Who is a charity?

August 7th, 2014 at 12:00 pm by David Farrar

The Herald reports:

has won the right to register as a , the Supreme Court found today.

No. They have won the right to apply again.

Greenpeace has been involved in a lengthy court battle after a previous application to register as a charity was dismissed because it was found to be too political and its protests could land them on the wrong side of the law.

Today the Supreme Court found that political advocacy for a charitable undertaking is allowed.

It was a 3-2 decision which will now mean that almost anyone can be considered a charity. Family First certainly will be eligible now.

In light of this decision Greenpeace will now have to the right to apply to the Charities Board, formerly the Charities Commission, for reconsideration.

This decision made New Zealand democracy a little stronger, Greenpeace’s executive director Bunny McDiarmid said.

“It means that the Supreme Court has now recognised that trying to change our world for the better, and taking on government to do that, is a public good.

On that basis, the Labour Party is also a charity. So let’s make donations to all political parties tax deductible. I’d donate a lot more if I could claim it off tax!

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52 Responses to “Who is a charity?”

  1. kowtow (8,093 comments) says:

    One more reason ditching the Privy Council was so important to the left.

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  2. Stephen Franks (52 comments) says:

    It is too early for Greenpeace or any of these charities to celebrate. The Supreme Court decision is baffling http://www.stephenfranks.co.nz/political-advocacy-may-be-charitable/. Sadly they have made the law more uncertain.

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  3. adze (2,049 comments) says:

    If the law is so vague that it cannot distinguish between a charity that does measurable humanitarian work in the local community, and a deceitful, politically partisan lobby corporation, then perhaps it needs to be looked at.

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  4. anonymouse (709 comments) says:

    I get the feeling that there will be some “clarifying” legislation if Peter Dunne returns as part of any Nat-led government…

    Oh look I spoke to soon
    http://www.radionz.co.nz/news/national/251548/lobbyists-to-seek-charity-status

    “Internal Affairs Minister Peter Dunne said this latest ruling turned the existing understanding of charity on its head.

    “The argument has been that what people are supporting when they make a donation is the charitable work of those organisations, and that is normally pretty clear and tightly defined,” he said.

    “To now say there is a political or other advocacy component to this is going to change the equation.”

    Mr Dunne said it was too early to say what impact the ruling could have, but there may be a need to clear up the law further down the track”

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  5. Ed Snack (1,827 comments) says:

    “It means that the Supreme Court has now recognised that trying to change our world for the worse, and taking on government to do that, is a public menace that deserves taxpayer funding even though taxpayers disagree”

    Fixed that for “Bunny”.

    Do the public have the right to make submissions on such applications, as it’s our money they want to rort off overseas to subsidize their executives commuting by jet. I do hope that the Charities Commission takes honesty and truthfulness into account in a positive sense, that is actually having it in contrast to Greenpeace’s stance that such “virtues” are optional.

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  6. Jack5 (5,001 comments) says:

    They want to be a charity because of the tax status. It’s time this was abolished.

    The concept of a “charity” has been greatly eroded by political groups like Greenpeace and Amnesty which are importing backpacker-type kids to hammer (on commission) on suburban doors badgering people to contribute X a day, Y a week, or Z a year.

    Then there’s the tax-free status of Ngai Tahu businesses and the Seventh Day Adventists under charity registration. The 2013 accounts show Ngai Tahu is paying company tax of something like a quarter of one per cent.

    Surely, the Salvation Army and similar worthy causes don’t tax-exemption to operate. If so, why?

    Unless there are other reasons than tax exemption, the legal status of “a charity” should be abolished. Incorporated society status, which some “charities” already have, should provide for other legal requirements.

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  7. Scott (1,759 comments) says:

    Interesting point DPF and you hit the nail on the head with family first.

    The difficulty has been that Family first believe that they have been unfairly targeted for deregistration as a charity because they have political views, particularly on gay marriage, that the present government does not agree with. Their concern is that charities who the government does agree with are able to carry on as charities while those who they disagree with are not.

    So whatever the outcome the law needs to be consistent and not applied selectively to favoured politically correct charities.

