Tax rules for charitable giving are changing

Submitted by catwalk on Fri, 04/18/2008 - 15:13.

The changes, effective from the 2008/09 income year, include:

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  • The removal of the $1,890 rebate threshold on donations made by individuals
  • The removal of the 5% deduction limit on donations made by companies and Maori authorities.
  • The company deduction for the donations will be extended to include unlisted companies with five or fewer shareholders
  • The changes recognise the significant contribution made by the charitable and non-profit sectors to the well-being of our communities, and foster a stronger culture of charitable giving in New Zealand.

How will the changes work?

For individuals

  • The $1,890 threshold for which individuals can claim a tax rebate for cash donations to donee organisations will be removed
  • Individuals will be able to claim a 33 1/3 % tax rebate for donations, up to a maximum claim equal to their annual taxable income.
For companies

  • The 5% limit on deductions that companies can claim for cash donations to donee organisations will be removed
    - Companies will be entitled to a deduction for donations made to donee organisations, limited only by the amount of the company's net income
  • The donation deduction is also being extended to unlisted close companies (companies with five or fewer shareholders)
    Under the current law, Company Ltd is entitled to a tax deduction of $10,000.
    Under the new rules, the full $20,000 can be deducted. The tax deduction will be included in the company's income tax return (IR4).
    For more information visit - http://www.ird.govt.nz/news-updates/like-to-know-tax-rules-charity.html
    Date published: 19 Dec 2007