healthy Board Renewal

Term limits and rotation schedules naturally create opportunities for board renewal. These mechanisms facilitate necessary discussions about new leadership without making it personal. Focus these conversations on the organisation’s needs rather than individual preferences to prioritise the entity’s long-term success.

2. Utilising a Skills Matrix

A skills matrix is a valuable tool for evaluating the board’s current composition and identifying gaps in expertise or experience. This can be used to decide where there may be areas to bring people in on. By regularly updating the skills matrix, you can keep your board aligned with the evolving needs of the organisation. Here is ‘needs matrix’ example from SportNZ.

3. Long-Term Vision: “Where Will We Be in 50 Years?”

While succession planning often focuses on the near to medium term, it’s crucial to consider the long-term legacy of the current leadership. The question, “where will we be in 50 years?” encourages the board to think beyond immediate challenges, nurture potential leaders, anticipate future trend and position the board to respond to long-term challenges and opportunities.

4. Conclusion

Board succession planning is not just about filling seats—it’s about ensuring that the board remains effective, diverse, and forward-thinking. By taking a proactive approach, utilising tools like a skills matrix, and thinking long-term, your board can continue to provide strong governance that drives the organisation’s success for decades to come.

If you would like to listen to a short podcast on this topic, the Institute of Director’s have released an episode featuring a Chartered Fellow of the Institute of Directors here where Steven Moe (the host of the show) talks through governance and board considerations.

If you need assistance in developing a succession plan tailored to your board’s needs or have legal questions regarding governance, contact one of our experts at Parry Field Lawyers.

This article is intended for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please contact a qualified legal professional. Reproduction is permitted with prior approval and credit to the source.

We have helped many incorporated societies transition into charitable trusts and an issue that always arises is what happens to bequests to the incorporated society? The answer, in short, is “it depends”. This article will look at two situations; what happens to bequests when the incorporated society is wound up and what happens when the incorporated society is left as a shell entity.

Wound up incorporated society

Firstly, if a gift is left to an incorporated society that has been wound up, the executer would look to supporting documents that show a relationship with the trust and whether it is essentially the same entity. This would include, for example, the background section of the trust deed and the resolution to wind up and transfer assets from the society to the charitable trust.

The court may need to get involved if the executer is not satisfied the charitable trust is essentially the same as the incorporated society or where the wording of the Will is clear that the funds are only to go to the society. In this unlikely case, the court will seek to carry out the wishes of the Will-Maker when deciding which charitable entity to gift the funds to.

This means that even where there is a background section in the trust deed, there is no absolute certainty that the charitable trust will receive a bequest meant for the society. It is likely they will, due to the clear documentation that the charitable trust is essentially the same as the society, but there still remains a risk. Unfortunately, we have talked to MBIE about this and they cannot make any regulations for the new Act to remove this risk.

It is therefore advisable that if your incorporated society has transferred to a charitable trust, that you get in touch with your supporters and let them know they should amend their Wills. If you need help with this wording please do not hesitate to contact one of our experts here at Parry Field Lawyers.

Shell incorporated society entity

Secondly, whether bequests are paid to the charitable trust when the Will states it is to an incorporated society and/or quotes the charitable trust depends on what the Will says, how the executor feels about the bequests and if the residuary or other beneficiaries will raise issues.

Where a Will is clear that the bequest is for the incorporated society and it contains the Companies Office number or Charities Service number, the executor will generally be able to find the contact details for the society. It could then be explained to the executor that the charitable trust is undertaking the same work as the incorporated society. It will be at the executor’s discretion as to whether they transfer the funds to the charitable trust directly or require the funds to be transferred to the incorporated society. It would be prudent for the incorporated society to keep a bank account and to be active for this very reason, so it can transfer any bequests made to it.

The executor may be a close relative (e.g. child) of the Will-Maker who is aware of the Will-Maker’s wishes and can interpret the gift left in the Will to the society as being meant for the charitable trust. By contrast, the executor might be distanced from the Will-Maker or unaware of their involvement in the charitable trust and therefore unwilling to make the gift to the society.

A situation may arise where a beneficiary of the Will is challenging the gift made to the society, in which case it could be helpful to avoid any challenges to the validity of the gift itself.

These may be a reason to keep the society as a shell entity, to avoid a lot of these situations. It is prudent to consider how long you should leave the incorporated society as a shell for, as there may be some people who have drafted their Wills recently but won’t pass for a long time.