    It appears that family first were targeted for deregistration because of the gay marriage debate.

    Lastly it is certainly conceivable that charities will from time to time advocate in the political arena on issues that affect them. For example we could imagine that Forest and Bird would advocate to the government on conservation issues. So I would hate to see a ruling that did not allowed charities to advocate to the government on issues that concerned them.

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  8. Redbaiter (8,226 comments) says:

    Nikki Papatsoumas, poor wee thing only recently graduated to journalism from a politically corrupt training system, she has no chance of writing an objective and informative report on this issue. It’s typical that her “go to” person is Bunny McDiarmind, and she prints her comments with gullible enthusiasm. Just the same old Green Left Daily propaganda that characterizes the NZ Herald.

    This should have been a piece that scrutinizes the decision, and did not just pander to a gang of eco-religious job destroying progressive/ socialist propagandists.

    But that only happens in real newspapers.

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  9. Bill Ted (91 comments) says:

    Well put Ed Snack. I have very little faith in our judges, because while they’re highly intelligent they also bend to their own ideology in their judgements, which benefits no one. Certainly not good law.

    I despise Greenpeace. They are not a charity. They’re an anti-capitalist group-think advocacy organisation. They no longer serve the environment, just their own socialist agenda and the desire to create a global slush fund so they can travel around the world.

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  10. ChardonnayGuy (1,194 comments) says:

    I must say I’m appalled at the decision for exactly the opposite reason. Obviously I have diametrically opposed views about the legitimacy of Greenpeace and its environmental protection ethos to some of the other posters here, but I actually agree with them that Greenpeace should not be considered a ‘charity.’ There should be a separate statutory regime for lobby groups, which would fit Greenpeace, Family First and any other such organisation that would fit whatever legislative definition that Parliament might come up with.

    I despise Family First. It is not a charity. It’s a sectarian, religious social conservative partisan advocacy organisation and therefore a pressure group. They pursue their own militant fundamentalist agenda as subsidiaries of extraterritorial US Christian Right organisations that have no hesitation in targeting centre-right social liberals if it suits their objectives.

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  11. Redbaiter (8,226 comments) says:

    “I despise Family First.”

    Well as an advocate for GayNZ, you would wouldn’t you?

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  12. Ross12 (1,364 comments) says:

    Well we had Graham E disagreeing with Greenpeace’s interpretation yesterday and now Stephen Franks is saying it is not a clear judgement ( but probably Internal Affairs can stick to their original decision !! Great !!) So I think I’ll go along with the lawyers not Gp.

    I’d just ask the question –what charity work does Greenpeace do ?

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  13. cas (34 comments) says:

    Excuse my legal ignornace but if the vote was effectively 2 all before the Chief Justice had a vote, shouldn’t she vote for the status quo ie uphold the decision of the lower Court? Is there a retirement age for the Chief Justice? Some of her recent decisions are way out there.

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  14. anticorruptionnz (210 comments) says:

    The whole charity thing is up the shoot and he people who run the charities register dont know the first thing about legal structures of trusts .

    The animal welfare institute of New Zealand ( AWINZ ) made an application for law enforcement powers in 1999- there was no such organization it existed only in the mind of the man who wrote the legislation

    In 2006 when his assertions to the minister were proved to be false he needed to cover up.

    A trust deed dated 1.3.2000 materialized. it was proved that these people signed the document independently of each other and they never met as a trust or held assets. This trust by its own terms ceased 1.3.2003 when no other trustees were appointed and there were no reappointment.

    In 2005 the man who had made the false application in 2000 set up a bank account in the name of AWINZ , he received over $100,000 from a charity which was winding up

    In 2006 three people came together they called themselves AWINZ and commenced court action .

    In December 2006 these persons and one other signed another deed and claimed to be a progression of the 2000 trust and claimed the money as their own and used this to pay for the court action att achieved with the benefit of charitable status

    The man who had the purse strings got the better part of $50,000 for his efforts ( including perjury ) . AWINZ the charity has done nothing except pretend to be the law reinforcement authority as way of cover up

    the DIA claim that thee people are all one and the same group of person . Logic.. if it has the same name it must be the same person … lets not look any closer.. again face value

    Logic would not be on their side.

    again an example of why there is no corruption in NZ.

