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Charitable organisations can receive many types of income, including subscriptions, grants, subsidies, donations or koha, fees, raffle money, trading profits, and proceeds from selling assets. There are income tax exemptions available if they are registered with Charities Services.
You can find out how to register with Charities Services on their website.
Once Charities Services have approved your registration, they will write to you to confirm this.
As the registration process of Charities Services meets most of the requirements for income tax exemption, you don't have to provide us with your organisation's founding documents. We no longer issue letters confirming tax-exempt status. However, if you require an exemption from RWT (resident withholding tax) you will need to complete an Application for exemption from resident withholding tax on interest and dividends (IR451) and send it to us.
You will be expected to self-assess your tax-exempt status annually.
You can find more information in our guide Charities and donee organisations (IR255)
Some organisations may have rules that prevent additions or alterations to the charitable objects, personal benefit and winding up clauses without first getting our approval.
If you are registering your charitable organisation with Charities Services, we don't need to give approval for changes to rules. Instead, we give general consent to any amendment removing such a rule. We recommend that you remove this requirement from your rules.
Charitable organisations are liable for income tax if they:
Income tax rates can vary for your organisation, depending on whether you're incorporated or unincorporated. You may also need to pay provisional tax.
Any type of charitable organisations you are running will need an IRD number.
You can get an IRD number by completing an IRD number application - resident non-individual (IR596) form.
You may also need to register for GST and PAYE.
The Income Tax Act 2007 sets out a number of income tax exemptions. Some of these exemptions give benefits to charitable organisations and some give benefits to people or companies who make donations to these organisations.
There are generally two main conditions that a charitable organisation must meet to qualify for any of the exemptions:
If your charitable organisation is assessed as being fully exempt from income tax, you don't need to file an income tax return unless we ask for one. However, you still need to keep accurate records for the organisation.
Banks and other financial institutions that pay interest are required to deduct RWT (resident withholding tax) from interest. Charities are eligible for an exemption from RWT. You can request an exemption from RWT (resident withholding tax) by completing an Application for exemption from resident withholding tax on interest and dividends (IR451) and sending it to us.