Radio New Zealand reported yesterday that Finance Minister, Nicola Willis, stated that tax changes for charities, and closing of loopholes, will be announced at next year’s budget in May.

Taxpayers’ Union Acting Head of Campaigns, James Ross, said “this looks like a move in the right direction.”

“Businesses should be treated in exactly the same way by the tax system. Exempting a business’ profits from taxation because it is set up to fund charitable or religious activities is not the correct approach.”

“It’s inconceivable that all of the profits are used for these activities. Most businesses fund capital replacements and expansions entirely, or at least partly, from retained profits. These expenditures are not charitable activities and, in the normal course of business, are funded from after-tax profits.”

“The correct approach is to tax the profits made by all businesses in the same way and then to provide the appropriate tax rebates to any profits distributed for qualifying charitable activities.”

“This is how the system works for all other businesses and individual taxpayers. It should be no different just because a business operates to fund charitable activities.”

“The current arrangements provide an unfair competitive advantage to businesses that have a broad charitable purposes tax exemption, because profits reinvested in the business are not taxed, unlike all other businesses. The Government is correct to fix this anomaly in the tax system.”

NOTES:

The New Zealand Taxpayers’ Union is an independent and membership-driven activist group, dedicated to being the voice for Kiwi taxpayers in the corridors of power. Its mission, lower taxes, less waste, more accountability, is supported by 200,000 subscribed members and supporters.

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