How does the new Charities Act affect early childhood education and care centres?
In 2005 Parliament passed the new Charities Act. The new law requires that not-for-profit organisations that wish to be listed on the new Charities Register will need to register with the Charities Commission. It is not compulsory to register but not-for-profit, community based kindergartens, early childhood education and care centres, kohanga reo etc., will need to register if they want to retain or gain an exemption from paying tax. Schools are deemed to be exempt from paying tax already under the Education Act 1989.
Until now many early childhood education and care centres will have met the Inland Revenue’s criteria for tax exemption. This has meant that they are exempt from paying income tax but still have to pay GST and Fringe Benefit Tax. Those that are not currently considered charitable by Inland Revenue have to pay tax on income over $1,000. From July 2008 those centres that wish to retain their tax exemption status or who wish to apply for tax exemption will have to register with the Charities Commission, showing that they have a charitable purpose that is directed towards the public benefit and that its officers are qualified to be officers under the Charities Act.
What are the other benefits of being listed on the Charities Register?
The Government believes that the new Register will help promote public confidence in the charitable sector. Once registered, your organisation will be listed on the new Charities Register on the Charities Commission website. This will mean that individuals, and other organisations, e.g. funders, will be able to go online to find out information about your centre.
When will we need to register?
The new tax laws relating to charities take effect on 1 July 2008. The Charities Register opens on 1 February 2007 but you will have until 1 July 2008 in which to register. It is best however to have your application in, to the Commission, by April 2008 in case there are any hold ups, and especially if you are making any changes to your Constitution. The appropriate time for your centre to register will depend on |
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depend on the date your financial year ends and when you hold your AGM. See the Charities Commission website for details on the best time for your organization to register.
Officer certification requirements
From now on officers (ie Chairperson, Treasurer and Secretary) of your organisation will need to meet certain criteria. When you register you will need to send in an Officer Certification Form with details of your officers. Your Constitution states who the officers of your organization are. Each organisation must have at least one. The factors that will prevent someone from being an officer of a registered charitable organisation are set out in the Charities Act and are listed on the Charities Commission website. They include: under the age of 16; have had a conviction for dishonesty within the last 7 years; and an undischarged bankrupt. You will also need to notify the Charities Commission within 3 months if you have a change of an officer.
Annual Returns
Once you have registered with the Commission you will need to send your Annual Return (including a copy of your annual accounts) to the Commission each year. This will need to be sent within 6 months of the end of your financial year. The Charities Act is a new piece of legislation. It does not replace the Charitable Trust Act or the Incorporated Societies Act. To maintain your legal status as a Charitable Trust or an Incorporated Society you will have to remain registered with the Companies Office. You will however, not have to send your Annual Return to the Companies Office anymore, only the Charities Commission.
The information that you supply on your Annual Return form and your annual accounts will be publicly available on the Register. You can however, request that certain information be restricted from public access. There will be a fee of $50 for filing your return online, and $75 for filing you’re your return on paper.
You can find out more by going to: www.charities.govt.nz , and if you have any queries call Free Phone: 0508 242 748; or Email: info@charities.govt.nz
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