Charities De-Registration Tax on Assets

Charities De-Registration Tax on Assets

Moore Markhams

A recent law change has been passed by Parliament impacting charity deregistration tax rules.

When a charity is removed from the Charities Register, they may need to pay de-registration tax.

1 year after deregistering

Your charity has 1 year from the date it’s deregistered to do 1 of the following:

  • re-register as a charity.
  • dispose of or transfer its net assets to a registered charity or a New Zealand tax-exempt entity.


Otherwise, the charity will need to pay income tax on specific net assets one year from the date that the charity was deregistered.

Working out the value of depreciable property or financial arrangement

Following the deregistration of your charity, you will be required to determine the value of any depreciable property and financial arrangements in your possession. This valuation would be used to calculate taxes for each subsequent year.

The IRD has a guide, Charitable and Donee Organisations – IR255, which provides detailed examples on how to assess and pay taxes on net assets, depreciable property, and financial arrangements. The guide can be found here.

Rules and regulations regarding not-for-profits and charities can become confusing quite quickly.

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