We continue our two part update covering the changed brough on by the Charities Amendment Act 2023 (the Act). In part one we covered the changes that came into effect in October 2023. In this part two, we cover the changes that are coming into force from 5 July 2024.
Objections
New sections 55A to 55E outline a new process for objecting to decisions made by Charities Services or the Charities Registration Board (the Board). The Act refers to the “chief executive” of the Department of Internal Affairs, but in practice these decisions are made by Charities Services.[1]
What Can Be Objected To?
Charities are now able object to a wider range of decisions. Previously, only proposals to deregister a charity or decline an application could be objected against. Section 55A outlines a list of several decisions made by Charities Services objections can be raised against. These include decisions to remove from the register any document or information related to the entity, a decision to give a warning notice and any decision made by the Board under the Act. Objections can also be raised against any decision made by the registrar.
Deadline For Objections
Before a decision is made, the decision makers must give the charity or person concerned notice regarding the intended decision, the grounds for the decision and the date by which an objection to the intended decision must be received (section 55B). This date will be no later than two months after the date of the notice. This is an increase from 20 working days. Unlike appeals (examined below), objections are therefore made before the decision is made.
Opportunity To Be Heard
Section 55D allows the objector the opportunity to be heard. This can be either in person or by electronic means. Previously, despite the rules of natural justice normally requiring an oral hearing, there was no right to a hearing.
Appeals
Decisions can also be appealed after they are made. There is a new process for this. While not explicitly stated in the Act, it appears that appeals can be made even if an objection was not made against a decision.
What can be appealed?
Section 58A outlines a list of decisions that can be appealed against. These grounds mirror those decisions that can be objected to under 55A. Previously, charities had wider rights of appeal as the grounds were not limited.
Who appeals are made to?
Appeals are now made in the first instance to the Taxation and Charities Review Authority (“TCRA”). Previously, appeals were made to the High Court. The intention behind this is to simplify the process for charities, with the TCRA offering a less formal process.[2] Subsequent appeals to the High Court and Court of Appeal can still be made. An unintended effect could be that charities lose their right of appeal to the Supreme Court, as generally only two appeals are allowed in New Zealand courts.
Deadline for appeals
As with objections, there is a two month time frame for filing an appeal. This was previously 20 working days. However, if it can be demonstrated that there were exceptional grounds that prevented an appeal from being lodged in time, additional time may be allowed.
Costs
Internal Affairs estimated in an impact statement that the cost for an appeal to the TCRA will be $410. This is significantly cheaper than the cost of appealing to the High Court.[3]
Additional change coming: Accumulated Funds
There is an additional change coming regarding charities’ accumulated funds. This is not found in the legislation but in an upcoming change the to the annual return form. Charities with annual expenditure over $140,000 will need to provide reasons in their annual returns for holding the accumulated funds. Charities Services is consulting on the annual return forms and other changes may be coming, likely to happen in 2024. In the meantime, charities are advised to consider the reasons for holding accumulated funds, ensuring it is being done in the best interests of their charitable purposes.
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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.
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
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[1] Department of Internal Affairs “Policy decisions to modernise the Charities Act 2005”, https://www.dia.govt.nz/Policy-decisions-to-modernise-the-Charities-Act-2005.
[2] Department of Internal Affairs “Policy decisions to modernise the Charities Act 2005”, https://www.dia.govt.nz/Policy-decisions-to-modernise-the-Charities-Act-2005.
[3] Department of Internal Affairs “Regulatory Impact Statement: Modernising the Charities Act” (Report, 19 October 2021) at 106 and 107, https://www.treasury.govt.nz/publications/risa/regulatory-impact-statement-modernising-charities-act
