Guidelines released for charitable donee status

The Government is providing a set of guidelines for organisations seeking charitable donee status for their activities overseas since having a flood of requests.

Revenue Minister Peter Dunne believes the recent lifting of the limits on the tax relief that is available for donors probably caused the increase in requests.

"It has become clear that many of these organisations need a lot more guidance about what is involved, and that many of them think sending a request to Inland Revenue for overseas donee status means automatic entry into law."

Hayes Knight tax director Phil Barlow says there have been major changes in recent times with the commencement of the Charities Commission and also the recent payroll giving legislation being enacted.

"These guidelines for donees are a good step in the right direction.

"They help to provide some transparency to the process and hopefully will assist potential donees in ascertaining the entitlement to donee status."

He  says they are however, only "guidelines" and therefore do not provide a definitive summary of the criteria that must be met in order for Inland Revenue to agree to donee status.

Dunne says the process cannot be fast tracked and a lot of research, consultation and consideration goes into the Government's decision to add an organisation to the list of those who have official donee status for their charitable activities overseas.

The Government looks at the credibility, transparency and accountability of an organisation, and at questions like whether its activities are ones that the Government would want to support.

The Government is mindful that taxpayers' funds should not be applied where there is a risk of private benefit or other misuse.

Dunne says the guidelines have been made to promote self-evaluation before organisations ask the Government to amend the law on their behalf.

He says organisations must demonstrate to the Government that they are robust in terms of their internal management and potential longevity, have adequate checks and balances in place for their project management and financial systems, and that they comply with the relevant law in New Zealand and the recipient countries

"All this is essential to ensure that the tax relief afforded by overseas donee status is appropriately targeted and the potential for misuse of public money is minimised," he says.

Barlow says any organisation looking to get donee status needs to do their homework to ensure that they fall within the guidelines that have been published.

"If there is any doubt they should seek appropriate advice and engage a professional if required, prior to filing an application for donee status."

The release of guidelines is an interim measure that will be followed in the first half of next year by a review of the relevant Cabinet guidelines and of the process for adding organisations to Schedule 32.

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