Dunne: Speech At Education Conference
Speech to the Association of Development and Alumni
Professionals in
Education
Conference
Samuel Marsden School, Karori, Wellington
Embargoed to 3.30pm, Friday, October 26
Hon Peter Dunne, Minister of Revenue
Thank you for inviting me here today to update
you on the government’s
programme to foster a stronger
culture of charitable giving in New Zealand.
This
programme arises because of the Confidence and Supply
agreement
between UnitedFuture and Labour.
It
recognises the significant contribution made by the
charitable and
non-profit sectors to the social, cultural
and economic well-being of our
communities.
My party is
strongly committed to the voluntary and community sector
and
hugely supportive of the work sector does and the
contribution to our
national wellbeing, and we want to
encourage and promote it at every turn.
Before I tell you
about the latest developments on the charitable
giving
front, let me recap briefly what we have achieved
to date.
As you know, Budget 2007 kick-started a number of
positive developments for
the non-profit sector.
These
developments included a number of tax incentives to
encourage greater
generosity in donating to non-profit
causes.
Under the new incentives, the current caps on the
dollar amount of
charitable donations that are eligible
for tax relief have been removed.
This means that
individuals will no longer be restricted by the
current
$1,890 donation limit for tax rebates.
The
clear intention of this change is to encourage those who are
already
donating substantial amounts to non-profit causes
to donate even more
generously.
For the same reason,
the 5 percent limit for tax deductions on donations
made
by companies and Māori authorities is being removed, and
also extended
to unlisted companies with five or fewer
shareholders.
These changes are included in the tax bill
currently before Parliament,
which once enacted, will
bring the new incentives into effect from 1 April
next
year.
Together, they represent a significant first step
towards recognising the
importance of charitable giving
in helping to deliver the services we need
to make a
positive difference in our communities.
Our next step is
to look at how we can make it easier for people to
donate
their time and money for the benefit of
others.
There are several ways we could approach this.
In the coming weeks, the government will be
releasing two papers for public
consultation, which
describe how we might remove some of the
current
obstacles for people who want to donate their
time or money for charitable
purposes.
The first
paper, which is due for release at the end of this month,
looks
at a number of possible solutions to the
long-standing problem of taxing
honoraria and volunteer
reimbursements.
Following the release of last year’s
discussion document, Tax incentives
for giving to
charities and other non-profit organisations
significant
concerns were raised about the tax
treatment of reimbursements and
honoraria paid to
volunteers.
As the law now stands, volunteers and
charitable organisations are often
unclear about their
tax obligations relating to reimbursement payments
for
volunteers.
Ultimately, this adds to the
compliance costs faced by non-profit
organisations
and can act as a deterrent to people offering their time
to
these organisations.
Specifically, the paper
seeks feedback on a number of suggestions
for
clarifying the law and new options for the tax
treatment of volunteer
reimbursements and
honoraria.
The over-arching consideration for the
government is to make it easier for
the estimated
437,000 volunteers and more than 90,000 organisations
that
make up the charitable sector to comply with their
tax obligations so they
can get on with their primary
functions.
The second set of proposals for further
developing a more generous culture
of giving are
contained in a discussion document due for release
in
mid-November.
This second paper looks at how we
might introduce a payroll-giving scheme
to New
Zealand.
Payroll-giving schemes have been well-received in
a number of other
countries, including Australia and the
United Kingdom, for their
simplicity, convenience and
effectiveness in facilitating
charitable
giving.
Payroll-giving schemes also have the
potential to increase donation levels
and establish
genuine partnerships between businesses and the
community,
while supporting employees’ community
activities.
The discussion document puts forward a number
of suggestions for
implementing an appropriate payroll
scheme that would balance the needs of
New Zealand
employers with the expectations of employees wishing
to
participate in this type of scheme.
However, before
any changes can be made, detailed consultation is
required
to ensure that any new approach is easy to
administer and does not raise
excessive costs for
employers.
On that subject, I want to emphasise the
important role that consultation
plays in this
process.
Feedback to the first discussion document, Tax
incentives for giving to
charities and other non-profit
organisations, continues to be instrumental
in helping to
shape the government’s response to the whole question
of
charitable giving.
For example, feedback on the
government’s initial proposal for increasing
tax relief
on donations suggested the measure did not go far enough in
its
intention to give greater incentives for people to
make charitable
donations.
The government agreed, and adjusted the proposed policy accordingly.
Given the
quality of feedback on our programme of reforms for
strengthening
charitable giving so far, I am confident of
a similarly constructive
response to the second round of
proposals on payroll giving and the
treatment of
reimbursements for volunteers and honoraria.
We will also
be looking at other mechanisms for delivering tax relief
for
charitable donations. Among the measures under
consideration are gift aid
schemes, similar to that in
the United Kingdom, which makes it possible to
claim tax
deductions for non-monetary donations.
Finally, I want to
make a brief comment on some recent ill-founded
political
speculation that charities stand to lose their tax-exempt
status
if they are not formally registered under the new
Charities Act by July 1
next year.
This claim is simply
untrue, and I hope it was based on ignorance rather
than
mischief making.
The position is simply this – charities
who have submitted a valid
application for registration
by July 1 next year will retain their tax
exempt status,
even though their application my not have been approved
by
that time.
I hope you have a successful conference,
and look forward to your continued
contribution to our
work in reforming the tax rules on charitable giving
for
the benefit of everyone
involved.
ends)