National announces charity tax policy
February 27th, 2007 at 2:54 pm by David FarrarJohn Key has announced a massive change to tax on charitable donations. Currently the law only allows you to claim $1,890 of donations at a 33.3% rebate (ie net $630) as an individual and companies are restricted to a 5%.cap.
National is abolishing both caps so that donations up to a person’s total net income will be eligible for the 33.3% rebate, The company cap is also lifted, plus extended to non publicly listed companies.
And finally gift duty on donations to charitable organisations has been abolished.
It is estimated this policy change could lead to a doubling of donations to the voluntary sector.
“In my Burnside speech I said I wanted to turbo-charge the efforts of private and community groups making a difference. This policy shows I mean it.
“Following that speech, Labour’s Steve Maharey attacked National using the sneering term ‘Tory charity’.
“This is the view that the State is always best placed to improve society by taxing people and spending the money on government programmes. This is the view that private charity is simply patronising.
“National thinks these views are appalling. It’s a fundamental part of a civilised society that people do things for one another, and do them selflessly, without being compelled, and without the Government organising it.
I think this is a great policy. It will make a huge difference to many charities.
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February 27th, 2007 at 6:26 pm
From a personal point of view I thoroughly approve. I have always thought that the current level has lagged way behind the increase in wage.
It might not have a huge impact on the amount I donate in future (it has never been a tax deduction issue), but it would have an benefit for me at tax return time.
Vote:February 27th, 2007 at 6:50 pm
All the media information — including a video from John and pictures from the announcement, as well as the backgrounder — is now on a dedicated National website page: http://www.national.org.nz/charities.aspx
Vote:February 27th, 2007 at 6:55 pm
Every man and his dog with their snouts in the “Fly by Night charitible trust inc” feeding trough will be pleased. Another growth indistry.
Will NZers ever wakey wakey.
Personally I wouldnt mind the oportunity of helping my kids out with the tax money taken from me and wasted every fortnight… but based on the pontifications of the major parties that will be the frosty frigin friday!
Vote:February 27th, 2007 at 7:33 pm
The private “charities” will be all set up overnight.
The definition of charity is allready very loose in NZ.
They dont even have to even spend their money on charitable works.
This is another huge tax loophole to be created by national so there ultra rich mates will have their vineyards in Waiheke controlled by a private charity.
Oh they might sling the Salvation Army $10K , to help out the underclass of course, but siphon off $500k out of the reach of the tax man
Vote:February 27th, 2007 at 8:15 pm
Porcupine said: “Every man and his dog with their snouts in the “Fly by Night charitible trust inc” feeding trough will be pleased. Another growth indistry.”
Perhaps, although I suspect that most loopholes can be closed AND people still have to give cash.
More importantly it will provide real benefit to many charities and politically it will be regarded by most voters as a helping hand to good causes (expect it to be a Labour policy before long).
A rather cynical response to good (and overdue) policy.
Vote:February 27th, 2007 at 8:21 pm
Libellula, you are not correct. While the definition of “charitable purpose” may be wide the one thing absolutely excluded is personal benefit. Once an asset, say a Vineyard, is transferred to a charitable trust, it is gone for good. The original owner cannot get any benefit. Maybe they could manage it and get paid for that, but that money would be taxable as personal income, so there is no tax advantage in that.
The profits of the trust can only be used inside the charitable trust, either as a distribution (which can only be for a charity)or perhaps to grow the fund.
So this is not a cynical rort; the whole purpose is to expand charitable donations, which it will do. Even the government accepts that. What they don’t like is the fact they do not control charities, except by the very wide definition of “charitable purpose”, and that does not really give any control.
Wayne Mapp
Vote:February 27th, 2007 at 8:43 pm
I bet this has the slimy socialists shitting their pants. How can anyone in there right mind give extra money to charity and not our beloved pack of theives in Wellington.
Libellula get a life, I would suggest you have a nasty case of jealousy. For fucks sake whats your problem if someone wishes to help a charity by the way of a large donation thats their good luck. And if they happen to get a large tax break, great, prehaps they will be happy to give again.
