Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on thousands of clubs, societies, trade associations and industry councils facing a significant tax bill

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Jenee Tibshraeny: NZ Herald Wellington business editor on thousands of clubs, societies, trade associations and industry councils facing a significant tax bill · Best of Business

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  Speaker 2: Brian Bridge, your news talk said, Big Time is seventeen
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  Speaker 2: after six. Around nine thousand clubs, societies, trade associations and
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  Speaker 2: industry councils are in line to possibly be slapped with
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  Speaker 2: a tax bill. Inland Revenue has changed the way it
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  Speaker 2: interprets the law and they're keen to crack down on
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  Speaker 2: businesses they think are masquerading as charities in order to
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  Speaker 2: reduce their tax bills. Jane Tips Trainey is The Herald's
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  Speaker 2: Wellington Business editor. She's with me tonight. Hey Jana, Hey Ryan.
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  Speaker 2: What are these changes going to look like for these
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  Speaker 2: clubs and associations? Potentially?
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  Speaker 3: Yes, So look at the moment, if you're a sports
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  Speaker 3: club or any sort of member society, there are special
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  Speaker 3: exemptions which means you don't need to pay tax, for example,
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  Speaker 3: on the subscriptions that you receive from your members. But
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  Speaker 3: Inland Revenue has been looking to change this. So it
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  Speaker 3: actually it releases guidance that say this is how you
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  Speaker 3: interpret the law, but it's updating that guidance to say, actually,
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  Speaker 3: a bunch of these club societies are going to have
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  Speaker 3: to pay tax, So Inland Revenue is doing that, you know,
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  Speaker 3: on one side. But then on the other side you
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  Speaker 3: have the governments which has come in and said we
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  Speaker 3: want to crack down on charities and make sure that,
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  Speaker 3: as you said before, businesses that are actually masquerading as charities,
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  Speaker 3: we want to make sure they are paying tax. So
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  Speaker 3: you've got two separate things ID doing it's thing government
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  Speaker 3: wanting to achieve something else. And what is happening now
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  Speaker 3: is that the IID is saying, actually, you we'd still
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  Speaker 3: like to change the way we treat clubs and societies,
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  Speaker 3: but we're going to put this work on hold while
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  Speaker 3: we wait for the government to sort out what it
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  Speaker 3: does with charities. Just more broadly, so it's kind of
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  Speaker 3: a messy situation. What it basically does is create quite
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  Speaker 3: a bit of uncertainty for these nine thousand club society,
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  Speaker 3: trade association's, professional and regulatory bodies, industry councils and so on,
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  Speaker 3: because on the one hand you have IOD wanting to
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  Speaker 3: tax them, but then IRD saying we'll put this work
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  Speaker 3: on hold and wait for this broader charities thing that
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  Speaker 3: the government's doing to iron itself.
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  Speaker 2: Out goodness may it sounds like a bit of a
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  Speaker 2: rollercoaster for these poor organizations. How much of a burden
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  Speaker 2: will the you know, an admin burden of potentially doing
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  Speaker 2: tax be for these organizations.
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  Speaker 3: Well, I think it'll be quite a bit. I spoke
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  Speaker 3: to the independent tax specialist Jeff Nightingale earlier today and
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  Speaker 3: he said, you know, some of these clubs and things,
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  Speaker 3: they don't really have a lot of profits, so that
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  Speaker 3: the tax burden might not be that big. The issue
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  Speaker 3: is going to be the compliance, in Jeff Nightingale's view,
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  Speaker 3: so he thought that actually IOD probably wouldn't push on
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  Speaker 3: with this, but you know, we we're going to have
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  Speaker 3: to wait and see. Now, we'll probably find out at
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  Speaker 3: some point after the budget, which is on May twenty two.
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  Speaker 3: That's when the government will release what it's going to
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  Speaker 3: do with charities. And after that point, the assumption is
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  Speaker 3: that we'll find out a bit more what's in store
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  Speaker 3: for these clubs and societies. I mean, nine thousand of
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  Speaker 3: them is a lot, and I suspect a bunch of
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  Speaker 3: them probably don't even know that Inland Revenue is thinking
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  Speaker 3: about changing their tax treatment because actually it's sort of
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  Speaker 3: buried this little detail in a long consultation document it
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  Speaker 3: released earlier this week. So a bit of uncertainty there,
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  Speaker 3: but I think ultimately the idea that the government has
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  Speaker 3: to relook at the way all these things attaxes is
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  Speaker 3: probably a positive thing and should bring us more in
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  Speaker 3: line with what other countries do.
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  Speaker 2: Right, And so just to clarify, so this is not
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  Speaker 2: this particular part that I has been looking at, is
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  Speaker 2: not part of the pushback against Destiny Church. This is
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  Speaker 2: a separate issue they've been looking at separately.
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  Speaker 3: Yeah, it is a separate issue. I mean it's related.
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  Speaker 3: IOD was doing this work and it's putting this work
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  Speaker 3: kind of on hold while we figure out what we're
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  Speaker 3: doing with charities more broadly, because you know, these rules
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  Speaker 3: are pretty complicated and they interlink. But it is just
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  Speaker 3: interesting that iod's position is actually that these clubs and
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  Speaker 3: things need to be taxed.
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  Speaker 2: Yeah, it is interesting, but I mean, give them an inch,
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  Speaker 2: they'll take a mile that text everything if they could.
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  Speaker 2: Thank you so much for that donative training with us
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  Speaker 2: the Zellen Herold, Wellington Business Editor.
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