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New Zealand law explained for everyone

Income Tax Act 2007

Deductions - Specific rules for expenditure types

DB 41: Charitable or other public benefit gifts by company

You could also call this:

“Companies can reduce their tax by donating to approved charities”

When you own a company, you can get a tax deduction for gifts you make to approved charitable organisations. This means you can reduce the amount of tax your company has to pay.

There are some rules about these charitable gifts:

You can only deduct up to the amount that would have been your company’s net income for that tax year if you hadn’t made the gift.

You can’t deduct the amount of a gift if it’s an asset that’s ignored for tax purposes under section HR 12.

This rule doesn’t apply to local councils.

The deduction follows the general permission rule, which means it’s allowed unless another rule says it isn’t. The general limitations on deductions still apply to these gifts.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513686.

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Money and consumer rights > Taxes
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Part D Deductions
Specific rules for expenditure types

DB 41Charitable or other public benefit gifts by company

  1. Repealed

  2. A company is allowed a deduction for a charitable or other public benefit gift that it makes to a donee organisation.

  3. Despite subsection (2), a company is not allowed a deduction for the amount of a charitable or other public benefit gift it makes, to the extent to which the amount is, for the company, an asset ignored for the purposes of section HR 12 (Non-exempt charities: treatment of tax-exempt accumulations) and described in section HR 12(3)(a).

  4. The deduction for the total of all gifts made in an income year is limited to the amount that would be the company’s net income in the corresponding tax year in the absence of this section.

  5. This section does not apply to a local authority.

  6. This section supplements the general permission. The general limitations still apply.

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Notes
  • Section DB 41(1) heading: repealed, on , pursuant to section 340(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
  • Section DB 41(1): repealed, on , by section 340(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
  • Section DB 41(2): amended, on , by section 74(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
  • Section DB 41(2): amended, on , by section 340(2)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
  • Section DB 41(2): amended, on , by section 340(2)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
  • Section DB 41(2B) heading: inserted (with effect on 14 April 2014), on , by section 151 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
  • Section DB 41(2B): inserted (with effect on 14 April 2014), on , by section 151 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
  • Section DB 41(3): amended, on , by section 340(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
  • Section DB 41(3B) heading: inserted, on , by section 68(1) (and see section 68(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
  • Section DB 41(3B): inserted, on , by section 68(1) (and see section 68(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
  • Section DB 41 list of defined terms close company: repealed, on , by section 74(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
  • Section DB 41 list of defined terms company: repealed, on , by section 74(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
  • Section DB 41 list of defined terms local authority: inserted, on , by section 68(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
  • Section DB 41 list of defined terms recognised exchange: repealed, on , by section 74(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
  • Section DB 41 list of defined terms share: repealed, on , by section 74(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
  • Section DB 41 list of defined terms donee organisation: inserted, on , by section 74(2)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).