I’m with Porcupine when he says we should have more of our own money paid in tax to play with as keeping everyone poor is not helping the really poor. We need to generate wealth, lots of WEALTH.
The government takes billions of dollars of our money, much of this they claim goes into supporting charities and still we have charities that struggle to make ends met. Still the theiving government wants more, it must be obvious the state dosen’t have the right policys. I think a change is long overdue. It would appear the government doesn’t want a bar of this tax policy as it will take from the state and give to thoses that really need help.
Vote:February 27th, 2007 at 8:53 pm
I agree with libellula.
There are only two overdue policies that we are in desperate need of:
1. That people should stand on their own two feet and take responsibility for their own actions, and only expect charitable help to get them back on their feet again
2. That we should get some of our tax money back so that we can help the real “underclass” of this society – our children who are finding our country unaffordable to live in.
These problems have arisen because of 50 years of “modern baby kissing” and blatant vote buying like the policy described in this post. If NZers cant see passed this then there is no hope. Governments over the last 50years have spent their time inventing ever more creative ways of spending the tax money that they have found themselves wallowing in because of high taxation and inflation. During that same time all social indicators have got worse exponentially. so excuse me for being cynical when I see more of the same.
Charities law needs a total overhauled. Only large charities should be allowed and subject to very close audit. All small “charities” like Pipi foundation crap should be closed down.
50 year have proven that throwing money at social problems only makes them worse. Lets see through the scams and use the money to progress our society into a place where people who work here can afford to live here (like our children).
Wayne – no. Overseas the wealthy become poorer giving to charity. In NZ the poor become wealthier working in the charity industry. Some charities do great work but many do not. Many are very politically active. “Don’t NEED to control charity” – Many charities are the left had of labour-type government like some big businesses are their right hand.
Vote:February 27th, 2007 at 10:03 pm
If national adds policies that allow people to opt out of the State system to go private in Health and Education in return for lower taxes etc they will knock Labour for six.
How can you really argue against giving people more choice while freeing up State resources for those who remain on it…?
Although they will try….dicks.
Vote:February 27th, 2007 at 10:14 pm
Lets try and get the comments on this post back on track, shall we? Sane people of the web, reclaim the blog! Porcupine – I suggest you go park yourself alone on an island somewhere – living in a community must be very stressful if the thought of either government OR charities helping people is such a problem for you.
Libellula – lets rephrase your post just a little, so we can illustrate that government collecting more money than it can sensibly use is also a problem:
“The bloated “agencies” will be all set up overnight.
The definition of government’s role is already very loose in NZ.
They dont even have to even spend their money on anything that works.
This is another huge tax sinkhole to be created by Labour so there meddling social engineer mates can have their idiot schemes in Wellington funded by public money.
Oh they might sling the Salvation Army $10K , to help out the underclass of course, but siphon off $500k out of the reach of the taxpayer.”
Great to see National coming up with some genuinely radical thinking rather than just tweaking rates and thresholds. Avoiding abuse will be harder than Wayne Mapp suggests but not impossible – some tightening of charitable purposes and auditing money-go-round schemes will be needed.
Vote:February 27th, 2007 at 10:26 pm
The fear of people evading tax seems greater than the concept that if some-one donates a slice of their income, why should they pay tax on it too?
The issue here is that tax money gets taken up front, and then if you legitimately donate more than the $1800 per annum, you don’t get the tax back. That’s just pure socialist greed.
If a person earns 100K, but donates 10K, then being taxed on the 90K remaining seems fair. Instead, they currently pay an extra $3,900 to the state for their generosity.
The current cap is ridiculous. This is a good policy, and its rationale is equally a good way of drawing examples of how people can be given positive incentives to help out, rather than the disincentives Labour likes to promote.
This was excellent, politically of Key, to release this policy and refer back to his January speech to explain how he aims to deliver a change in attitude. I suspect we’ll see more policy released over time that will relate back to this, and the public will see there is a positive differentiation over Labour.
