Donee organisations and application of funds overseas

Until now, non-profit organisations which have donee status with the IRD (where receipts for donations made to the organisation can be claimed for tax credits) have been permitted to expend up to 50% of their funds overseas. (Some organisations such as World Vision or Mercy Ships NZ have legislated approval under schedule 32 of the Income Tax Act 2007 and are not limited in this way)

The IRD is proposing to raise the level of a donee organisation’s funds that must be put towards projects etc in NZ to 75% (ie must limit funds applied to purposes outside NZ to less than 25%).  In its Draft Interpretation Statement on the subject, IRD proposes how the minimum 75% threshold may be calculated and suggests that donee organisations will be required to monitor their compliance with the threshold every year.

The IRD is inviting comment on the Statement up to 30 November 2017.  A two-page factsheet has also been created to highlight the main issues under consideration.

Donee organisations that have some level of overseas commitment are advised to read the statement and FactSheet.

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