• Facebook
  • Twitter
  • Youtube
  • LinkedIn
Parry Field Lawyers
  • Home
  • About
    • News & Insights
    • Terms of Engagement
  • Our People
  • Services
    • Property
      • Residential
      • Construction
      • Subdivisions
      • Commercial
      • Leasing
      • Community Housing Information Hub
    • Advisory
      • Employment
      • Sale & Purchases
      • Financing
      • Governance
      • Technology/IT
      • Start-ups and Capital Raising Hub
    • Disputes
      • Employment
      • Court, Tribunals and Arbitrations
      • Estates & Wills
      • Divorce & Separation
      • Insurance
      • Family
      • Company & Shareholding
      • Debt Collection
      • Construction
    • Trusts & Asset Planning
      • Wills & Enduring Powers of Attorney
      • Estates
      • Succession Planning
    • Charities/For Purpose Organisations
      • Incorporated Societies: Information Hub
      • Charities: Information Hub & Healthchecks
      • Governance Essentials
      • Faith Based Groups: Information Hub
      • Impact Investing: Information Hub
      • Hybrid Solutions: Charity/Business
      • Not for Profits
      • Churches
      • Sports Groups
      • Social Enterprises/Impact Companies
      • Community Groups
    • Migrants
    • Immigration
      • Work Visas
      • Family Visas
      • Skilled Migrants
      • Business and Investment Visas
      • Potentially Prejudicial Information
      • Employer Assistance
      • Overseas Investment
  • Resources
    • Guides
      • Capital Raising Guide
      • Resources for the Incorporated Societies Act 2022
      • Doing Business In New Zealand
      • Start Ups Legal Toolkit
      • Buying & Selling Property
      • Charities In New Zealand
      • Social Enterprises in New Zealand Handbook
      • Family Trusts
      • Death & Estates
      • Churches Handbook
    • Articles
      • Heat of the moment resignations – do employees need to be given a chance to cool off?
      • The new Incorporated Societies Act 2022: When will the new Act affect my Society?
      • Racial Harassment in the Workplace
      • Built up annual leave – does an employee have to use it?
      • Resources for the Incorporated Societies Act 2022
      • When can a Trustee delegate their powers?
      • Buying your first home: Key issues (a practical guide from a first home buyer)
      • The new Incorporated Societies Act 2022: What it means for your Incorporated Society
      • The Addington Farm: A case study in setting up a Charity
      • The Bright-Line Test
      • Funds that advance charity: How do they work? 
      • What is a LIM?
      • Charity Founders’ Ongoing Relationship With The Charity They Start: Key points to know
    • Blog
    • Templates
      • Terms and Conditions
      • Terms and Conditions Including Software
      • Non-Disclosure Agreement – One Way
      • Non-Disclosure Agreement – Two Way
      • Independent Contractors Agreement
      • Shareholders’ Resolutions – Written resolution
      • Share Transfer
      • Incorporation – First Shareholder Resolutions
      • Incorporation – First Directors’ Resolutions
    • Videos
      • COVID-19 and Commercial Leases
      • Force Majeure” clauses in Contracts and COVID-19
      • Property sale and purchases and COVID-19
      • Seeds Podcast
  • Careers
  • Contact
    • Healthcheck
  • Pay Online
  • Search
  • Menu Menu

Charities and Imputation

Incorporated Societies Act 2022: Information Hub

In mid-2008, the New Zealand government gave charities an opportunity to give their view on receiving a tax break. Currently charities are indirectly taxed when they invest in New Zealand companies. The government has been investigating ways to prevent this from happening. Parry Field lodged the following submission with comments on the government discussion document.


We write regarding the Government discussion document entitled “Streaming and refundability of imputation credits”.

We are a 6-partner law firm, and we have a significant amount of charitable institutions that we act for. As such, we consider that we are well placed to comment on the tax policy issues that arise from the discussion document, especially regarding how they relate to charities.

We would like to make the following submissions in relation to the discussion document:

Chapter 4, Question 1 – Does the absence of a rule allowing a refund for imputation credits affect the type of investments a tax-exempt organisation makes?

