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Private hospital's tax-exempt status tested

Last updated 05:00 07/05/2013

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The charitable status of Christchurch's St George's Hospital is under scrutiny by the Government.

The private fee-charging hospital's status as a tax-exempt charity came under fire over the weekend when The Press revealed it made millions of dollars last year, but gave less than $100,000 back to the community - an amount slammed by critics as "appallingly low".

Community and Voluntary Sector Minister Jo Goodhew said the Department of Internal Affairs would contact St George's Hospital to "ensure they are aware of their responsibilities under the Charities Act 2005".

The department confirmed its charities staff would contact the hospital to "discuss its charitable status" this week.

"Charity Services is not taking any action with St George's Hospital to rescind its charitable status at this time," a department spokeswoman said.

Hospital chief executive Greg Brooks did not respond to questions from The Press yesterday.

The Anglican faith-based hospital, which has charitable status and is therefore exempt from income tax, gave 1.5 per cent of a $6.5 million surplus to charitable causes last year, according to its 2011/12 financial report.

The $91,463 it gave to philanthropic causes has been publicly criticised as "tokenism" by charity specialist Dr Michael Gousmett.

However, New Zealand charities are not legally required to give any proportion of their annual surplus to charitable causes, provided that income is not accumulated for more than 80 years.

Inland Revenue estimates Kiwi charities are exempt from up to $400m worth of income tax a year, yet under current law they can benefit from that privilege while giving as little as $1 a year to charitable causes for public benefit.

Since 2007, almost 4000 charities have been removed from the Government's Charities Register for varying reasons.

Of those, 25 had their tax exemption revoked because they did not comply with the charitable purpose test set out in the Act.

The Department of Internal Affairs has taken two prosecutions under the Charities Act 2005 and is investigating some charities.

"Inland Revenue will monitor New Zealand charities to ensure that they are compliant with the rules and are operating exclusively for charitable purposes," an IRD spokesman said.

"We will prosecute those who choose not to comply."

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- The Press

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