Charities to benefit from new payroll giving system

A system to allow people to donate to charities straight from their pay will start next year.

Finance Minister Michael Cullen and Revenue Minister Peter Dunne today confirmed the Government would proceed with the voluntary payroll giving system.

Other changes would be made to clarify and simplify the law on how reimbursements and honoraria paid to volunteers in the non-profit sector are to be treated for tax purposes.

The ministers said the changes would remove problems and associated compliance costs for volunteers.

The changes would be in the next taxation bill to be introduced in June.

About a million New Zealanders participated in volunteer work and about $350 million a year was donated to charities and other non-profit organisations.

Previously caps on the dollar amounts of charitable donations that are eligible for tax relief were removed.

Payroll giving would operate through the PAYE system but employers did not have to agree to it. It would mean people making donations would get tax relief immediately and no longer have to apply for rebates.

Mr Dunne said the Government was also looking at other ways to foster charitable giving.

"For example, we are looking at the idea of making it possible for people to claim tax deductions for non-monetary donations, such as artworks and other property.

"Similarly, we are reviewing the question of whether imputation credits should be refundable to charitable organisations, which are not able to use them under current law."

- NZPA