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Community housing entities may be entitled to a tax exemption on their income and be granted donee status.
This only applies to community housing entities that have been set up to provide housing or housing assistance for low income householders who may not otherwise be able to buy their own home.
Donee status means that when you make a donation to a community housing entity as:
The community housing entity must be registered as a community housing provider (CHP) under the Housing Restructuring and Tenancy Matters Act 1992. This register is administered by the Ministry of Business Innovation and Employment (MBIE). Go to the Social Housing Unit's website for more information.
It must also meet the following criteria to qualify for the tax exemption and donee status:
From 1 August 2016 the following income caps apply:
|If the applicant is a ...||then the income entry threshold is ...|
|single person||$85,000 or less.|
|group of persons||a combined income of $130,000 or less.|
If an applicant has previously held an estate in land, the following asset caps apply depending on where they are proposing to purchase a home.
Where an applicant has held no previous interest in an estate in land only the income cap applies. The total value of their assets held is unlimited.
|If the applicant buys a home in ...||then the asset value is ...|
|Hamilton City, Tauranga City, Western Bay of Plenty District, Kapiti Coast District,,Porirua City, Upper Hutt City, Hutt City, Wellington City, Nelson City, Tasman District, Waimakariri District, Christchurch City, Selwyn District, or Queenstown Lakes District||
|other areas in New Zealand||
Prior to 1 August 2016, these asset values were $110,000, $90,000 and $70,000 respectively.
Asset value is defined as the total value of property owned by the applicant, at the date of the application for housing or housing assistance, that is:
A single applicant who is purchasing in Auckland and who has previously owned a home must have income of $85,000 or less and assets of $120,000 or less to be eligible.
A single applicant who has held no interest in land will have no limit on their assets, but must still have income of $85,000 or less.
Mr and Mrs Jones are looking at purchasing a home in Taupo with assistance from a community housing entity. Mr Jones had previously owned a home but Mrs Jones had not.
Mrs Jones would meet the entry threshold provided her and Mr Jones's combined income was $130,000 or less. Mr Jones would meet the entry threshold provided he had assets of $80,000 or less and a combined income with Mrs Jones of $130,000 or less.
If more than 15% of the entity's beneficiaries or clients do not meet the entry threshold, the entity will not qualify as a community housing entity for tax purposes. This means the entity will not be eligible for the income tax exemption and donee status.
|If the entity has ...||then they ..|
|not had any new beneficiaries or clients since 14 April 2014||will qualify for the tax exemption.|
|only had one new beneficiary or client since 14 April 2014 who was not over the threshold||will qualify for the tax exemption.|
|had four new beneficiaries or clients since 14 April 2014 with only one over the threshold (25%)||won't qualify for the tax exemption.|
|had seven new beneficiaries or clients since 14 April 2014 with only one over the threshold (14.29%)||will qualify for the tax exemption.|
The entry thresholds have replaced the need for an Order in Council to determine eligibility for beneficiaries or clients.
You must ensure the entity is on the Community Housing Regulatory Authority register before you apply for the exemption. See the Social Housing Unit's website.
If your entity qualifies for the exemption, please write to us with:
If the entity does not yet have beneficiaries or clients, please confirm that you understand that if 15% of them exceed the income or asset threshold, the income tax exemption and donee status will cease.
If your entity doesn't have an IRD number you'll need to complete an IRD number application - resident non-individual (IR596)
Send your application to us at:
PO Box 39010
Wellington Mail Centre
Lower Hutt 5045
New tax rules were introduced for entities who have been removed (deregistered) from the Charities Register administered by Charities Services.
Under these rules a deregistered charity, in the year of deregistration, has to either apply its income and assets to charitable purposes or become liable to tax on the balance.
|If the entity ...||then the new rules apply from ..|
|asked to be removed from the Charities Register||14 April 2014.|
|was removed from the Charities Register by Charities Services||1 April 2017 ( extended from 1 April 2015).|
Read more information in our Tax Information Bulletins: