Types of education centres
There are four types of education centres:
- centres bound by the Education Act 1989 in its amendments
- charitable organisations
- non-profit bodies
Centres bound by the Education Act 1989 and its amendments
These are schools operated by boards of trustees. They include state primary, intermediate and secondary schools, private integrated schools, composite schools, Kura Kaupapa Maori schools, and special education schools. These schools are exempt from income tax by the Education Act 1989, but may have to pay other taxes, such as goods and services tax (GST) and fringe benefit tax (FBT).
These are centres that meet the criteria required of a charitable organisation. Charities are generally exempt from income tax and some duties, but may have to pay other taxes, such as GST and FBT.
These are generally community-based organisations with rules that prevent members from receiving any benefits. Some non-profit bodies are childcare, playcentre, kohanga reo, and community associations that have not been approved as charitable. The first $1,000 of a non-profit body's net income (taxable income after expenses) is exempt from income tax. However, it may still have to pay GST or other taxes.
If a centre is run to make a profit for its owners, it will be liable for income tax on its taxable income and may also have to pay GST or other taxes. Business development and training organisations may qualify as businesses.
Basic tax obligations
Whatever type of centre you are involved in, you will have some tax obligations.
These may include:
- making a number of tax payments each year - some of these may be for your Centre’s own tax liability, others may be on behalf of staff
- filing various return forms each year - these may be for income tax, GST, PAYE deductions and FBT
- paying ACC residual claims levy on employees' earnings
- calculating the profit from any business, to work out how much tax is due - this is also explained in our booklet Smart business - IR320
- keeping certain business records.