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  15. David Farrar (1,880 comments) says:

    Stephen: The Supreme Court seem to often make the law more unclear!

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  16. Colville (2,235 comments) says:

    why does a charity need to be exempt tax?
    If they have income of $100 and spend $100 on charity stuff they dont make money and dont pay tax.

    Greenpeace want charity status so all the money they send offshore to the Fat Cats is tax free!

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  17. gravedodger (1,541 comments) says:

    Apart from the clear and obvious disadvantage under MMP where someone failing to attract 1% of an electorate vote can still end up as a legislator, this is another massive negative for the system.

    MMP has turned many former lobby groups that had a significant and legitimate political niche positions, now regarded as a faction in a party group or worse still a party in their own right.

    The Melon Party is a classic revelation of this revolution.
    There are still many who originally joined the green wagon to “save stuff”, who are now still handing their support to a bunch of communist and hard left socialist usurpers sublimely oblivious their tree huggers have all been consigned to the knackers yard.

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  18. Barnsley Bill (983 comments) says:

    If greenpeace are a charity then so are coca cola, ford, McDonald’s and every other global corporation doing business in NZ.

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  19. peterwn (3,233 comments) says:

    As far as I know, tax rebates cannot be claimed for the portions of donations to charities which are subsequently remitted overseas.

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  20. lastmanstanding (1,261 comments) says:

    Jack5 Be very careful what you wish. As one who has worked for several real charities operating in the neurological disorder area they do work that Government thru its DHB’s and Ministry of Health don’t and wont.

    The Government contracts to these charities and pays at best 10% of their operating costs. they are told to go and get the other 90% from philanthropic trusts pokie trust COGs and shaking the bucket outside supermarkets.

    If you or any of your family or friends are every unfortunate to contract one of these diseases many terminal you and they will be very grateful for the services these real charities provide.

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  21. georgebolwing (733 comments) says:

    Having read the Supreme Court’s judgement in full (how many of the commentators above have done that?), I thought it was a very good judgement that has given both the Charities Board and the courts below a very clear message that Greenpeace should not be given charitable status.

    What the majority has said is that NZ law does not automatically exclude bodies with a political objective from being a charity (which is what the Court of Appeal had said), rather, the decision-makers have to look further at the objectives and means by which bodies with political objectives seek to achieve their objectives to determine whether they come within the four classes of “charitable purpose” that are encompassed within the existing law (the relief of poverty, the advancement of education or religion, or any other matter beneficial to the community).

    Even though Greenpeace has said it will change its objectives to align them with New Zealand’s current domestic law and international obligations (elimination of nuclear weapons and weapons of mass distraction), the Supreme Court judges have clearly signaled that the fact that Greenpeace’s methods (non-violent direct action) often involve at least trespass, it is highly unlikely that they will be able to claim that their activities are “beneficial to the community”).

    If I was Greenpeace, I would not apply for registration again, since to do so will be inviting the Charities board to make full inquiry into its methods, which is probably something that it wouldn’t want.

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  22. Ross12 (1,364 comments) says:

    Thank you georgebolwing –easy to understand for this layman. As I said on anther thread I think Greenpeace have been spinning this to “suit their PR” or they are getting poor advice.

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  23. georgebolwing (733 comments) says:

    Barnsley Bill

    You confuse the source of a charity’s earnings and the purpose to which those earnings are put.

    Sanitarium is the best publicly known example. Sanitarium is the trading name of New Zealand Health Association Ltd. The source of the funds of New Zealand Health Association Ltd is the production and sale for profit of food stuffs. The purpose of the body undertaking those activities (the Seventh Day Adventist Church, via the registered charity the New Zealand Conference Association, which is the owner of New Zealand Health Association Lt), is the promotion of religion.

    Thus, Weetbix funds religion with a tax subsidy.