Some Wills contain a clause which discusses the “successor” entity which that would work in the charitable trust’s favour. Alternatively, some Wills say that if a gift fails then it gets added to the residue, or if the provision falls short, then it automatically gets added to the residue, this would not be in the charitable trust’s favour.

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We have helped many incorporated societies transition to a charitable trust and have an incorporated society information hub here and a charitable trust information hub here. This article is not a substitute for legal advice and our experts here at Parry Field Lawyers would be happy to answer any of your questions.

If you would like to discuss further, please contact one of our team on stevenmoe@parryfield.com sophietremewan@parryfield.com or annemariemora@parryfield.com .

Many organisations choose to hire out their venues to the public when the venues are otherwise unused. While this can be an excellent way of bringing in funds, there are some pitfalls to be aware of including intentional or unintentional discrimination.

Discrimination on the basis of religion

In 2012, a Catholic Priest in the United Kingdom sought to ban its church hall being used for ‘spiritual yoga’, [1] which was thought to be incompatible with the Catholic faith. Even if the yoga was incompatible, excluding the yoga teacher on the basis of religion would be illegal in New Zealand and grounds for a complaint of discrimination.

It may seem counter-intuitive that one religion cannot prevent people from an incompatible religion using their facilities, yet that is what the law says. [2] Anyone who provides goods, facilities or services to the public or a group of the public cannot discriminate based on religion.[3] This includes treating someone less favourably based on religion when providing goods, facilities, or services.

If someone feels they are being discriminated against, they are entitled to make a complaint to the Human Rights Commission[4] or to take the matter to the Human Rights Review Tribunal.[5]

The legal test for whether behaviour is discriminatory is[6]:

Is there differential treatment or effects as between person or groups in analogous or comparable situations on the basis of a prohibited ground of discrimination; or
Does that differential treatment impose a material disadvantage.

If we apply this to the example of the church above, the yoga teacher may have been able to establish that they were discriminated against if the church hall had been readily hired by other members of the public or other religious groups. Banning the yoga teacher would arguably then have been ‘differential treatment’.

Can a church legally limit who uses its venues?

Section 44 of the HRA says it is unlawful for any person who supplies goods, facilities, or services to the public or to any section of the public to refuse or fail on demand to provide any other person with those goods, facilities, or services, by reason of any of the prohibited grounds of discrimination. Religion is a prohibited ground of discrimination. When it comes to a venue, the key word is ‘public’.

Going back to the example above, one option would be for the church to have a policy that its facilities are for private use, but exceptions can be made on a case-by-case basis and subject to availability. This would give the church some discretion regarding who uses its facilities and would mitigate against accusations of discrimination. The downside is that the the venue might miss out on valuable funds from hiring its venues out publicly.

Another option would be to limit which parts of a venue or facility are able to be rented out.

This article is not a substitute for legal advice and our experts here at Parry Field Lawyers would be happy to answer any of your questions.

We have assisted a number of churches with ensuring their rental provisions comply with the law – we would be delighted to assist you to. If you would like to discuss your options, please contact stevenmoe@parryfield.com or annemariemora@parryfield.com.

[1] https://news.sky.com/story/catholic-church-bans-hindu-yoga-classes-10468941#:~:text=Instructor%20Cori%20Withell%20said%20the,was%20a%20Hindu%20religious%20activity.

[2] Human Rights Act 1993, section 21(1)(d).

[3] As above, section 44(1)(a) and (b).

[4] https://tikatangata.org.nz/resources-and-support/make-a-complaint

[5] https://www.justice.govt.nz/tribunals/human-rights/

[6] Ministry of Health v Atkinson [2012] NZCA.

Trustees have important duties. If a trustee lose their mental capacity and cannot perform their trustee duties, action is needed in the best interests of the trust, and arguably in the best interests of the trustee themselves. So what happens?

What is meant by ‘loss of capacity’?

The Trusts Act 2019 (the Act) does not define what this means (except when it refers to people who are subject to an order appointing a manager under the Protection of Personal and Property Rights Act, or has a trustee corporation managing the person’s property under that Act).

Broadly speaking and depending on the circumstances, a trustee will have lost capacity if they do not have the capacity to make the future decisions required for their role as trustee. It is also useful to be aware that ‘capacity’ has been interpreted by the courts in numerous ways, depending on a variety of circumstances, including what the affected trustee is responsible for doing.

In New Zealand people are presumed to have mental capacity until proven otherwise. We suggest that only an appropriately qualified medical practitioner can truly make this evaluation. Not only is a medical practitioner’s decision authoritative, it is made independently from other trustees.

