From the 1st of July 2008 PTAs’ current tax exemptions from IRD are no longer valid.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 Services.
IF YOU WISH TO RETAIN YOUR TAX EXEMPT STATUS YOU SHOULD
REGISTER WITH THE CHARITIES SERVICES AS SOON AS POSSIBLE
Three Options for PTA’s
1. Register with the Charities Services…
- There is no cost to register with the Charities Services.
- Your PTA needs to have written rules that meet the Charities Services 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 Services.
- If your PTA’s gross income is over $10,000.00 per year then there will be a fee for filing the annual return.
- Your accounts do not need to be audited but we recommend an Independent Review.
The process of registering with the Charities Services is free. Once registered, the only requirements are to keep the Charities Services 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 status quo…
- If you do not register with the Charities Services your PTA will not have not-for-profit status. Your PTA will have 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. Become a sub-committee of 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 come under the schools tax exemption status.
- 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.
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 this may result in a loss of the control of how the funds are spent. We recommend that PTAs/Parent/Whanau groups register with the Charities Services to retain their autonomy and tax benefits.
If you require any further assistance, please contact us.
About Charities Service
To read more about Charities Service download this informative PDF