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  24. alwyn (408 comments) says:

    cas @ 12.51 pm
    Why on earth should she be forced to vote for the status quo just because the other four judges split 2-2?
    Why do you think we have an odd number of judges if not to avoid deadlocks?
    As far as retirement age goes it is 70. Sian Elias will be 70 on 13 March 2019 so we have almost 5 more years of her judgements.

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  25. georgebolwing (733 comments) says:

    cas

    You also have clearly not read the judgement.

    The majority (Elias CJ, McGrath and Glazebrook JJ) are of the view, at least as I read the judgement, that it is unlikely that Greenpeace is a charity under New Zealand law, but that is a matter that needs to be determined by the Chief Executive of DIA and the Charities Board, with the assistance of the very clear guidence the Court has given as to how to undertake the necessary inquiry in the case of a body established with political purposes.

    The minority (William Young and Arnold JJ), in a short judgement, said that they were more inclinded to the view that advocacy in support of a charitable purpose is non-charitable unless it is merely ancillary to that charitable purpose.

    So, none of the judges are of the view that Greenpeace is clearly a charity. They all hold real doubts, some more strongly than others.

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  26. Jim Peters (10 comments) says:

    Mary Wilson spoke with Bunny McDiarmid last night. Mary was asking, in an obtuse way, why Greenpeace needed to be a charity. The questioning was, what was the disadvantage of Greenpeace not being a charity? Not being a charity does not stop you doing what you do. Bunny danced around an answer, relying on irrelevant tangents of noise.

    Normally Ms.Wilson’s questioning is more direct – why is it important that Greenpeace is a registered charity?
    I thought Ms. McDiarmid was let off lightly with a gentle soft-soaping.

    Anyone compos mentis knows it is purely for tax purposes and advantages.

    When Greenpeace cannot be honest about their reasons for wanting to be a charity, what can they be relied upon to be honest about? (rhetorical by the way)

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  27. georgebolwing (733 comments) says:

    Stephen Franks:

    I think those steeped the law of the taxation of charities will see this judgement as being very clear.

    In summary, what I think they are saying is:

    a) you have to look at the purposes for which the body is established (which has been long understood) and the methods it uses to achieve those purposes (this might be new);

    b) in the case of the forth charitable purpose (“other matters beneficial to the community”), a non-ancillary purpose of advocacy might not automatically disqualify a body (that is new: previously, the New Zealand cases have said that non-ancillary advocacy was always non-charitable, although the recent Australia High Court decision in Aid/Watch also is of the view that advocacy can be charitable, although importantly, the issue being advocated for was the relief of poverty, which could be used to distinguish Greenpeace’s purposes);

    c) whether advocating an idea (as opposed to undertaking a clearly charitable activity like feeding the poor) is something that is truly beneficial to the community is not clear cut, and just because the advocate thinks that their views are beneficial is not enough.

    d) advocating for peace might be charitable, but there is little judicial support for this notion (by way of commentary, I think that in times of actual war, advocating for peace might be seen by the Government and the Courts as not being to the benefit of the community);

    e) using illegal means to advance any charitable purpose is likely to disqualify a body from being a charity, which is the biggest hurdle the Supreme Court has put in the way of Greenpeace. I think here the judges have clearly given a clear steer to the decision makers that Greenpeace shouldn’t be a charity.

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  28. insider (1,035 comments) says:

    @ cas

    Sisn Elias is frequently out of synch with her colleagues. She is the most radical of the judges on the SC. Why do you think Clark put her there?

    ive read a chunk of the decision and it is not the big win gp claim.

    @ George bowling

    a lot of the sanitarium money goes into their schools and overseas aid organisation.

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  29. Colville (2,235 comments) says:

    peterwn
    So if someone gives $100 to Greenpeace the reciept will show “only $82 of this donation is tax deductable as the rest went overseas?”
    LOL

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  30. alwyn (408 comments) says:

    insider @ 2.55 pm.
    “Why do you think Clark put her there?”.

    When the Supreme Court was set up the five most senior judges in the New Zealand Court system were appointed to the court.
    Sian Elias was the Chief Justice of New Zealand, ie THE senior New Zealand judge and was therefore appointed. It would have been impossible not to have chosen her.

