After a year of uncertainty, and a consultation for charities earlier in the year, we now have an update on the issue of taxation of business income for charities.
As a reminder, there was a consultation paper put out on this topic at the start of the year by Inland Revenue (IRD). To read more on the philosophical position around why charities have tax concessions you can read the paper that our Partner, Steven Moe, wrote with Craig Fisher, which is available to download here.
In response to the consultation, around 900 submissions were received by the IRD – a very high level of feedback.
In May, it was announced no changes were due in the Budget on this topic, but we understood it was still being considered.
Now we have heard during a speech at an event hosted by the International Fiscal Association, Minister of Revenue Hon Simon Watts mentioned that he has decided not to continue work on the taxation of the business income of charities. We heard from the IRD that apparently, “Ministers were concerned the complexities, compliance costs and distortions associated with a change would impose significant costs on charitable organisations and distract them from their core purposes. However, he said he expects Inland Revenue to increase its enforcement efforts to make sure charity businesses are complying with the existing rules.”
Our view is that this is a positive development as it will provide certainty for charities on this position. There is still likely to be other points that are consulted on, which we will be involved in and will share updates on developments.
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Published 6 November 2025.
