What are the benefits of registering as a charity?
The benefits of registering as a charity are:
grants and other funding opportunities
Donors and grant providers are able to access the organisation’s financial and other information on the charities register. Their policy may be to disburse grants only to registered charities.
exemption from income tax and gift duty
If your organisation has tax exempt status, there will be money left for operations and investment that would otherwise be disbursed in tax.
exemption from filing of income tax returns
A charity will be exempt from filing income tax returns each year unless one is requested by Inland Revenue (which would be unusual). If income tax returns do not need to be filed each year, the organisation will enjoy reduced compliance costs. The possibility of late filing penalties being imposed because a return is not filed by the due date will also be avoided.
grants and other funding opportunities
What criteria are there?
All organisations considering registration with the Charities Commission will need to check the activities and objectives. To be eligible for charitable recognition, the organisation’s purposes and activities must come within at least one of these four categories:
the advancement of religion
the advancement of education
the relief of poverty
any other purpose beneficial to the community
From 1 July 2008, only organisations registered with the Charities Commission will be eligible for exemption from income tax and gift duty.
What are the tax exemptions? A registered charity has tax exempt status in respect of:
• income tax on non-business income
• income tax on business income derived by or in support of charities
• gift duty otherwise payable by donors who make gifts over a particular value in any 12 month period.
When can we apply, and what will happen if we don’t apply?
Registrations commenced with the Charities Commission from 1 February 2007. The transitional period during which organisations meeting the charitable requirements can register will end on 30 June 2008. Organisations that do not register within the transitional period can expect to file an income tax return for each year while they are not registered. How can Searells help?
We can take care of your application for registration as a charity.
This may include:
• review of an existing Constitution (Rules) or Trust Deed, and preparation of amending documents • preparation of minutes to record member/trustee approval • filing of documents with the Registrar of Incorporated Societies • preparation and filing of an application for registration as a charity with the Charities Commission • Other services as required