    As for how she became the Chief Justice? You will have to ask Shipley, not Clark for the reason. Elias was appointed as the Chief Justice in May 1999, when Shipley was the PM.

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  31. Tarquin North (244 comments) says:

    The dodgiest charity of the lot is the exclusive bretheren.

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  32. howitis (12 comments) says:

    Jack5 (12.20 pm) : Very good points. There are over 26,000 registered charities in NZ. I am not sure how many more we need. Few realise that these bucket-rattlers and door-knocker backpackers receive commission and often less than 30% of donations get to the recipient charity.
    I find it incongruous that if I buy Hubbard muesli the company is liable to tax but if I buy Sanitarium muesli (Seventh Day Adventist) they don’t pay any tax as they are a ‘charity’. OK!

    Personally I would like to see all churches removed as tax exempt. The Mormon church is sitting on over USD 200 Billion of managed funds plus many assets. I am not sure how much more money they need out of Manukau minimum wagers. The Catholic church is the world’s biggest landowner. Will they help Kiwis with the ‘housing crisis’? The $3 million given to the Auckland Anglican Cathedral by AK Council last year could have been used better in the fight to fund a huge deficit.

    I think deregistration is appropriatein many cases. Muldoon deregistered CORSO circa 1979 because they moved away from charitable activities to political activism. Rightly so.

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  33. ROJ (111 comments) says:

    Tarquin is right.

    Big areas around here are dairy farms owned by them, through opaque trusts. Follow the money!

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  34. Scott (1,759 comments) says:

    Thanks to George Bowling for your very educated posts on this issue.

    My main concern is that the definition of charity appears to have been applied selectively and in the case of family first they were notified that they would be deregistered as a charity once they started advocating against the gay marriage bill. Now whether you are for the gay marriage bill or against it the same rules should apply as to what is a charity and what is not.

    For their part the charities commission appears to believe that family first’s opposition to gay marriage makes them beyond the pale and therefore they should be deregistered.

    It appears that political correctness has become a major criteria for the bestowing of charitable status on an organisation and the government will punish those who do not conform to their views. This is wrong and why we need the courts to clear this matter up.

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  35. burt (8,167 comments) says:

    The CEO of Greenpeace flying to work each day in a private jet thinks it’s very important that minimal tax is paid in NZ. Fuel and landing fees are expensive and it’s more important to pay those than fund social services in NZ.

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  36. georgebolwing (733 comments) says:

    Thanks Scott.

    I do, however, think that your suggestion that “political correctness has become a major criteria for the bestowing of charitable status” is going to far.

    The cases on advocacy go right back to the 1890s and there is a clear line of authority in the UK, Australia and NZ, only really disturbed by the High Court of Australia in 2010, that non-ancillary advocacy of political ideas can never be charitable.

    What has changed in New Zealand is the advent of the Charities Act in 2005, which has made the administration of the definition more transparent and robust. Prior to that Act, IRD used to decide what was and wasn’t charitable and did some in an often ad hoc way. There was very little of post-registration review of the purposes and activities of charities.

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  37. Scott (1,759 comments) says:

    “Personally I would like to see all churches removed as tax exempt.”

    Yep them evil churches need to get taxed because hey like there is no way they do heaps of charitable work that is done by volunteers and saves money which the government would have to pay far more for the same services because they would be paying out salaries?

    I can only believe you are speaking out of ignorance.

    There needs to be the same rules for all charities both secular and religious and the government does not need more tax and some of you are statists that believe far too much in big government.

    Love the little platoon of small organisations in the community that do a lot of good and do not worry about the IRD, they will always get their fair share.

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  38. georgebolwing (733 comments) says:

    I have no problems with relief of poverty being a charitable purpose, nor education, regardless of the religious views of the provider of that relief. “Satanist against poverty” can get tax-free interest on their bank accounts for all I care.