Vote:February 27th, 2007 at 11:19 pm
Clutching at straws
Vote:February 27th, 2007 at 11:27 pm
Johnmacc you criticise me then agree with me about tighter controls on charities. Let the record stand for itself. The more money we throw at social causes the worse it gets. 1950 – 2 murders 25% tax, 2005 >70 murders and >35% tax not counting user pays and GST.
Now National is proposing to redistribute the social spending in a different manner that all – you still have to pay it or not get your tax back. Abuse will be rife – it already is.
So now with Key determining National policy who speaks for us? poor hard workers who have to pay for all this social engineering clap trap.
Vote buying, pure and simple. (and the mdia love it).
Also james, “choice” is worse than the old system of “high tax but universality” (meaning everone gets to benefit fromthe high tax).
Now user pays just lets governments pick up the tab for their voters and leave the rest of to flounder. Great – they used to call it corruption.
Vote:February 27th, 2007 at 11:29 pm
He has stolen a march over Labour. Their policy will be very complex, they do not like private charity anyway. There will be some highly bureaucratic scheme that will be very expensive to administer and will not achieve results.
Vote:February 27th, 2007 at 11:58 pm
The policy prepares the way for faith based providers taking over the delivery of services to the poor – in the USA, this is part of the cultural war of dividing the deserving poor from the undeserving poor – one managed by religious group faith identity (fear of God) and the other by (secular poor to live in fear of the police) the prison and parole/probabation system (the unchurched underclass no one really wants to help, just lock away for a long time or intimidate into docile acceptance of their poverty).
This speaks to a means of government/management of the poor. While people are working to offer them a hand up at the local level there is no campaign/cause to change the societal structutres which result in the circumstance of poverty in a society of great wealth. The celebration of charity and the examples of its working will be promoted – but the poor will remain with us even so. And no doubt in the USA the disparity in wealth will increase while this is done.
Those in the religious groups who care will be praised while part of the charade, otherwise they will be too busy coping with the impact of cutbacks in public programmes to understand what has happened.
This is likely part of the right’s love of devolution of public provision to private providers – despite the cost and failure of US health care, which few elsewhere seriously consider implementing.
Vote:February 28th, 2007 at 12:03 am
I suppose one might say I am not opposed to this measure of itself that much, just wary of what it is leading to.
If existing public programmes are to be diminished, then this move does not end up being positive at all. It becomes the vehicle for public policy neglect.
Vote:February 28th, 2007 at 12:40 am
Cullen is gutted that Key is going to get credit for this http://www.beehive.govt.nz/ViewDocument.aspx?DocumentID=28497 and is trying his best to say that Labour was about to do the same. If Labour claim they were about to announce similar changes (which I doubt would have been as far sweeping) then it is a bit rich to claim they would have proposed an idea to support “another huge tax loophole to be created by national so there ultra rich mates will have their vineyards in Waiheke controlled by a private charity.”
Remeber we just lost 10′s of millions in charity from the founder of Kathmandu because of our crappy laws. Sounds like a fair law change no matter who proposed it.
Vote:February 28th, 2007 at 12:51 am
To summarise,
National’s tax cut policy is to cut taxes as long as you give the money away.
“We need to generate wealth, lots of WEALTH”
- most sensible words said – we need to generate wealth not rearrange the govt bank vault while we count our lose change.
Vote:February 28th, 2007 at 8:59 am
There are many charities that are doing far better (and cost-effective) work than equivalent government agencies, that I would be very keen to see their scope increased. For example, rather than pass Sue Bradford’s anti-smacking bill, teach parents how to raise children (and the best provider is Parents Inc). I would happily divert more of my hard-earned income to them.
I’m appalled that objectors to this policy automatically assume the worst of well-off people. NZ has a reputation for being generous. This policy can only encourage that characteristic.
Those who denigrate the idea — do you think CYFS does a great job? How about WINZ? Housing NZ?
Vote:February 28th, 2007 at 10:02 am
I bet this has the slimy socialists shitting their pants.
This slimy socialist isn’t shitting his pants. I fully support the idea.