In the context of charities, the answer to this question is undoubtedly yes. Although the answer to the question is yes, even if imputation credits were refundable to charities, there would be limited circumstances where charities would actually avail themselves of the privilege. Most charities are set up for the purpose of carrying out their charitable purposes. As such, they will typically not invest their money in New Zealand companies, but rather use every dollar at their disposal to further their charitable aims.

Notwithstanding the above point, some charities do invest significant amounts of money, and do attempt to make a reasonable return on this investment. The return on the investment may then fund the charitable purposes of the entity involved. Although these situations, from our experience, are not representative of the charitable sector, we do consider that the inequities inherent in the non-refundability of imputation credits should be removed. We understand that the current government policy is not to tax charities, and we consider that the non-refundability of imputation credits flies in the face of that policy.

Chapter 4, Question 2 – If rules were introduced to allow imputation credits to be refunded, it would be necessary to ensure they did not undermine the objectives of the imputation system. What checks and balances would a responsible refund mechanism have?

As stated above the situations where charities would invest in companies is fairly limited in number, although the amounts that may be invested may be significant. We would therefore agree that proper safeguards are put in place to ensure that there is no abuse of the refundability of imputation credits, as this would bring a bad name to the good work charities do.

The types of safeguards we envisage could include the following:

  • Ensure that the refund mechanism is closely linked with Charities Commission registration. This will ensure that only deserving charities are able to claim the refund.
  • Develop a separate form whereby Charities can claim the refund of the imputation credit. Specific audit levels can then be placed on refunds to ensure that they are properly administrated. This will also prevent Charities from having to file a full return to claim the refund, when they would otherwise not have filed a return.
  • In all cases where a refund is claimed dividend statements should be provided evidencing the imputation credits received.
  • A sample of refund applications could be subjected to audit activities to ensure that no spurious refunds have been claimed.
  • The penalties regime should apply to spuriously claimed refunds in the same way that it applies to underpayment of tax.
  • Reference should be had to the safeguards implemented in Australia with reference to spuriously claimed refunds.

For further assistance with tax matters please contact Ken Lord at Parry Field (348 8480).

Tags: charities
https://www.parryfield.com/wp-content/uploads/2017/03/mountain-4420695_1920.jpg 1080 1920 Leigh Gray https://www.parryfield.com/wp-content/uploads/2019/07/Parry-Field-Lawyers-Logo.png Leigh Gray2011-12-09 00:37:002020-03-20 11:31:23Charities and Imputation

Related Lawyers

Ken Lord
Email Ken
+6433488480
View Profile
Kris Morrison
Email Kris
+6433488480
View Profile
View Profile

Christchurch CBD

PHONE: +64 3 348 8480
FAX: +64 3 348 6305

PHYSICAL ADDRESS:
Level 1, 60 Cashel Street
Christchurch 8013, New Zealand

POSTAL ADDRESS:
PO Box 744
Christchurch, 8140, New Zealand

Christchurch

PHONE: +64 3 348 8480
FAX: +64 3 348 6305

PHYSICAL ADDRESS:
1 Rimu Street, Riccarton,
Christchurch 8041, New Zealand

POSTAL ADDRESS:
PO Box 8020, Riccarton,
Christchurch, 8440, New Zealand

Rolleston

PHONE: +64 3 348 8480
FAX: +64 3 348 6305

PHYSICAL ADDRESS:
Level 1, 80 Rolleston Drive,
Rolleston, 7614, New Zealand

POSTAL ADDRESS:
PO Box 8020, Riccarton,
Christchurch, 8440, New Zealand

Hokitika

PHONE: +64 3 755 8673
FAX: +64 3 755 8073

PHYSICAL ADDRESS:
26 Weld Street,
Hokitika 7810, New Zealand

POSTAL ADDRESS:
PO Box 44,
Hokitika 7842, New Zealand

Parry Field Charitable Foundation

Parry Field charitable members of NZ LAw, Global Cross Legal and SCLA

© Copyright – Parry Field Lawyers     |     Privacy Policy

Tax On Australian InvestmentsTax When Moving To New Zealand
Scroll to top
  • Share on Facebook
  • Share on LinkedIn
  • Share on Email