What needs to happen if a trustee loses capacity?

There may be negligible or substantial risks attached to an incapacitated trustee remaining in office. The more substantial the risk, the greater the need for action. Those affected by a trustee’s decision-making may need to be protected from potentially imprudent decisions, for example.

A trustee may or may not recognise that they have lost or are losing their capacity. If they do not recognise this and fail to remove themselves from the role, it falls to others to act.

The law is clear

The Act recognises the necessity of dealing with this issue. Anyone who “lacks the capacity to perform the functions of a trustee” is legally disqualified from being a trustee. Furthermore, a trustee who lacks capacity is legally required to be compulsorily removed from the role by the ‘person with power to remove trustees’ to act to remove them.

Who is the ‘person with power to remove trustees’?

The Trust Deed will normally state who has this power, and failing that, the other trustees are empowered to act. If the trustees are unwilling to act, a person holding an enduring power of attorney over the property of the trustee who is mentally incapable may act. Other options are set out in the Act.

What is the process for removing a trustee?

In most circumstances you can follow the process set out in your Trust Deed, or the process set out in the Act. If you are following the Act, you must give the affected trustee 20 working days’ notice in writing of their removal.

The affected trustee may make an application to prevent their removal within 20 working days of receiving notice of the removal decision. The affected trustee will need to produce evidence that raises a genuine dispute as to whether the removal decision was open to the person who made the decision. If the court finds that this evidence is sufficient, the onus then returns to the person who made the decision to remove the trustee to show the decision was reasonably open to them. (That is why it is advisable to have a reputable medical evaluation.) We recommend seeking legal assistance if things reach this stage.

How to give notice to a trustee

So many issues can be avoided by choosing the correct words. Our rule of thumb is to treat a trustee who has lost their capacity as you would like to be treated in the same circumstances. Although you are acting to remove the trustee, compassion is recommended as it is likely to minimise any unintended offence.

What if an incapacitated trustee refuses to leave?

The law makes provision for this situation because unfortunately it does arise—the court may make an order for removal. We suggest you seek legal assistance in this situation.

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This article provides an overview but it is not a definitive guide. For further assistance, please contact one of our team. You may also find this article about Enduring Powers of Attorney of interest.

If you have any further queries please do not hesitate to contact one of our experts at Parry Field Lawyers- stevenmoe@parryfield.com, yangsu@parryfield.com, sophietremewan@parryfield.com or annemariemora@parryfield.com

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

Raffles are a common way to raise money for worthy causes. What may surprise you is that there are laws that govern how raffles need to be run. For example, it is illegal to run a raffle online. It pays to be aware of the rules before organising a raffle. Here are some important things to know.

Where are the rules?

The laws around raffles are found in the Gambling Act which exists among other reasons to ensure the integrity and fairness of games, and ensuring that money from gambling benefits the community. It’s useful to keep in mind that these laws are not there to make life difficult but to guard against improper use of funds.

What can raffles be used for?

The raffle proceeds can be used for a charitable purpose, or a non-commercial purpose that is beneficial to the whole or a section of the community. So raising money for a registered charity is fine, as is raising money for the local football club. It is not acceptable for someone to run a raffle to raise money so they can go on holiday or buy a new laptop.

What prizes are permitted?

Most prizes will be fine to raffle. However, alcohol and tobacco products prizes are illegal, as are firearms, explosives, restricted weapons or airgun. It is also illegal to offer a taonga tuturu as a prize (an object over 50 years old that relates to Māori culture, history or society and was manufactured, modified, used or brought into New Zealand by Māori), or a voucher or entitlement to commercial sexual services.

A licence is sometimes needed

Most small raffles are pretty straightforward to run. However, if the combined value of prizes is more than $5,000, and the turnover (the money raised) is more than $15,000, a Class 3 licence is needed. Apply for a licence on the DIA website.

What’s involved in a Class 3 licence?

Among other things, there are special requirements for what needs to be on the tickets. The prize needs to be worth at least 20% of the prize’s ‘gross potential income’ (which is the amount you expect to raise, calculated by multiplying the number of tickets by the cost of each ticket). Within 3 months of the raffle finishing the organisers must provide an audited Audit and Prize Statement to the Secretary. More information is set out on the DIA website.

Other rules

Even if you do not need a licence, there are other rules to be aware of, including:

The rules for the competition must be clear to all participants.
If tickets are sold to the general public, the time and location of the prize draw must be open to the public.
Prizes can only be given to winners and must be given to winners within 3 months of the result, unless the winner cannot be identified or located or does not accept the prize. Prizes cannot be changed once the raffle has started.

