Guest Contributor - Eleanor Cater
Philanthropy & Membership Services Director, Community Foundations of Aotearoa New Zealand
Giving into our communities, both through our time and our resources, plays an important part in the kiwi psyche. Doing good is just part of who we are. Underneath that, there's something interesting to be uncovered about the rationale behind our country’s tax incentives to promote giving and philanthropy.
How does charitable tax and giving work?
In a nutshell, 33% of what you give to a registered charity in New Zealand can be claimed back through a tax rebate*. So, if you donate $30 to any registered charity in New Zealand, you can claim $10 back at the end of the financial year (after 31 March). This means if you've donated $300, you can claim back $100 - and on, and on!
The reason behind tax incentives for giving is to encourage generosity and to support a thriving charity and community sector, which is independent of government and driven by the hearts, heads and desires of the people. Such incentives are a recognised tool worldwide that encourages a culture of philanthropy to thrive and have also been shown by research to increase the level of private giving for public good.
Utilising New Zealand’s 33% tax rebate on charitable donations is a smart move, helping to enable and shift extra funding into our communities. If you've donated to The Christchurch Foundation in the last year, you'll have received a receipt for that donation, which you can submit to the IRD to claim your tax back.
Community Foundations of Aotearoa New Zealand see many instances unfold where the tax rebate supercharges giving in communities, sometimes encouraging a larger donation or even the regifting of the tax rebate itself. With all of the community need out there, it’s a shame to leave your giving unclaimed when you could utilise it to donate in your lifetime to an area of impact in your community.
Inland Revenue offers two convenient ways to claim your tax credit – either by submitting copies of your donation receipts electronically throughout the year via your ‘myIR’ account, or by filing the tax credit claim form (IR526) from April of the following year. And here's a bonus tip: If you've missed claiming tax credits for donations in the past, the IRD allows you to go back up to four years, covering tax years 2021 through 2024. See more at the link here.
*Up to the level of income tax paid; the donation must be over $5 and the donor must provide a legitimate receipt from the charity.