Why register as a charity?
Income Tax Act 2007, s CW41(2)
You’re not required to register your group on the Charities Register, but there are several benefits if you do. Most importantly, registering is a precondition for obtaining “charitable status” from Charities Services (Department of Internal Affairs), and therefore for being exempt from paying tax on income.
Usually Inland Revenue will presume that if your group is a registered charity and has only non-business income, it qualifies for tax-exempt status.
Your group will need to register with Charities Services even if it’s already registered and incorporated as an incorporated society or a charitable trust or trust board.
Registering as a charity also has other benefits:
- Information on the Register – Supporters and funders can find detailed information about the organisation on the Charities Register (this is particularly useful for charities applying for public funding)
- Proof of registered status – The registration number can be displayed on promotional and identification material to provide proof of your registered charitable status to potential donors and funders.
- Greater public confidence – Registered charities are likely to enjoy greater public trust and confidence, because information about their activities and how they use their resources are available to the public on the Charities Register.
Can we still raise money as a charity if we’re not registered?
Charities Act 2005, ss 37, 38
Yes. An unregistered charitable organisation can still call itself a “charity” and ask the public for donations.
However, if you choose not to register you can’t call yourself a “registered charitable entity”, and you also won’t qualify for tax-exempt status.
It’s a criminal offence, carrying a fine of up to $30,000, for a person to falsely claim or imply that they are a registered charitable entity or that they act on behalf of one.