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This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

As you may know, all incorporated societies in New Zealand must re-register under the new Incorporated Societies Act 2022 (the “new Act”). If this is news to you, we have written an article about it here.

The new Act requires a society’s name to end with either ‘Manatōpū’, ‘Incorporated’ or ‘Inc’ (or more than one of these if you so wish). However, to change your society’s name, even just one word, you must reregister first then apply to the Registrar for a name change.

To change the name of your society, you need a RealMe® login, an Incorporated Societies Register online services account, and you need the requisite authority in your society to manage information on your society’s register. You need to log into your online services account and select ‘Name Change’ on the ‘View Details’ page and type in the new name. You may click ‘Name availability check’ to make sure you can use the name. If there are any documents in support of your name change (i.e. if another entity has provided consent for you to use the name) you should include these. Then, after completing the signatory details you can submit it. See Companies Office for more information about naming your society here.

The Registrar must then approve the name and will send an email confirmation that they have registered the change within three working days. An updated Certificate of Incorporation will be sent to you. You do not need to update your society’s constitution as it will be treated as having the new name; however, this should be done in your next general meeting.

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We have supported many incorporated societies and produce many free guides and resources on our Incorporated Societies information hub here. This article is not a substitute to legal advice and if you have any questions please do not hesitate to contact our experts here at Parry Field Lawyers.

We help with unincorporated and incorporated societies and answer questions all the time. If you would like to discuss further, please contact one of our team on stevenmoe@parryfield.com sophietremewan@parryfield.com or annemariemora@parryfield.com.

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 than making a donation directly to a charity as donors do 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 ‘tax 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.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

If you would like to discuss further, please contact one of our team, stevenmoe@parryfield.com, or annemariemora@parryfield.com at Parry Field Lawyers.

We are often asked when a charity will be registered after applying to Charity Services. This is because the time between applying and getting positive news can be 12 weeks, or more. The simple answer is Charities Services can backdate to when you first applied, but there are two criteria under section 20 of the Charities Act 2005 (the Act) that must be considered. These might affect if they can backdate and are:

When did Charities Services receive a “complete” application?
Was the entity “qualified for registration” as a charitable entity at all times during the period between the effective registration date and the date the entity became registered as a charitable entity?

A completed application requires a completed application form and a copy of the entity’s legal rules. An entity is “qualified for registration” where the application meets all key registration requirements under the Act. This could have an impact on the date. For example, if an entity was required to amend its rules to meet these requirements, then Charities Services can only backdate the registration date to the date of these amendments were legally effective. However, the High Court has allowed the backdating of an application where such amendments were “for the avoidance of doubt”.

Charities Services have the power to backdate an application to the date they received a complete application for an entity that is qualified for registration at all times from the period of effective registration and the date of actual registration. A backdated registration is referred to as the effective registration time, being the date registration was effective rather than when it occurred.

The High Court has interpreted the Charities Services ability to backdate as a means of addressing the otherwise adverse consequences for charities of administrative delays. However, this discretionary ability was not found to extend to charities that have been deregistered and have applied for another application to be registered. The Court, alternatively, does have the power to do so. This means that if a charity wishes to have a backdated registration following deregistration it would need to appeal to the courts for an order to do so.

In summary, while most applications can be backdated if you are asked to amend your documents it may not be possible unless the changes are not very material. We have helped many charities get registered and are happy to provide advice for your specific situation or answer any questions you may have.

If you have any further queries please do not hesitate to contact one of our experts at Parry Field Lawyers- stevenmoe@parryfield.com, sophietremewan@parryfield.com or annemariemora@parryfield.com

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

Why might a Trust vary its Trust Deed?

A requirement to consider if rules are “fit for purpose”?

Penguins or Children?

So what should you do?

But what about practical risk?

What is Business Income for Charities?

The Business Income Exemption

Territorial and Control Restrictions

Key Takeaway for Charities

1. Primary Responsibility of the Current Board

(a) Evaluating Leadership Roles

(b) Emphasising Diversity of Thought

(c) Mapping Out a Succession Plan

(d) Encouraging Healthy Board Renewal

2. Utilising a Skills Matrix

3. Long-Term Vision: “Where Will We Be in 50 Years?”

4. Conclusion

Wound up incorporated society

Shell incorporated society entity

Christchurch CBD

Christchurch – Riccarton

Rolleston

Hokitika

Auckland