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Not-for-profit and charitable organisations working overseas

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Donee status

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.

IS 18/05 - Income tax - donee organisations – meaning of wholly or mainly applying funds to specified purposes in New Zealand

IS 18/05 - Interpretation statement 18/05 Fact sheet – applying the “safe harbour”

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.

Find out more about charitable bodies requesting overseas donee status

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.

Find out more about funds in QB 19/10: Donations: What is required to establish and maintain a fund under s LD 3(2)(c) of the Income Tax Act 2007. Funds are also explained in our Charitable and donee organisations (IR255) booklet

Charities claiming a business income tax exemption

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.

For more information read our pamphlet Charitable and donee organisations - IR255

Charities with a student loan borrower working overseas

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.

Find out more about charitable organisations and the student loan scheme.

Non-resident charities not able to register in New Zealand

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.

Find out about guidelines for non-resident charities

Protect your organisation's funds from terrorism

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:

  • are engaged in ‘service’ activities operating near an active terrorist threat
  • send funds to counterpart or ‘correspondent’ not-for-profit and charitable organisations located in or close to countries where terrorists operate.

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:

  • prevent funds going directly, or indirectly, to any individual or organisation associated with terrorism
  • ensure that no support is given to any individual or organisation that may carry out activities that could result in conviction in New Zealand under the law, such as the Crimes Act 1961, or similar laws in the relevant country.