    But it is pure religion that I have doubts about. I am note sure when religion per se became charitable, but I suspect that it was a combination of the status of the Church of England as the established church in the UK and the obvious mixing of work with the poor and oppressed with the ministering to the spiritual needs of the rich and healthy that churches do. So it was probably a pragmatic solution to add religion to the list.

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  39. ShawnLH (4,481 comments) says:

    “Personally I would like to see all churches removed as tax exempt.”

    Churches do a vast amount of charity work. Apart from militant secularism, there is no valid reason for removing their tax exempt status.

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  40. georgebolwing (733 comments) says:

    I don’t think its militant secularism, just a view that the pure advancement of religion shouldn’t be charitable.

    Just as groups like Greenpeace do currently with its separate educational charity, I would like to see churches required to split their relief of poverty activities from their ministering to the rich and healthy activities.

    What would be interesting if this went ahead (which I admit is extremely unlikely), is how far the courts would go in requiring religion to be ancillary to relief of poverty to enable churches to maintain their charitable status.

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  41. ShawnLH (4,481 comments) says:

    “I don’t think its militant secularism, just a view that the pure advancement of religion shouldn’t be charitable.”

    But the advancement of charity is, and most Churches engage in a large amounts of charity.

    Now if you could find a church that didn’t engage in any charitable work, that might be a fair call. But I suspect those would be few and far between. I certainly don’t know of any.

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  42. Akld Commercial Lawyer (165 comments) says:

    As a postscript to the other legal inputs, I am not greatly attracted to the view that the methods of achieving a charitable goal should have some bearing on the decision on whether the entity has a charitable purpose.

    My perspective on this is largely as a result of long involvement in the (amateur) sports sector – where sports have increasingly needed to tap into commercial revenue streams in order to survive. This, in turn, led the UK to make a useful modernisation of their statute – to provide that the promotion of amateur sport is, of itself, charitable.

    It is high time that there was an update in this country. Instead, we find ourselves dealing with law that goes back to Elizabethan times and the four heads of charity. The result, as we see here, is trying to stretch some outmoded concepts to fit the 21st century.

    In this context, I will leave it to the policymakers – but I am not sure that the law can be too prescriptive about the means by which a charity can / cannot raise funds to advance its charitable purpose (taking care to point out that I do think that a charity running a business – should not get a headstart against its commercial competitors by enjoying concessionary tax treatment).

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  43. Scott (1,759 comments) says:

    I say leave the churches alone as well as the 4 wheel drive club and other small community organisations that do not exist for profit making and do not pay out dividends, they should be left alone by the state.
    The burden of the church to divide religious from charitable activities would be immense and just is there to advance the personal animus of militant secularists in my view. The state gets enough tax, leave the small organisations alone!

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  44. ShawnLH (4,481 comments) says:

    “I say leave the churches alone as well as the 4 wheel drive club and other small community organisations that do not exist for profit making and do not pay out dividends, they should be left alone by the state.”

    I agree.

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  45. georgebolwing (733 comments) says:

    @ Akld Commercial Lawyer

    The government of the day decided deliberately in 2005 when the Charities Act was enacted not to alter the definition of charity, in part because of the storm of protest that followed the release of a discussion document in 2001 suggesting that the definition be modernized (see; http://taxpolicy.ird.govt.nz/news/2001-06-14-tax-and-charities-discussion-document-released). The proposal in the discussion document was;

    “A charitable purpose means a humanitarian purpose that, when viewed objectively, makes a direct positive contribution to the well-being of society as a whole.”

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  46. howitis (12 comments) says:

    ShawnLH (5.45pm) I think you need to be careful about saying ‘most churches engage in large amount of charity’.
    There is a some charitable work done under the auspices of some church groups. I donate to the Salvation Army. I see them as a active helpers of those in need. I don’t think of the religious side. They are good people who front up and help people that I would not engage with, to be honest.

    Presbyterian Support Services also does a lot of good work. But a sweeping statement is not appropriate. eg Young Mormons do a mission and the principal objective to get more members to increase future cashflows.

