How to Apply for Tax-Exempt Status for a Nonprofit Organization in New Zealand

How to Apply for Tax-Exempt Status for a Nonprofit Organization in New Zealand

Are you a New Zealand nonprofit looking to say “bye-bye” to taxes? We don’t blame you! Taxes are never fun.

But you’ll need to jump through some hoops to secure that sweet tax-exempt status. Don’t panic, though – we’ve got your back! 

Get ready to become a tax-exempt superstar with our guide on how to apply for tax-exempt status for nonprofit organizations in New Zealand.

How to apply for tax-exempt status for a nonprofit organization in New Zealand

apply tax-exempt status for a nonprofit organization in New Zealand
DifficultyModerately Difficult ●●●○○
Number of steps5
Time to performA few weeks to a few months
Things you need• Your IRD number
• A copy of your not-for-profit’s rules, constitution, trust deed, or other founding documents

To apply for tax-exempt status for a nonprofit organization in New Zealand, you’ll need to follow a set of guidelines provided by the Inland Revenue Department (IRD). 

These guidelines cover everything from filling out the necessary forms to providing the required documentation to prove your organization’s eligibility.

STEP 1. Determine if your organization qualifies.

Determine if your organization qualifies

Before you start filling out forms and jumping through hoops, you need to determine if your nonprofit organization qualifies for tax-exempt status in New Zealand.

Remember the criteria we mentioned? Yes, your organization must have charitable purposes, be registered with the Companies Office, and meet the compliance requirements set by the IRD.

And that’s not all — just like the vibrant people and culture of New Zealand, the range of nonprofit organizations that can qualify for tax exemption is as diverse as it gets.

From charities to sports clubs to community housing providers, there are plenty of organizations that can benefit from tax-exempt status.

Let’s break it down, shall we?

CharitiesCharities must be working in New Zealand and registered with Charities Services to get full tax benefits. 
Examples of charities include those that support health, education, poverty relief, religion, and the environment, among others.
Education centresThese include schools run by boards of trustees, charities, and businesses. 
To qualify, they must provide education that is at least equivalent to the national curriculum and be registered with the Education Council of Aotearoa New Zealand.
Community housing providersCommunity housing providers do not need to pay income tax or file returns if they meet certain requirements. 
To qualify, they must provide affordable rental housing to low-income families or individuals, and be registered with the Community Housing Regulatory Authority.
Sports clubs and societiesSports clubs, societies, trusts, and associations may not need to pay income tax if they meet certain requirements. 
To qualify, they must be a nonprofit organization primarily engaged in amateur sports activities.
Other not-for-profits with tax exemptionsThere are less common types of nonprofit organizations that may also qualify for tax-exempt status, such as friendly societies, research organizations, and not-for-profits that promote a town or region.

STEP 2. Incorporate your organization.

Incorporate your organization

Before you can even think about applying for tax-exempt status in New Zealand, you’ll need to take a crucial step before that: legally incorporating your nonprofit organization in the country.

To incorporate your nonprofit in New Zealand, you’ll need to follow these steps:

  • Choose a name: Pick a unique and memorable name that reflects your organization’s mission and values.
  • Choose a structure: Decide on the legal structure that best suits your organization’s purpose, such as an incorporated society or charitable trust.
  • Draft a constitution: Write up a set of rules that outline your organization’s purpose, structure, and decision-making processes.
  • Register with the Companies Office: Submit your application for incorporation to the Companies Office and pay the required fee.

STEP 3. Register for an IRD number.

Register for an IRD number

The IRD number is a unique identifier issued by the Inland Revenue Department that your organization will use for tax-related activities. The good news is that you can easily register for an IRD number online through their website

Just provide the following:

  1. The legal name of your organization
  2. Address of your organization
  3. Additional documentation, such as proof of incorporation or other legal documents
  4. Submit your application
  5. Wait for the IRD to process your application
  6. Once approved, you’ll be assigned a unique IRD number.

STEP 4. File an application for tax-exempt status.

File an application for tax-exempt status

For this step, follow the correct procedure and provide all the necessary information and supporting documents.

Let us run through the process to help you:

1. Write to IRD

Write a letter to the Inland Revenue Department (IRD) explaining why you think your organization qualifies for tax-exempt status. Think of it as your elevator pitch! 

Include all the necessary details, and don’t be afraid to highlight your organization’s unique strengths and contributions. Be as clear and convincing as possible to increase your chances of success.

If you don’t know how your application should go, here are some sample lines that give you the idea:

“Our organization, XYZ Charity, is a registered nonprofit that provides vital services to low-income families in our community. We meet the criteria for tax-exempt status as outlined on the IRD website, as our primary purpose is to promote social welfare.”

2. Attach your supporting information

This includes your organization’s constitution, financial statements, and a list of your officers. 

Make sure to gather all the necessary information before you begin the application process so you can breeze through this step. 

Don’t forget, the more complete your supporting information is, the smoother the application process will be.

3. Send your application

Now that you’ve written your letter and gathered all the necessary documents, it’s time to send your application to the IRD. You can do this in a few ways: 

Inland Revenue

PO Box 39010

Wellington Mail Centre

Lower Hutt 5045

STEP 5. Wait for approval.

Wait for approval

Congratulations! You’ve submitted your application for tax-exempt status! 

Now it’s time to sit back, relax, and wait for approval. But don’t get too comfortable yet, because waiting for approval can take some time.

While you’re waiting, it’s important to remember that patience is a virtue. The IRD has to review all the applications they receive, and they want to ensure that all tax-exempt organizations meet the necessary requirements. 

You can also keep track of the status of your application. Check your myIR account or contact the IRD’s charities team for updates. This will give you an idea of where your application stands in the process.

Also, keep in mind that the IRD may request additional information or clarification during the approval process. 

If this happens, respond promptly and provide all the necessary information to avoid any further delays.

1. How long does it take to receive approval for tax-exempt status for a nonprofit organization in New Zealand?

The timeframe for receiving approval for tax-exempt status can vary depending on a range of factors.
Generally speaking, the IRD aims to process applications within 30 business days of receiving them. 
However, this time frame is not set in stone and can vary depending on the complexity of the application, the amount of supporting documentation provided, and whether or not any additional information is requested by the IRD.
In some cases, the IRD may need to undertake further investigations or request additional information from the applicant. This can prolong the approval process and result in a longer waiting period.

2. What should I do if IRD rejects my application for tax-exempt status for a nonprofit organization?

If your application for tax-exempt status is rejected by the IRD, the first step is to review the reasons for rejection provided by the IRD and see if there are any errors or omissions in your application that can be corrected.
Once you’ve identified the issues, you can submit a revised application with the necessary corrections and additional supporting documentation. 
Take note: It’s essential to ensure that your revised application addresses all the reasons for rejection and provides any additional information that may be required.
If you’re unsure about how to revise your application, seek professional advice from a lawyer or accountant experienced in nonprofit tax law. They can help you identify the issues and provide guidance on how to address them.