Speech to the Association of Development and Alumni Professionals in
Samuel Marsden School, Karori, Wellington
Embargoed to 3.30pm, Friday, October 26
Hon Peter Dunne, Minister of Revenue
Thank you for inviting me here today to update you on the government’s
programme to foster a stronger culture of charitable giving in New Zealand.
This programme arises because of the Confidence and Supply agreement
between UnitedFuture and Labour.
It recognises the significant contribution made by the charitable and
non-profit sectors to the social, cultural and economic well-being of our
My party is strongly committed to the voluntary and community sector and
hugely supportive of the work sector does and the contribution to our
national wellbeing, and we want to encourage and promote it at every turn.
Before I tell you about the latest developments on the charitable giving
front, let me recap briefly what we have achieved to date.
As you know, Budget 2007 kick-started a number of positive developments for
the non-profit sector.
These developments included a number of tax incentives to encourage greater
generosity in donating to non-profit causes.
Under the new incentives, the current caps on the dollar amount of
charitable donations that are eligible for tax relief have been removed.
This means that individuals will no longer be restricted by the current
$1,890 donation limit for tax rebates.
The clear intention of this change is to encourage those who are already
donating substantial amounts to non-profit causes to donate even more
For the same reason, the 5 percent limit for tax deductions on donations
made by companies and Māori authorities is being removed, and also extended
to unlisted companies with five or fewer shareholders.
These changes are included in the tax bill currently before Parliament,
which once enacted, will bring the new incentives into effect from 1 April
Together, they represent a significant first step towards recognising the
importance of charitable giving in helping to deliver the services we need
to make a positive difference in our communities.
Our next step is to look at how we can make it easier for people to donate
their time and money for the benefit of others.
There are several ways we could approach this.
In the coming weeks, the government will be releasing two papers for public
consultation, which describe how we might remove some of the current
obstacles for people who want to donate their time or money for charitable
The first paper, which is due for release at the end of this month, looks
at a number of possible solutions to the long-standing problem of taxing
honoraria and volunteer reimbursements.
Following the release of last year’s discussion document, Tax incentives
for giving to charities and other non-profit organisations significant
concerns were raised about the tax treatment of reimbursements and
honoraria paid to volunteers.
As the law now stands, volunteers and charitable organisations are often
unclear about their tax obligations relating to reimbursement payments for
Ultimately, this adds to the compliance costs faced by non-profit
organisations and can act as a deterrent to people offering their time to
Specifically, the paper seeks feedback on a number of suggestions for
clarifying the law and new options for the tax treatment of volunteer
reimbursements and honoraria.
The over-arching consideration for the government is to make it easier for
the estimated 437,000 volunteers and more than 90,000 organisations that
make up the charitable sector to comply with their tax obligations so they
can get on with their primary functions.
The second set of proposals for further developing a more generous culture
of giving are contained in a discussion document due for release in
This second paper looks at how we might introduce a payroll-giving scheme
to New Zealand.
Payroll-giving schemes have been well-received in a number of other
countries, including Australia and the United Kingdom, for their
simplicity, convenience and effectiveness in facilitating charitable
Payroll-giving schemes also have the potential to increase donation levels
and establish genuine partnerships between businesses and the community,
while supporting employees’ community activities.
The discussion document puts forward a number of suggestions for
implementing an appropriate payroll scheme that would balance the needs of
New Zealand employers with the expectations of employees wishing to
participate in this type of scheme.
However, before any changes can be made, detailed consultation is required
to ensure that any new approach is easy to administer and does not raise
excessive costs for employers.
On that subject, I want to emphasise the important role that consultation
plays in this process.
Feedback to the first discussion document, Tax incentives for giving to
charities and other non-profit organisations, continues to be instrumental
in helping to shape the government’s response to the whole question of
For example, feedback on the government’s initial proposal for increasing
tax relief on donations suggested the measure did not go far enough in its
intention to give greater incentives for people to make charitable
The government agreed, and adjusted the proposed policy accordingly.
Given the quality of feedback on our programme of reforms for strengthening
charitable giving so far, I am confident of a similarly constructive
response to the second round of proposals on payroll giving and the
treatment of reimbursements for volunteers and honoraria.
We will also be looking at other mechanisms for delivering tax relief for
charitable donations. Among the measures under consideration are gift aid
schemes, similar to that in the United Kingdom, which makes it possible to
claim tax deductions for non-monetary donations.
Finally, I want to make a brief comment on some recent ill-founded
political speculation that charities stand to lose their tax-exempt status
if they are not formally registered under the new Charities Act by July 1
This claim is simply untrue, and I hope it was based on ignorance rather
than mischief making.
The position is simply this – charities who have submitted a valid
application for registration by July 1 next year will retain their tax
exempt status, even though their application my not have been approved by
I hope you have a successful conference, and look forward to your continued
contribution to our work in reforming the tax rules on charitable giving
for the benefit of everyone involved.