We asked for clarification on what the individual organisations could expect in terms of reviews of their charitable status. We expressed significant frustration in the sector- that you have little time or resource to respond to a review, the lack of clear criteria on which the review might be conducted, and the ongoing uncertainty of the alternate tax exemption if a group were faced to move to a different form of tax exemption. We know that many organisations are also hearing from CHRA that you may need to alter your trust deed to comply with the CHRA definitions for Class 1-Social Landlord- with no clarity on how those changed might affect or relate to the Charities review.
We received their permission to print in full the email response received on 21 November. CHA continues to stress to MBIE, Treasury, MSD and Charities Services of the need to get this sorted out, and stressed to Minister Bennett the importance of a whole of government solution. We do hear that a solution is underway- and will report as we know more.
Thank you for meeting with us on Friday 14 November. It was helpful to hear your feedback from the sector.
We discussed the process by which entities already on the Charities Register are assessed for on-going qualification for registration. As we mentioned during our discussion, we review the on-going qualification of entities for registration for a number of reasons. Sometimes this is the result of a decision by the Courts (such as on the Queenstown Lakes Community Housing Trust), which clarify the current legal position, or of a decision of the Charities Registration Board. Such decisions can lead us to look at other similar entities to ensure consistency. This type of review usually considers whether the entity continues to meet the charitable purpose requirements for registration. We would also consider whether an entity continued to qualify for registration if it were to change its purpose or activities. At other times we might look at an entity because of a complaint or concern raised publicly, or because of material in the entity’s annual returns, either of which may indicate potential wrong-doing or that the entity is no longer qualified for registration.
For reviews of charitable purpose, our first step is to look at the information we have on hand about an entity’s purposes—these are found in its rules and activities. We may also look at other publicly available information as part of this initial review. Often this is sufficient for us to determine that the entity still appears to qualify for registration. Initial reviews can be undertaken reasonably quickly, depending on the complexity of the situation and the level of other priorities the Charities Services’ team is working on. We would not normally need to contact the entity during this initial review, and we may complete it without any contact with the entity. If however we do not think it is clear that the entity does still qualify, our next step would be to write to the entity advising it that we are looking at its on-going qualification for registration, enclosing a number of specific questions (for example, seeking further detail about the activities the entity is undertaking currently) and asking for a response within 4 weeks. As we discussed, if it appears that an entity may need to make small changes to its rules or activities so that it continues to qualify, we would provide examples of the kind of changes necessary and feedback on the proposed changes.
If it seems clear that an entity no longer qualifies for registration, we will send it a notice advising it that we intend to remove it from the register in 20 working days. An entity would then have three options: change the portion of it rules or activities that are not charitable; submit an objection to removal from the register on the grounds that the grounds for removal have not been satisfied and/or for any other reason it is not in the public interest to remove the entity from the register; and choose to voluntarily deregister. Any submissions received are fully considered before a final decision is made, therefore, the process could take a further 8-12 weeks.
You noted during our conversation that MBIE and IRD are working on policy and exemptions to support community housing providers, particularly any that no longer qualify for registration as charitable entities and may therefore lose access to income tax exemptions. We will certainly work with these departments with the aim of ensuring any charities in the community housing space have access to information about alternatives should they be deregistered. However, as we discussed, the Department also has to ensure it is carrying out its role in ensuring that the entities on the register are qualified to be there.
Please feel free to pass the information in this email on to your members. We will continue to keep up communication with you.
Lesa Kalapu | General Manager
Charities Services Ngā Rātonga Kaupapa Atawhai
Direct Dial: +64 4 474 3168 | Extn: 4968 |
Level 8 85 The Terrace | PO Box 805, Wellington 6140, New Zealand
Charities Services is part of the Department of Internal Affairs Te Tari Taiwhenua | www.dia.govt.nz