Latest / Best of Business / Geof Nightingale: independent tax expert on the IRD's plan to tax 9000 clubs, societies and not-for-profits

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Geof Nightingale: independent tax expert on the IRD's plan to tax 9000 clubs, societies and not-for-profits · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks B follow
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  Speaker 1: and land.
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  Speaker 2: Revenue is setting at sites on taxing nine thousand club
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  Speaker 2: societies and other not for profits under changes that could
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  Speaker 2: be implemented. To chat about this further, we're joined by
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  Speaker 2: independent tax specialists Jeff Nightingale, who's on the line now. Cheff,
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  Speaker 2: very good afternoon to you.
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  Speaker 3: Good afternoon.
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  Speaker 4: Hey, So Jeff, how does tax on clubs and societies
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  Speaker 4: currently work?
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  Speaker 3: Yes, so, at the moment they have one thousand dollars
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  Speaker 3: tax free threshold for interest income from investments and things.
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  Speaker 3: But all of their transactions with their members, subscriptions in
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  Speaker 3: any trading amongst the members that they generally have been
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  Speaker 3: seen to be not taxable tax free because they are
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  Speaker 3: mutual transactions. They're not about making a profit, but just
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  Speaker 3: about sharing the costs around around the members. And it's
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  Speaker 3: that that ideas suggesting might have to change.
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  Speaker 4: So we're talking subs at a bowling club, for example.
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  Speaker 3: Yeah, probably not a bowling club. So there is a
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  Speaker 3: specific exemption for pure sporting amateur sporting bodies. We're talking
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  Speaker 3: maybe subs at a bridge club. We're talking contributions to
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  Speaker 3: your local residents association, body, corporate, you know, a myriad
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  Speaker 3: of you know, non profit making mutual associations where people
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  Speaker 3: organize themselves together and share the costs.
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  Speaker 4: Right, so you could say, like on the most sort
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  Speaker 4: of lowest level of it, even though they are a
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  Speaker 4: great time, especially when they're up in a nightclub. But
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  Speaker 4: say you're running a book club with your friends, and
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  Speaker 4: you will put some money into the book club. The
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  Speaker 4: ID thinks it should take some of that.
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  Speaker 3: Well, yes, but a bit more confidence in that. What's
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  Speaker 3: happened is that they have they've reached an interpretation internally
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  Speaker 3: that changes their view of the law, and that changes
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  Speaker 3: the view from those subscriptions or levees were non taxable,
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  Speaker 3: and now they're saying it's possible that they're taxable, and
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  Speaker 3: so now they're consulting on that before they change their view. Formally,
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  Speaker 3: they're saying, hey, what does everyone think about this? And
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  Speaker 3: I think the answer is we don't like change and
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  Speaker 3: we want to stay the status quiet. I mean, I think,
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  Speaker 3: to be fair, the subtext is they are collecting evidence
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  Speaker 3: to go back to the Ministry of Revenue and say
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  Speaker 3: we don't want to make this change. Here's a whole
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  Speaker 3: bunch of reasons on our consultation, So let's tweak the
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  Speaker 3: law so we don't have to make this change. I
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  Speaker 3: think that's what's happening.
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  Speaker 4: And is this looking at churches and businesses like sanitarium
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  Speaker 4: for example, Is this under this whole scope of this investigation.
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  Speaker 3: Yes, that's right. So we were expecting a discussion document
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  Speaker 3: on the taxation of charitable businesses and that's the sanitariums
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  Speaker 3: and others of this world tacked onto that was a
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  Speaker 3: chapter dealing with this not for profit. So that bit
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  Speaker 3: caught us by surprise. So we were expecting the government
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  Speaker 3: to do some work on whether they should tax the
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  Speaker 3: business operations of charities.
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  Speaker 2: The unintended consequences of changes to text legislation, and it
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  Speaker 2: worries me when they are, you know, they change their
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  Speaker 2: interpretation of the law. For most people, you'd think the
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  Speaker 2: law is the law and interpretation shouldn't come into it.
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  Speaker 2: Is that just the complexity when there are changes to
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  Speaker 2: these particular tax laws.
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  Speaker 3: Yeah, you're absolutely right. Certainty of tax law is an
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  Speaker 3: important thing and changes are very unsettling and to be avoided.
