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June 2016

Read a text only version of Charities Update.

Lesa's Message

Scott Miller and Lesa Kalapu

Tena koutou, talofa lava and warm greetings,

This week is National Volunteer Week, and I wanted to take time to acknowledge the contribution volunteers make to the charitable sector. We know that many registered charities are run, managed and supported by volunteers. This is reflected in the information you supply in your annual return forms each year, and in the recent report published by Statistics New Zealand, which shows the number of volunteers in the non-profit sector rose by 21 per cent from 2004 to 2013. 

I know that volunteers are often responsible for providing us with charities’ Annual Returns and preparing financial information under the New Reporting Standards. We understand that for some, the New Reporting Standards are a challenging new requirement often completed in your spare time!

We are starting to see some common areas and themes where charities are struggling with the new standards and are developing more resources to support you. The new blog is one of the ways we can tell you about what we are seeing and answer any questions you have about the standards, and I am excited to launch the blog in today’s newsletter!

Lesa Kalapu
​General Manager, Charities Services

New Charities Services Blog

Blog image

This week marks the launch of our brand new charities blog. The blog will cover current topics of interest to charities with the first few mainly focusing on the new financial reporting standards which have recently come into effect. If you have an issue or question that you would like us to highlight through a blog post, then please get in touch with us with your suggestions. Click below to view our very first blog post:

Upcoming Seminars on the New Reporting Standards

Chartered Accountants Australia and New Zealand have arranged a series of seminars around the country to assist Tier 3 and 4 charities get familiar with the new reporting standards. The seminars are appropriate for accountants and non-accountants alike, and will be focusing on how to keep things simple when preparing your end of year performance report.

You can find information about each seminar by clicking on the links below.

Disclosing salary details in performance reports/financial statements

Disclosing salary details in performance reports/financial statements image

The new financial reporting standards set by the External Reporting Board require some registered charities to disclose the salary details of individual staff members, as part of the requirements to include information about related party transactions.

For those charities reporting using the Tier 3 or Tier 4 standards, related parties include people who are closely associated with the charity and have the ability to influence the charity (for instance, committee members, officeholders and those involved in the strategic management of the charity) AND their close family members. So if a staff member is a son or daughter of a Board member, for example, details of that staff member’s salary will need to be disclosed where the salary is significant to the charity, or it is not on normal terms and conditions (for example, the salary is significantly higher or lower than the market rate).

Understandably, charities are concerned about the privacy implications of this requirement. There is a short answer to the privacy issue – the Financial Reporting Act 2013 provides that the disclosure of personal information (such as salary details) is not a breach of the relevant privacy principles in the Privacy Act 1993 if the disclosure is required for compliance with a standard issued by the External Reporting Board. And there is no requirement to name the staff member concerned. The standards set out what must be disclosed, including a description of the related party relationship, and a description and amount of the transaction(s). We have some useful guidance on our website about these requirements.

But we appreciate that salary information is generally viewed in New Zealand as being highly sensitive. While it is not necessary to name the individual concerned, in many cases it will be easy for those involved in the charity to know who the individual is. Charities in these situations can request, when submitting their annual returns and performance reports or financial statements to us, that this information be withheld from the publicly-accessible Charities Register. We can restrict access to information on the register where it is in the public interest to do so. While we consider each request on a case-by-case basis, protecting the privacy of individuals employed by charities is likely to be a public interest that justifies restricting public access to the information. Further details about restricting access to information on the register is available on our website.

Inland Revenue consultation on donee organisations

Inland Revenue is currently consulting on an issues paper on donee organisations.  When a person makes a donation to a donee organisation, they can generally claim a tax credit for that donation.

The issues paper examines the donee organisation requirements of the Income Tax Act 2007, and is particularly relevant to registered charities that apply some of their funds to charitable purposes outside of New Zealand. This is because donee organisations must “wholly or mainly” apply funds to certain specified purposes (including charitable purposes) within New Zealand. Inland Revenue currently accepts that this requirement is met where 51% or more of the funds are applied within New Zealand. The issues paper suggests a higher threshold should apply which, although no exact figure has been set, could be as much as 90% or more.

If the current practice was to change it would apply prospectively. Organisations unable to satisfy the “wholly or mainly” requirement under any new higher threshold may have alternatives (discussed in the issues paper) if they wish donors to be eligible for tax benefits.

The issues paper also considers how the extent to which an organisation has applied funds to specified purposes is calculated and confirms that applying funds to specified purposes within New Zealand does not limit an organisation to spending funds within New Zealand.

The deadline for comment is 29 July 2016. More information is available on http://www.ird.govt.nz/public-consultation/#03 under Draft items.

National Volunteer Week 2016 Toolkit

Volunteering New Zealand have created a Toolkit for organisations to celebrate National Volunteer Week. Take a look at the images, posters, photo frame and certificates that you can customise and use to promote and recognise volunteers for all their hard work. Click here to view these helpful resources.