10 Aug 2016
Inland Revenue’s new guidance on how to define donee organisations and gifts will affect how arts organisations issue tax receipts for donations.
Creative New Zealand, with the endorsement of 61 arts organisations, made a submission in February on Inland Revenue’s proposals to clarify how it treated tax deductions for donations to charitable organisations.
Inland Revenue has now issued its final guidance. Arts organisations that issue receipts for donations are strongly recommended to read and understand this latest guidance to ensure they and their donors are compliant.
While Inland Revenue has taken advice and met their aim of clarifying the legislation its approach to what is tax deductible is conservative.
To be regarded as a gift, and therefore tax deductible, a donation must be made voluntarily with no expectation of a material benefit or advantage. This may affect how arts and cultural organisations structure their patron and donor programmes to ensure donations qualify as tax deductible.
While we expect most arts donors do not donate solely for tax advantage it should not be disregarded as an influencing factor.
Creative New Zealand has prepared a quick fact sheet on Income Tax: Donee Organisations and Gifts which is on our website. It includes an overview of Inland Revenue guidance, a range of examples to help arts and cultural organisations interpret it, and links to the Inland Revenue guidance.