The New Zealand Taxpayers’ Union submitted feedback on Inland Revenue’s proposed changes to how the not-for-profit sector is taxed, warning that the proposals risk disrupting long-standing rules that underpin the sector. While the review aims to modernise the system, we argued key elements lack clear justification and could impose unnecessary complexity.
We strongly opposed changes to mutuality rules that could see NFP surpluses taxed, supported taxing commercial activities run by charities to ensure a level playing field, and called for a full Generic Tax Policy Process before any major reforms proceed. We also backed simplifying compliance for volunteers and donors while preserving existing exemptions that deliver genuine social value.
This matters because poorly designed changes could undermine the financial viability of not-for-profits, increase compliance costs, and weaken the services they provide to communities. A balanced approach protects fairness, supports the sector’s contribution, and ensures tax policy remains stable, transparent, and fit for purpose.
