From January 2010 payroll giving will be an option for employees in New Zealand. New Zealand Parliament has recently passed changes to New Zealand’s tax laws which will introduce a payroll giving scheme, enabling employees to make donations to charities directly from their pay while immediately receiving a tax credit.
From January 2010, businesses and employees will be able to sign up to payroll giving and community organisations will start to benefit. Inland Revenue will provide resources to employers promoting these changes.
The Minister for the Community and Voluntary Sector, the Hon. Tariana Turia, welcomed the introduction of the new tax legislation to encourage charitable giving.
“I am calling on employers and their staff to investigate payroll giving as a way of supporting the community and voluntary sector. It is an effective and efficient way to donate to donee organisations such as marae, schools and charities,” said Minister Turia.
The legislation introducing the scheme received Royal assent on 6 October 2009 and the scheme is expected to be operational by 6 January 2010. Inland Revenue have released some guidelines about payroll giving.
The scheme will operate through New Zealand’s PAYE system and will enable employees to make regular donations from their salary or wages to charities whilst receiving the tax benefit of their donations each payday without the need to retain receipts for donations.
The key features of the new scheme are:
• participation in payroll giving will be voluntary for employers and employees;
• payroll giving will be available only to employees whose employers file their monthly schedules (EMS (IR348) and EDF (IR345)) electronically;
• employees who choose to make payroll donations will receive a tax credit on the amount of those donations each payday. The tax credit will be calculated at a set rate of 33 1/3% of the donation;
• the tax credit will be offset against the PAYE calculated on the employee’s gross pay, reducing the amount of PAYE payable for that period; and
• organisations eligible to receive donations through the payroll giving scheme are those which have 'Donee Organisation' status and are on the approved list with Inland Revenue.
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