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Tax-exempt fight – Abuse alleged

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A government review of the tax status of New Zealand charities has triggered opposition from charities, The New Zealand Herald reported July 16.

Revenue Minister Michael Cullen launched the review last week, believing that charitable status and charities’ tax benefits have been abused, the Herald said.

Charities are not losing their special tax treatment, he said.

“Instead, it is a matter of recognizing that the income tax exemption may give businesses run by charities an unfair advantage over their taxpaying competitors,” he said.

If charities keep their trading profits, he said, they should be taxed like any other business.

But John Lister, chief executive of the Spirit of Adventure Trust, is mobilizing opposition to the plan, the Herald said.

While a few charitable trusts may take advantage of their tax-free status, he said, it’s not necessary to change the rules for 37,000 just to “catch a few cowboys.”

The proposed new rules would redefine charity, limit tax exemption to groups registering as charities, requiring charities to file public accounts and allowing for the monitoring of charities to ensure they do the charitable work they were set up to do.

The government also wants to charge income tax on the trading operations of charities unless profits are used for the group’s chaitable purpoes in the same year.

Charities also would face the fringe-benefit tax now paid by  firms that provide cars for employees’ private use.

For full story, go to The New Zealand Herald.

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