    The Catholic church has done much more harm in the last 100 years than good delivered. They are parochial and concerned with looking after their own. They have done huge damage and spent large amounts of donations from their parishioners to pay silence money. Multi multi millions in the USA. Is it fair this is tax deductible when society has to deal with the fall out? They have deliberately moved child molesters around parishes and then between countries without manning up and facing responsibility. They leave a path of destruction and damaged lives. Other organisations have to step in to help. If you read about or see a movie about the behaviour on the young girls at the Irish Magdalene Laundries your stomach may churn. Mine did. Even the Bank of Italy ceased processing credit cards payments for the Vatican Bank because of their money laundering associations. Yep you got it. I do not like the Catholic church and recent statements from the new pope are only talk and mean nothing until there is action.

    The automatic assumption that a particular industry type does good is open to question. Just like there are responsible farmers there also are irresponsible farmers. We got rid of SMP and other subsidies but they are still there and more efficient than before.
    I think a good mid ground is a sunset clause on deduction approval of maybe 5 years or 10 years. Then they reapply. Perhaps 5 years for their first time with proof of results and metrics. eg Number of meals delivered; number of teaching hours; number of calls answered on a crisis help line. If they are not measuring those they are not an organisation. Use some benchmarking and those dragging their feet in benefit delivery lose deductibility. IRD has done good benchmarking work in the last few years.

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  47. georgebolwing (733 comments) says:

    Scott and Shawn; you are confusing being not-for-profit and being a charity.

    Not-for-profit organisations enjoy a tax deduction of $1,000; meaning that those bodies which are not trading for profit, but have small amounts of income (say from a bank account), will not pay income tax. This covers all the many small clubs and bodies around the country. They might think of themselves as “charities”, but legally they are not, but the effect is the same; no income tax. The point is that their income is small and earning income is not their purpose.

    A charity is, at tax law, a profit-making body that uses those profits for a charitable purpose. This is for the big guys, like the churches, Sanitarium, Greenpeace (if they win): bodies with large amounts of business income that are using those proceeds for the good of others (as that is defined in the Charities Act).

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  48. scrubone (3,090 comments) says:

    A charity is, at tax law, a profit-making body that uses those profits for a charitable purpose. This is for the big guys, like the churches

    Churches don’t make profits. If they have money left over at the end of the year, if it’s not being done deliberately for something like a new building, they expand their charity work, or put it aside for future expansion of their charity work. The Presbyterians and Anglicans in NZ have significant resources, but all the income is used for their charity work, which is usually done very quietly and without fuss.

    The point is, no one is getting rich because they bought shares in a church.

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  49. Akld Commercial Lawyer (165 comments) says:

    @GB

    Thanks for your 7.29pm post. As I am sure you are aware, this has led to the workaround by many of the larger sports (and a handful of the littler ones) to set up a separate charitable trust as a funding conduit. Yet more admin and inefficiency that reduces the funding lifeline for something (namely grassroots sport) that the average Kiwi would regard as part of the fabric of the NZ that we knew and want our kids to continue to enjoy.

    Thanks again for efforts in educating the readers of this thread.

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  50. georgebolwing (733 comments) says:

    @ scrubone

    Continuing the masterclass on taxes and charities, the difference that the tax exemption that charities get is all about spending out of pre-tax income (what charities can do) and spending out of tax-paid income (what taxpayers like me have to do).

    From the charities register, we know that, to pick an example, that for the year ended 31/12/2012, the Anglican Dioceses of Christchurch earned gross income of $13,961,740, off total assets of $154,736,025. It had total expenditure of $12,647,763, leaving a surplus of $1,313,977.

    Now, tax exemption doesn’t mean that it gets to keep all of the surplus. What it means is that the difference between its total income and total deductions for tax purposes is not taxed. Some, how much I don’t know exactly but it looks like about $6,000,000 of its total expenditure, the bit that relates to its charitable activities, would not be deductible for tax purposes, since it is not incurred in earning income, it is the use to which the income is put.

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  51. SPC (5,531 comments) says:

    Donations to political parties leading to a tax refund is a step to towards matching funds.

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  52. BlairM (2,310 comments) says:

    Since I’m not left wing and think it’s a good thing if people pay less tax, I support the Court’s decision.

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