E aku nui, e aku rahi, tēnā koutou katoa
Koha is money, but it can also be goods or services. It’s given without any expectation on the part of the person receiving it. You will need to work out if you pay income tax on your koha on a case by case basis.
You do not need to pay income tax on your koha if:
- it’s given by choice
- the payer or giver gets no benefit or advantage in return
- it's not made so that it is income for you.
Working out if you need to pay income tax on koha
To work out if you need to pay pay income tax on koha look at the situation in which it was given. Here are some examples to help.
Marae committee provides overnight accommodation
Your marae committee provides overnight accommodation on the marae for tourists at a set cost per person. This is a service and payments received by the marae will be taxable income.
The marae pays income tax because the payments are not voluntary and the payers expected a benefit in return.
Marae committee allows access to marae land
Your marae committee agrees to let an American couple and their wedding party walk across the marae grounds to access a beach to take their wedding photos. No charge is made by the committee. The couple give a sum of money in appreciation. This is a gift and not taxable income to the marae.
They don’t have to pay income tax because the payment was given voluntarily and not for any benefit or advantage.
Parent provides food and other goods instead of kōhanga reo fees
Your kōhanga reo charges fees for children to attend. A parent provides food and other goods instead of paying fees for their child. The value of the food and goods is taxable income to the kōhanga reo.
This koha is taxable because it was not given voluntarily and the giver got a benefit.
Another parent at the kōhanga reo has paid the fees for their child, but has a surplus of vegetables from their garden. They give these to the kōhanga reo, which provides lunches for the children. This is a gift and not taxable income.
It’s not taxable as it was given voluntarily, did not benefit the giver, and gave no income to the kōhanga reo.
Waka ama group rents outrigger canoes to the public
Your waka ama group owns outrigger canoes which it rents commercially to the public. The rent is taxable income.
Your waka ama group has to pay tax as the rental payments are not voluntary and the payers got a benefit in return.
Situations that may change the tax status of a group
A marae or kōhanga reo registered as a charitable organisation with the Charities Services is exempt from paying income tax.
A marae or kōhanga reo approved by Inland Revenue as a non-profit organisation qualifies for a $1,000 deduction from the taxable income it receives.
Qualifying for the $1,000 income deduction as a not-for-profit
A waka ama group can be approved as a sporting body which is exempt from paying income tax.