Charities and Tax – IRD Consultation

We covered this important topic earlier this year, when the government positioned itself to changing the tax settings for Charities and Not-for-Profit organisations - including tax exemptions which Not-for-Profits are entitled to.

A consultation paper was released by the IRD in February 2025 on proposed tax changes, which resulted in significant feedback with over 900 submissions sent to the IRD - identifying issues and deficiencies in relation to the proposed changes.  The government subsequently decided not to proceed with the proposed changes. The collaborative efforts of those in the charitable sector in bringing the key issues to the forefront in this debate certainly had an impact on the outcome.

More recently in October 2025, the Minister for Revenue, Hon Simon Watts launched the government’s refreshed Tax and Social Work Programme. Contained within the programme, the government advised that its review on the charities and not-for-profit sector will be significantly narrowed. It will now focus its review on specific matters such as donor-controlled charities. The Minister confirmed that no changes are planned for the treatment of business income in charities.

We are actively involved in advocating for the charitable sector and will keep you updated on any significant developments in this space. Feel free to contact me if you wanted to discuss anything regarding government’s ongoing work in the tax environment for charities and not-for-profits.

 

Incorporated Societies Act – the Registration deadline is very close

Under the new Incorporated Societies Act - 5 April 2026 is the final date for re-registration for all existing societies.

With less than 4 months to go, latest reporting statistics from the Companies Office show that more than half of all incorporated societies have not yet re-registered. This is concerning as failure to re-register before the deadline will result in the society being removed from the incorporated societies register and no longer legally exist.

You can visit the Register of Incorporated Societies website to re-register and read the guidelines available to complete re-registration. See the Companies Office Incorporated Societies information hub https://is-register.companiesoffice.govt.nz/law-changes-for-societies.

We have assisted many societies in understanding how the changes impact upon their society and arranging for re-registration – feel free to contact us if you know of any societies or clubs that have not yet re-registered and need help.

 

Charities Amendment Act – governance review every 3 years

Under the Charities Amendment Act 2023, all charities now have a statutory duty to review their rules and governance procedures at least every 3 years.

Your review will need to comprise two main aspects:

• your charity’s rules documents, which could be a trust deed or constitution;
• any policies or guidelines relevant to your charity’s governance obligations, such as policies on financial management, conflicts of interest and staff and volunteers.

When you review your governance procedures, you need to look at whether your rules and other policies and procedures are still fit for purpose, they allow your charity to achieve its charitable purpose and meet its obligations.

Many charities would have indicated in their most recent annual return to Charities Services, confirmation they have completed review of their rules, governance procedures and policies.

Feel free to contact us if you need any assistance around requirements to comprehensively evaluate your existing governance policies and procedures, to ensure they are fit-for-purpose, align with best-practice approaches and meet statutory requirements under the Charities Act.

 

Budget 2025 “Investment Boost” - a real cash-tax win for capex

From 22 May 2025, businesses can claim an extra 20% deduction on the cost of eligible new (not second-hand) depreciable assets in the year they’re first used, on top of normal depreciation. Land and most residential buildings are excluded. It accelerates deductions and can meaningfully reduce 2025/26 tax where businesses are investing in plant, equipment, fit-outs, tech, or commercial build components.

If you are thinking of upgrading plant, vehicles, equipment, IT, or doing a fit-out? Talk to us before you commit — timing and asset eligibility matter.

 

KiwiSaver changes — payroll and remuneration planning for 2026+

New KiwiSaver settings are being phased in:

Default employee & employer rate rises to 3.5% from 1 April 2026, and 4% from 1 April 2028.

Members can temporarily “opt down” to stay at 3% and be matched at 3%. Government contribution is being reduced (so employees may want to review contribution choices).

Employers need to forecast payroll costs, update employment agreements/remuneration packages, and ensure payroll systems are ready.

Build KiwiSaver increases into your budgets now — especially for wage reviews and fixed-salary packages. Total Cost of Remuneration is an important concept to be on top of.

 

ESCT & FBT threshold / method changes — make sure 2025 filings are right

Effective from 1 April 2025 there are new ESCT thresholds and FBT thresholds, plus changes to some FBT calculation methods. These affect the tax cost of employer KiwiSaver contributions and fringe benefits (vehicles, loans, subsidised goods/services). Incorrect rates can create avoidable year-end adjustments and penalties.

If you provide vehicles, shareholder-employee perks, or extra employer contributions, we can sanity-check your FBT/ESCT before the March/June quarter filings.

 

E-invoicing & faster B2G payment rules — a procurement “quiet mandate”

Government Procurement Rules now push agencies to be e-invoice ready, and by January 2026 a wider group of agencies (ACC, Waka Kotahi, Health NZ, Police, etc.) must send/receive e-invoices and pay most domestic trade e-invoices faster.

While not a universal legal mandate for all businesses, suppliers may be expected to be e-invoice capable to win/keep government contracts. If clients sell to government or want to, e-invoicing can improve cashflow and reduce administration time. It is quickly becoming a competitive “must-have”.

If you invoice government agencies (or plan to), ask your software provider about e-invoicing readiness before 1 Jan 2026. We are ready and available to assist you with conversion of your accounting systems to e-invoicing.

Employment law changes & reform watchlist

Here are some important changes coming down the wire around employment reform.

a) Contractor “Gateway test” and classification focus

2025 reforms introduce clearer contractor classification via a Gateway test to reduce misclassification disputes.

Businesses using contractors should review agreements and working arrangements — risk sits with the hirer.

b) High-income dismissal exemption

What’s changing: Employees above about $180k are expected to be excluded from raising unjustified dismissal claims under new rules.

If you employ senior/high-earning staff, make sure contracts and HR processes line up with the new regime.

c) Holidays Act reform still in flight

MBIE has ongoing Holidays Act reform, but current rules still apply until legislation passes. Payroll providers and employers should stay alert.

We’ll update you as soon as final rules are enacted - for now, keep applying existing Holidays Act calculations.

 

Key dates coming up with tax and payment dates

Please note the following filing and payment falling due over the coming months. If you are unsure as to your tax filing or payment obligations, please feel free to contact us.

 

22 December 2025

• Employer deductions payment due November – small & medium employers 
• Employer deductions payment due 1 to 15 December – large employers

15 January 2026

• GST Return and payment due for period ending 30 November

20 January 2026

• FBT Return and payment due for period ending 31 December

20 January 2026

• Employer deductions payment due December – small & medium employers
• Employer deductions payment due 1 to 15 January – large employers

28 January 2026

• GST Return and payment due for period ending 31 December

 

We are here to help

Lynch & Associates are here to assist you in any way to ensure you meet your various legal and regulatory obligations including filing of returns and payment of tax.

We are always available to assist you with any questions, queries or help you may need – please do contact us if you need any help.

Please note, we will be closing our office Friday 19th December for the summer break – we will provide more detail on our office close and open dates in our Christmas message to clients coming out shortly.

In the meantime, all the best as you prepare for Christmas and wrapping up the year.