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  Speaker 3: Sometimes it's unavoidable, and you know, I've advised many clubs
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  Speaker 3: and associations over the years, and we've always dealt with
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  Speaker 3: it in the way that IOD accepted, and so this
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  Speaker 3: change is a surprise and creates uncertainty. I think IOD
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  Speaker 3: in their own way attempting to cure it, but at
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  Speaker 3: the moment we are left with uncertainty if you are
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  Speaker 3: the treasurer of a club or a little association.
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  Speaker 4: So just to make this clear, because I'm a little
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  Speaker 4: bit confused on that. So they're planning to target around
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  Speaker 4: nine thousand clubs. What's the difference between a club, a
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  Speaker 4: society and a trade association.
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  Speaker 3: Well, they might be formed under different laws like incorporated
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  Speaker 3: societies or not. They might just be unincorporated. The unifying
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  Speaker 3: factors they are not about making a profit. So if
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  Speaker 3: you think of the Bridge Club, the Bridge Club is
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  Speaker 3: about helping people play bridge. If you think about the
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  Speaker 3: Residents Association, it's act as a voice for the residents.
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  Speaker 3: So they're not about making profits, and they share their
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  Speaker 3: costs amongst the members. That's how they operate. And so
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  Speaker 3: that's the nine thousand and some of these very big
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  Speaker 3: So if you think about a trade union, that's an
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  Speaker 3: association that's not about MA a profit. It's about as
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  Speaker 3: members and some of the professional association's trade associations could
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  Speaker 3: be caught up in all of this. So this is
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  Speaker 3: a big issue. It has up to now been a
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  Speaker 3: very settled area of tax law, and they've kind of
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  Speaker 3: thrown the cat amongst the pigeons. But I think the
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  Speaker 3: purpose of the discussion document is to try and find
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  Speaker 3: good reasons to fix the problems.
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  Speaker 4: We're talking to independent tax specialists. Jeff Nightingale, So you
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  Speaker 4: said before that there's different provisions for a sports club,
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  Speaker 4: and you see it might be different from a sports
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  Speaker 4: club as opposed to a bridge club. Is that correct?
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  Speaker 3: Yes, yes, So there is a specific tax exemption for
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  Speaker 3: the promotion of amateur sport and that's been there for
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  Speaker 3: years and there's no suggestion that that's going to change.
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  Speaker 3: That's not being mentioned. So that should take out all
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  Speaker 3: of the sports clubs that the pure sports clubs. You
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  Speaker 3: do get into definitional the challenges. What's the sport and
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  Speaker 3: what I'm going to.
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  Speaker 4: Say so because because someone might say bridge, you know,
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  Speaker 4: is kind of a sport. Is chess considered a sport?
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  Speaker 2: Bingo? That's on the.
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  Speaker 3: Line exactly, Yeah, walking bingo yeah.
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  Speaker 4: Yeah, well, I mean, well, I've got kids that try
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  Speaker 4: and claim that Fortnite is a sport.
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  Speaker 2: Jeff, thank you very much for having just.
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  Speaker 1: Before we go.
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  Speaker 4: Do you think that seriously in this in this look
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  Speaker 4: that things like, I guess, musical clubs, you know, pastime clubs,
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  Speaker 4: motor clubs, I'm just pulling clubs out of my oment court.
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  Speaker 4: That would that would be that would seem terrible to me,
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  Speaker 4: because because in my opinion that clubs. We need more clubs,
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  Speaker 4: We need more people in the community getting out and
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  Speaker 4: getting together. And I feel very sorry. I see club houses,
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  Speaker 4: I see people trying to organize these things, and there's
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  Speaker 4: a lot of stress on these people. Everyone's really really busy,
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  Speaker 4: and they're trying to put these things together that are
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  Speaker 4: good for the community, and I would just hate to
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  Speaker 4: see another level of admin or another level of difficulty
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  Speaker 4: put on these people to the point where they just
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  Speaker 4: throw up the hands in the air and go, I
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  Speaker 4: can't be bother doing this anymore.
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  Speaker 3: I completely agree, but I also suspect that I do
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  Speaker 3: agree with you, and they're trying to get enough feedback
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  Speaker 3: to go back to the Minister of Revenue and say, hey,
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  Speaker 3: this isn't a good idea to make this change?
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  Speaker 4: Okay, so this is my feedback. It's not a good idea.
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  Speaker 4: There's a feedback. Write your submission, yeah yeah, and look,
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  Speaker 4: you can have your feedback on this on eight hundred
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  Speaker 4: eighty ten eighty and nine two nine two, and also
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  Speaker 4: write a submission. Hey, thank you so much. That was
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  Speaker 4: independent tax specialist Jeff Nightingale.
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