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From the 1st of July 2008 PTAs' current tax exemptions from IRD are no longer valid.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.

IF YOU WISH TO RETAIN YOUR TAX EXEMPT STATUS YOU SHOULD REGISTER WITH THE CHARITIES COMMISSION AS SOON AS POSSIBLE.

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 status quo.

• If you do not  register with the Charities Commission 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.

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 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 Commission to retain their autonomy and tax benefits.

If you require any further assistance, please contact us.