On 24 February 2025, Inland Revenue released an Officials’ Issues Paper titled Taxation and the not-for-profit sector. The paper sought feedback on several potential areas including the taxation of charity-run businesses, the treatment of donor-controlled charities and long-standing exemptions that may no longer be fit for purpose. It marked the beginning of what could have been significant changes to how charities are taxed in New Zealand.
Then in late April 2025, the Finance Minister, Nicola Willis, confirmed that reform would not proceed due to the complexity uncovered as a result of the submissions received.
On 7 July 2025, Inland Revenue published all 826 submissions on its website, allowing full public access to the feedback. At over 3,500 pages, the submissions represent a large volume of information and an important gauge of views on the issue.
Despite varying opinions on the detail, there was a strong, unified message: any changes to the current tax settings should be approached with caution and must not undermine the critical role not-for-profit organisations (NFPs) play in New Zealand communities.
A common message was that NFPs provide a net gain to wider society, and many noted that these groups often deliver services that the government would otherwise need to fund. They argued, tax exemptions are not a handout, but a tool that allows NFPs to maximise public benefit.
Given the complexity of the issue, the range of views and the timeframe Inland Revenue was working to, it is arguably not a surprise the process appears to have failed or at least stalled significantly. But what has become clear is that New Zealanders deeply value the role of charities and not-for-profits, and they want a tax system that strengthens, not stifles the work these organisations do.
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