Charity Tax Reforms Paused – For Now …

The Government’s proposed changes to the tax treatment of charities have sparked significant concern across the charitable sector. While the reforms have now been put on hold, they have not been withdrawn—and are expected to resurface in revised form.

BACKGROUND TO THE PROPOSED CHANGES

The proposals sought to tighten rules around business income earned by charitable entities, particularly where that income is retained or used overseas. Under the proposed changes, income would only remain tax-exempt if it was applied for charitable purposes within New Zealand.

The intent behind the reforms was to ensure that the tax benefits provided to charities deliver clear public benefit to New Zealanders. However, many in the sector raised concerns that the approach was too broad and did not account for legitimate
overseas aid, long-term planning, or group structures involving charitable business arms.

Strong Sector Response

The proposed amendments attracted approximately 900 submissions, many from registered charities, legal professionals, and sector experts. Common themes included concerns over:

  • The complexity of the proposed changes;
  • The potential to discourage charitable giving;
  • Increased compliance costs and governance burdens;
  • The risk of unintended impacts on charities engaged in international development or long-term investment.

GOVERNMENT RESPONSE

In light of this strong response, the Government announced in May 2025 that it would pause the proposed reforms to allow further review. However, this is not the end of the matter.

Officials have signalled that the underlying policy objectives remain a focus, and revised proposals are likely to follow.

IMPLICATIONS AND NEXT STEPS

Charities should use this pause as an opportunity to:

  • Review governance structures and operational models— particularly where business income or overseas expenditure is involved;
  • Stay engaged with upcoming policy developments and consultation processes;
  • Seek legal advice on how future changes may affect tax status and compliance obligations.

If you are involved with a Charity and are unsure how these potential reforms could affect your organisation, please contact our team.

Scroll to Top

festive colouring competition!

There are four age categories: Ages 0-5, Ages 6-9, Ages 10-13 and 14+. All ages welcome!

The competition closes on December 9th, and the lucky winners will be featured in the Scene Newspaper on December 16th.’

To enter, simply drop off your masterpiece at the Magill Earl office located at 28 Tainui Street, Matamata.

Let your creativity run wild!

Merry Christmas and Happy New Year from the Directors and Staff of Magill Earl Limited

Please note that our office will be closed from 3:00pm on Friday the 20th of December 2024 and will re-open at 8:30a.m. on Monday the 13th of January 2025