Charites fear impact of $100k tax credit limit

In the Government’s Budget delivered on May 28, it was announced that a $100,000 limit each year will be placed on those seeking a donation tax credit. A maximum of $33,000 will be able to be claimed.

Acting chief executive of Philanthropy New Zealand Robyn Scott said the move would reduce the income for charities that relied on larger gifts, at a time when the need is “really high”.

The Government had previously signalled that it wanted to encourage philanthropic giving, but this change would not do that, she said.

“It’s really disappointing,” she said. “Charities, volunteering and giving in New Zealand make an enormous difference to communities. And we know that communities are doing it really hard, and in tough times like this we need people to be supporting communities and giving.”

The SPCA said that large donations help fund essential services and help with long-term impacts for animals in need. The change would likely have “unintended consequences” for charities, the SPCA said.

Tax Professionals director Ranjana Gupta supported the move, saying there had been misuse in the past. Until 2007, the cap was just $1890.

Announcing the move, Finance Minister Nicola Willis said: “We will ensure the donation tax credit scheme remains financially sustainable, and limits tax planning risks, by capping eligible donations at $100,000 a year.”

In the 2023/24 tax year, about $350 million was paid in donation tax credits to about 350,000 people.

In the Budget, the Government also increased the amount of net income a not-for-profit organisation can earn in a year without paying tax from $1000 to $10,000.

The changes will take effect at various times between 2027 and 2028. Detailed information on the changes will be published by Inland Revenue when the legislation is introduced.

FULL STORY

Budget 2026: Fears 100k donation tax deduction limit could hurt charities (New Zealand Herald – subscription required)

Improving tax rules for charities (Beehive)