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PTAs and the Charities Act
The Charities Act and how it affects your PTA
From the 1st of July 2008 PTAs' current tax exemptions from IRD are no longer valid.
If you want to keep your tax exempt status you need to register with the Charities Commission.
Contrary to our earlier advice (based on what IRD advised us to do), NZPTA was informed on 7 July 2008
that we would not be able to act as a parent organisation for individual PTAs for tax exemption purposes.
IF YOU WISH TO RETAIN YOUR TAX EXEMPT STATUS YOU SHOULD REGISTER WITH THE CHARITIES COMMISSION AS SOON AS POSSIBLE.
IRD HAVE A LIST OF NZPTA MEMBERS AT 1 JULY 2008 AND WILL APPLY A TRANSITIONAL MEASURE FOR THESE GROUPS WHO
ACTED ON THEIR EARLIER ADVICE THAT NZPTA COULD ACT AS A PARENT ORGANISATION.
PTAs have three options available to them:
1. Register with the Charities Commission.
There is no cost to register with the Charities Commission
Your PTA needs to have written rules that meet Charities Commission requirements
for charitable status (information is available to members here
and an editable (Word doc) sample constitution is available to members here).
Once registered, you need to file an annual return to the Charities Commission.
If your PTA's gross income is over $10,000.00 per year then there will be a fee for filing the annual
return electronically of $50 per year ($75.00 if it is filed as paper).
Your accounts do not need to be audited but we recommend an independent review.
The process of registering with the Charities Commission is free.
Once registered, the only requirements are to keep the Charities Commission informed of any key changes
(e.g. changes to your officers, address, or rules) and to file your annual return after your AGM.
For more information or forms you can visit the website www.charities.govt.nz
or call the Commission's free information line on 0508 242 748.
2. Remain as you are and face the consequences.
If you do not come under the NZPTA umbrella or register with the Charities Commission you still have not-for-profit status.
This gives you an exemption from income tax on the first $1,000 of net income,
but after that you could be taxed from 19.5c up to 33c in the dollar for any net income for that financial year.
Funding applications may be unsuccessful as some funding organisations will require charitable
status before a donation can be made.
3. Hand over the job of fundraising to the Board of Trustees.
Fundraising activities and the control of the funds raised could be handed over to a sub-committee
of the school's Board of Trustees to avoid paying income tax.
The fundraising committee would use the school bank account and be included in their GST returns
and annual financial statements.
Section 66 of the Education Act 1989 allows a school Board to delegate any of its functions or powers
by resolution and written notice in its minutes. This means that parents who are not on the Board of Trustees
could become part of the fundraising committee, but it must have at least one board member on it
to meet legislative requirements.
Our Recommendation
NZPTA believes that parent groups should have full ownership of the decision-making process
that determines where funds raised by parents are spent.
The Board of Trustees and PTAs have very different functions within the school and combining them may result
in a loss in the quality and quantity of parental involvement in children's education.
We recommend that PTAs/parent groups register with the Charities Commission
to retain their autonomy and tax benefits.
If you require any further assistance, please contact us
or email help@nzpta.org.nz.
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