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If your not-for-profit or charitable organisation does some of its work overseas, you need to be aware of the tax rules that may affect you.
If your not-for-profit organisation has donee status, individuals, companies or Māori authorities who make cash donations to your organisation may be able to get a tax credit or income tax deduction.
To qualify for donee status, your organisation must apply its funds wholly or mainly within New Zealand. From April 2019, we will generally accept that "wholly or mainly" means that an organisation applies 75% or more of its funds within New Zealand.
Read more about how to calculate whether your funds are applied wholly or mainly within New Zealand in our interpretation statement and fact sheet below.
If you do not apply your funds wholly or mainly within New Zealand, you can still get donee status.
To qualify for overseas donee status you must be specifically named in tax legislation.
Or your organisation could establish and maintain a fund exclusively for use in New Zealand. In this case, the fund, rather than the organisation, could hold donee status.
Business income used for charitable purposes in New Zealand is tax-exempt. However, if you use business income for charitable purposes in New Zealand and overseas, you must apportion your business income between charitable purposes in New Zealand and charitable purposes overseas. Only the New Zealand portion is exempt from income tax.
To keep their entitlement to an interest-free student loan, a student loan borrower who is or will be working overseas for you as a volunteer (or for token payment), can apply to us to be treated as being physically in New Zealand. Your organisation must be an approved charitable organisation.
We may approve exemption from income tax for a non-resident charity if they are unable to be registered with Charities Services under the Charities Act 2005.
Not-for-profit organisations and charities are at risk of being misused by individuals or other organisations to finance or support terrorist activity or assist money laundering.
New Zealand is a member of the Financial Action Task Force (FATF), an inter-governmental organisation that sets international standards for combating money laundering and terrorism financing. These standards require member countries to identify the subset of not-for-profit organisations that are likely to be at risk of terrorism financing abuse.
The not-for-profit and charitable organisations at most risk of terrorist abuse:
If your organisation sends funds overseas, we expect you to have internal controls to ensure the tax relief is targeted appropriately.
You should have procedures to: