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Other remedial matters

Applications for overseas donee status

(Clause 2 and 75)

Summary of proposed amendment

The bill amends the Income Tax Act 2007 to add the following three organisations to schedule 32:

  • The Branch Foundation.
  • The Mutima Charitable Trust.
  • The Bougainville Library Trust.

This will enable donors to obtain tax credits on their donations to these overseas-focussed organisations.

The Mutima Charitable Trust is to be granted donee status until the end of the
2016–17 tax year and the Bougainville Library Trust is to be granted donee status until the end of the 2018–19 tax year.

The Income Tax Act 2007 is also being amended to reflect the name change of the Volunteer Service Abroad (Incorporated) to Te Tuao Tawahi: Volunteer Service Abroad Incorporated.

Application date

The application date is 1 April 2011 for the three organisations to be added to schedule 32. This means that donations made to these organisations after this date will be eligible for a tax credit.

The approval of overseas donee status for The Mutima Charitable Trust and The Bougainville Library Trust is subject to a sunset clause as these organisations operate projects of a limited duration. At the end of this period these organisations will be removed from the schedule. The Mutima Charitable Trust is to be granted donee status until the end of the 2016–17 tax year and the Bougainville Library Trust until the end of the 2018–19 tax year.

The application date for the name change of Volunteer Service Abroad will be from the date of enactment.

Background

Charities that apply some or all of their funds outside New Zealand must be approved for charitable donee status by Parliament. These organisations are listed in schedule 32 to the Income Tax Act 2007.

Donations to listed organisations entitle individual taxpayers to a tax credit of 33⅓% of the amount donated, up to the level of their taxable income, and for companies and Māori authorities, to a deduction for donations up to the level of their net income.

The Branch Foundation is a fundraising body working for grassroots organisations on the Thai/Burma border. The Foundation enables local organisations, particularly in Thailand, to provide aid for those who have fled ethnic conflict in Burma. The main focus of the Foundation is to provide financial and logistical support to organisations working primarily with children displaced due to conflict.

The Mutima Charitable Trust was established by a team of cardio-thoracic specialists from Christchurch Public Hospital. The aim of the Trust is to perform life-saving heart surgery on young adult Zambians who suffer from rheumatic heart disease. The Trust aims to have established a sustainable Zambian-based specialist cardio-thoracic unit after five years of operations, once local funding is in place and local staff have been trained.

The Bougainville Library Trust was established to support the work of the Bougainville Heritage Foundation. The Trust’s aim is to act as a vehicle through which New Zealanders and the international community can contribute to, and support, the building and stocking of a library in Bougainville.