Legislation introduced in 2021 made it easier for businesses to donate trading stock to approved donee organisations (which are mostly registered charities) as well as to public authorities and non-associated persons.
Normally if you give your businesses trading stock away you still might have to pay tax as if you'd sold it. But if you've donated trading stock between 17 March 2020 and 31 March 2024, this might not apply. For example, to help people affected by COVID or because of the January or February 2023 weather events.
Temporary relief
This concession is for trading stock donated from 17 March 2020 to 31 March 2024.
This temporary relief means that you do not have to return deemed income as if you had sold the stock. This applies if you donate or have donated your stock to:
- donee organisations
Approved donee organisations - public authorities, for example public hospitals
- non-associated persons - people or businesses you are not associated with.
Disposing of stock
Disposing of stock includes donating, but it is also selling, giving away or getting rid of stock at below market value.
The temporary relief for disposal of your stock, to a person or business that is not an approved donee organisation or public authority, applies if you are not associated with the recipient. You must also show you have a business reason for disposing of the trading stock at below market value. For example, you may dispose of the trading stock for marketing purposes to increase your customer loyalty and brand awareness.
If there is no business reason for the disposal, you may have to account for deemed income. This is based on the cost or opening value of the trading stock.
It is best to talk to your tax agent if you have one, as it can be complicated.
The legislation
Find more information about this change:
The Orders extending the relief can be found on the New Zealand legislation website.
Tax Administration (Extension of Period of Relief for Certain Disposals of Trading Stock) Order 2023
Tax Administration (Extension of Period of Relief for Certain Disposals of Trading Stock) Order 2022
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