Vote:February 28th, 2007 at 10:12 am
To those who may not have noticed a Charities Act was recently introduced and indeed registrations under the new Act started on the 1st February. In short this legislation drawing on excellent examples particularly in the UK will minimise if not eliminate any shonky ones.Hats off to the Socialists for introducing this legislation. Although it is still a bit of a sledge hammer to crack a walnut no doubt some tweaks over time will round off the rough edges. So to those quivering and shaking that the rich bastards are going to rort the system I say Rest easy Dont panic.Give Give until it hurts to your favourite charity. Rememeber The life you save may be your own.
Vote:February 28th, 2007 at 10:26 am
As a “slimey socialist”, I wholeheartedly approve of Key’s policy statement. I may not trust National as far as I (or anyone) could throw Gerry Brownlee, but I do admire Key’s initiatives and his ideas. Let’s face it – at the end of the day, it’s having ideas that will work for the most people and putting them into practice that’s important.
Vote:February 28th, 2007 at 10:59 am
“I’m appalled that objectors to this policy automatically assume the worst of well-off people”
I agree! But it is human nature – the few who might abuse this (given the chance) get a lot more attention & the lazy observer deduces that all are like that.
Not that dissimilar to beneficiary, maori & muslim bashing.
I like the sound of this policy – but if this were election year Labour would no doubt implement it next week to pull the rug out from under JK.
As it is, they’ll wait to see what the public think & steal it wholesale later in the year.
Vote:February 28th, 2007 at 11:59 am
Agree with you llew I fear JK releasing policy at this stage is just allowing the Socialists the chance to implement and gain the kudos. The vast unwashed dont know or care whose idea it was first just who was the government who passed it.
I just hope JKs got some big stuff come election time.
Its no point firing off all your shots before the big performance as the actress said to the bishop.
Vote:February 28th, 2007 at 12:04 pm
So soon you all forget the Pipi Foundation, a “charity” which spent money on cosmetic surgery and shoping sprees.
But the funny thing that was all OK for a charity. Donna was only caught out by spending public money. If the money was given by a private individual there would be no problem.
Thats how the tax deductions will work.
Set up a charity to employ the wife and kids, she does lunch once a week and a few social functions , all good causes but is paid a wage as Dirctor of the charity, plus the cost of tickets to social functions. Not much money to help the needy left over to go to real charities
Plus National and ACT will use this to channel funds for them via ‘charities’ which include party polictical purposes amoung their aims
Vote:February 28th, 2007 at 12:22 pm
Monckton – you really should read the up on the new Charities Act and the rules that it puts in place for charities. Basically it is a harder now to get the IRD tax exempt status and comes with all sorts of auditing requirements. Through work I am involved with a such a trust and if I was looking to minimise my tax (and had the money to make it worthwhile), you can be very sure that there would be easier options than this!
Cheers, Chris W.
Vote:February 28th, 2007 at 12:35 pm
Hi Chris W , you say, “ Basically it is a harder now to get the IRD tax exempt status and comes with all sorts of auditing requirements”.
Can you please expand as I have recently received the Certificate of Incorporation for the Children Need Parents Trust and I was wondering how long and what kind of bureaucratic quagmire from the IRD can I expect to be swimming in?
Any advice would be appreciated. Cheers.
Vote:March 1st, 2007 at 10:08 am
Dad4 , dont be a cheapskate ,pay for a lawyer.
But this is exactly the sort of vainglorious ‘charities’ we dont need.
Didnt Fay Richwhite use a ‘charitable trust’ as one of their vehicles in the BNZ debacle of the late 1990′s.
Vote:March 1st, 2007 at 3:58 pm
I don’t use lawyers. I DO NOT promote adversarial tactics for EFFECT.The truth does not NEED a lawyer !!!
Children Need Parents Trust is not “vainglorious” ??… whatever that means!!
Its just common sense = morals, faith that sort of stuff etc….etc….
Don’t get me started on Fay Richwhite mate, know all about that “saga ” as me old man was good mates with piggy and norm .
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