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Overseas based or carrying on activities overseas
The Charities Act does not specifically deal with international charities and activities. They assess each application they receive on a case-by-case basis, based on the criteria set out in the Act.
New Zealand entities will not fail the charitable purpose test simply because they have an overseas purpose or their public benefit is directed overseas (for example, a New Zealand charity established with the purpose of relieving poverty in another country).
However, to be eligible for registration under the Charities Act, overseas charities must either be established in New Zealand or have a very strong connection to New Zealand so that CS are able to monitor the charity and carry out our compliance functions.
Can we use our funds on a charitable purpose outside New Zealand?
You can use your funds for overseas charitable purposes if your rules permit funds to be spent overseas.
If you intend to change the proportion of income expended overseas, you should update your details. However, a charity with mainly overseas purposes may not qualify for donee status under the Income Tax Act 2007. You should refer to Inland Revenue for information about how this may affect your tax liability.
What does 'established in New Zealand' mean?
To be registered under the Charities Act, charities do not have to be incorporated.
However, if an overseas organisation is an incorporated body, it must be incorporated under New Zealand law to be considered 'established in New Zealand'.
For example, an overseas company must be incorporated here under the Companies Act 1993.
If an overseas charity is not incorporated in New Zealand, Charities Services will have to decide whether it has a 'very strong connection' with New Zealand.
What does 'very strong connection' mean?
If an overseas charity is not incorporated under New Zealand law, it can still be registered under the Charities Act if it has a very strong connection to New Zealand so that Charities Services is able to exercise its monitoring and enforcement powers in relation to it.
In reviewing the connection an overseas charity has with New Zealand, CS will consider matters including:
whether it has a centre of administration here;
- how many of its officers are resident here;
- how much of its property is held here; and
- if it has any other strong connection with New Zealand.
- matters that could help CS to decide whether any other strong connection exists for the purposes of monitoring and enforcement include:
being able to exchange information easily between New Zealand and the overseas charities home country
- being able to easily get information about the overseas charity, including whether an officer or the charity itself has been found guilty of "serious wrongdoing"
- whether the overseas charity has a purpose aimed at the public of New Zealand or carries out activities in New Zealand.
Inland Revenue administers charitable tax exemptions from things such as income tax, and gift duty for people who give gifts to charitable entities. Inland Revenue generally accepts Charities Services’ decisions regarding charitable registrations, so in most cases tax exemptions are approved.
Inland Revenue has more information on their website, www.ird.govt.nz , and CS recommend reading their guide: Tax information for charities registered under the Charities Act 2005 (IR256) [PDF, 65 KB].
When a charity is registered as a charitable entity, CS advise Inland Revenue. Conversely, CS also advise them of organisations who have been deregistered for any reason.
A registered charity need only contact Inland Revenue directly if there is a possibility that a tax return needs to be filed (if it is thought that there is taxable income), or for other tax matters such as GST, PAYE or changes to records.
Organisations do not need to be registered with Charities Services in order to apply for donee status from Inland Revenue.
With an organisation having approved donee status from Inland Revenue, individuals can claim a tax rebate for a donation that they make to that organisation. In addition, companies and Māori authorities can claim a deduction for donations made to an organisation with donee status.
Registered Charities receiving donations / koha generally receive donee status from Inland Revenue.
As part of the application process to become a Registered Charity, organisations are asked if they intend to receive funds from donation / koha. If charitable status is approved, your details will then be supplied to Inland Revenue and donee status is usually granted.
Note: If you spend money delivering your charitable purpose overseas (providing disaster relief, delivering aid and so on) Inland Revenue will assess your eligibility for donee status differently. Refer to Inland Revenue's website for more details about overseas donee status.
What information do charities need to put on a receipt for a donor?
Donation receipts need to show:
the name of the donor(s)
- the amount and date of the donation
- a clear statement that it is a donation
- the signature of an authorised person, and
- an official stamp with the name of the approved donee organisation.
Getting a replacement receipt
If a donor needs a replacement receipt, the same information needs to be on it as on the original receipt. The word "Copy" or "Replacement" should be clearly visible on the receipt.
If a donee organisation issues a receipt that has later been refunded, they must advise the donor to destroy the receipt. If the donor has already made the claim for the donation, the donor must advise Inland Revenue, as their tax credit (formerly called a "rebate") will need to be adjusted.
While it is not a requirement to put your charities registration number on receipts, Charities Services encourages you to use this number on all promotional material.