Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Exempt income

CW 41: Charities: non-business income

You could also call this:

“Tax-free income for charities that isn't from business activities”

This law is about income for charities that isn’t from business activities. You don’t have to pay tax on some types of income if you’re a charity. This includes:

  • Money you get while you’re registered as a charity, even if you’re later removed from the charity register.
  • Money that trustees get for charitable purposes.
  • Money that organisations get if they’re set up only for charity and not to make money for individuals.

But there are some rules. You need to be a ‘tax charity’ when you get the money. A tax charity is usually registered under the Charities Act 2005. If you’re not in New Zealand, you might still be a tax charity if the Commissioner of Inland Revenue approves you.

This law doesn’t apply to money from businesses run by or for charities. It also doesn’t apply to most council-controlled organisations, except for some hospitals.

If you’re removed from the charity register, you might still be treated as a tax charity for a short time. This is to give you a chance to fix any problems with your charity’s rules.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513269.

Topics:
Money and consumer rights > Taxes
Previous

CW 40C: Te Pou Tupua, or

“Tax exemption for Te Pou Tupua's income, with specific exceptions”

Next

CW 42: Charities: business income, or

“Tax rules for charities running businesses”

Part C Income
Exempt income

CW 41Charities: non-business income

  1. The following are exempt income:

  2. an amount of income derived by a person who is removed from the register of charitable entities (the register) under the Charities Act 2005, if it is derived in the period starting with the day they are registered on the register and ending with the earlier of the following days:
    1. the day on which the person does not comply with the person's rules contained in the register:
      1. the day of final decision:
      2. an amount of income derived by a trustee in trust for charitable purposes:
        1. an amount of income derived by a society or institution established and maintained exclusively for charitable purposes and not carried on for the private pecuniary profit of any individual.

          1. This section does not apply to an amount of income if, at the time that the amount of income is derived, the trustee or trustees of the trust, the society, or the institution is not, or are not, a tax charity.

          2. This section does not apply to an amount of income derived from a business carried on by, or for, or for the benefit of a trust, society, or institution of a kind referred to in subsection (1).

          3. This section does not apply to an amount of income derived by—

          4. a council-controlled organisation, other than a council-controlled organisation operating a hospital as a charitable activity:
            1. a local authority from a council-controlled organisation, other than from a council-controlled organisation operating a hospital as a charitable activity on behalf of the local authority.

              1. Tax charity means,—

              2. a trustee, a society, or an institution, registered as a charitable entity under the Charities Act 2005:
                1. a trustee, a society, or an institution (the entity), that—
                  1. has started, before 1 July 2008, to take reasonable steps in the process of preparing an application for registering the entity as a charitable entity under the Charities Act 2005; and
                    1. intends to complete the process of preparing an application described in subparagraph (i); and
                      1. has not been notified by the Commissioner that the entity is not a tax charity:
                      2. a trustee, a society, or an institution, that is or are non-resident and carrying out its or their charitable purposes outside New Zealand, and which is approved as a tax charity by the Commissioner in circumstances where registration as a charitable entity under the Charities Act 2005 is unavailable:
                        1. a person who is removed from the register, in the period starting with the day they are registered on the register and ending with the earlier of the following days:
                          1. the day on which the person does not comply with the person's rules contained in the register:
                            1. the day of final decision.

                            Compare
                            Notes
                            • Section CW 41(1)(aa): inserted (with effect on 14 April 2014 and applying for a person for the 2014–15 and subsequent income years; and for an income year before the 2014–15 income year, but only for the first income year and subsequent income years for which the person files a return of income on the basis that subsections (1), (2), and (3) of section 30 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 apply for the relevant income year), on , by section 30(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                            • Section CW 41(2): amended, on , by section 20(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
                            • Section CW 41(4): substituted, on , by section 331 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                            • Section CW 41(5) heading: added, on , by section 20(2) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
                            • Section CW 41(5): added, on , by section 20(2) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
                            • Section CW 41(5): amended, on , by section 140 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                            • Section CW 41(5)(a): amended, on (with effect on 1 July 2008), by section 37(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                            • Section CW 41(5)(b): amended, on (with effect on 1 July 2008), by section 37(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                            • Section CW 41(5)(c): amended, on (with effect on 1 July 2008), by section 37(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                            • Section CW 41(5)(c): amended (with effect on 14 April 2014), on , by section 30(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                            • Section CW 41(5)(d): inserted (with effect on 14 April 2014 and applying for a person for the 2014–15 and subsequent income years; and for an income year before the 2014–15 income year, but only for the first income year and subsequent income years for which the person files a return of income on the basis that subsections (1), (2), and (3) of section 30 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 apply for the relevant income year), on , by section 30(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                            • Section CW 41 list of defined terms day of final decision: inserted (with effect on 14 April 2014 and applying for a person for the 2014–15 and subsequent income years; and for an income year before the 2014–15 income year, but only for the first income year and subsequent income years for which the person files a return of income on the basis that subsections (1), (2), and (3) of section 30 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 apply for the relevant income year), on , by section 30(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                            • Section CW 41 list of defined terms notify: inserted, on , by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
                            • Section CW 41 list of defined terms registered as a charitable entity: repealed, on , by section 20(3) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
                            • Section CW 41 list of defined terms tax charity: inserted, on , by section 20(3) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).