Publications
Charities Commission registrations: what you need to know
Registration with the Charities Commission
As you may be aware, the Charities Commission (Commission) has opened for business and is now accepting registrations from entities wanting to confirm their charitable status.
If a charitable entity is not registered with the Commission by 1 July 2008, it will lose the exemption for income tax currently afforded to all charities under the Income Tax Act 2004. This applies to all charities irrespective of their objects and credentials. And forgetting is not an excuse!
But before you join the stampede to register, it is prudent to use the 'window of opportunity' between now and 1 July 2008 to your benefit.
There are two issues that charities should consider regarding the timing of their application to the Commission.
Annual returns
Once registered with the Commission, the charity must file an annual return including a balance sheet and financial statements. The returns are due six months after the charity's balance date.
However, if a charity registers immediately after its balance date (but before 1 July 2008), its first annual return is not due until after the end of that year.
For example, assume a charity has a 31 March balance date. If that charity registers with the Commission between 1 April 2007 and 31 March 2008, its first annual return will be due by 1 October 2008. But if that charity delayed its registration until after 1 April 2008 (but before the 1 July 2008 cut-off), its first annual return will not be due until 1 October 2009.
This extra year may prove useful if it is necessary to implement new systems to ensure that all financial reporting is up to scratch - particularly given that the charity that registered after 1 April 2008 does not have its tax status jeopardised by this later registration.
Personnel changes
Every time an officer (for example, a trustee of a trust) changes, the new officer is required to complete a form providing their details to the Commission.
The "original" officers are similarly required to provide their details at the time of the initial application with the Commission.
As a result, if the charity is one that is likely to have a change of officers at an AGM (or at any other set time of year), it may be preferable to delay registration in order to avoid unnecessary paper work.
This will allow the charity to register with the Commission at a time where it envisages that its group of officer holders will be relatively stable.
Registration generally
As we have mentioned in previous newsletters, a fundamental requirement for registration is the lodging of the founding documents (for example, the trust deed for charitable trusts or the constitution of charitable societies or companies).
If your charity's founding documents have been misplaced, or if you think they may need to be amended or updated before registration you should be addressing this now.
If you don't have any difficulty with filing the first annual return by 1 October 2008, you would be well advised to start on the registration process soon. There will be a big rush to get them all done if everyone leaves registration until after 1 April next year.
If we can assist in the review of any foundation documents or in the application process generally, please contact us.
For further information, please contact your usual Bell Gully advisor or:
AUCKLAND
David Simcock
Partner, Firm Chairman
Niels Campbell
Partner
Willy Sussman
Partner
John Bassett
Senior Associate
Graeme Olding
Senior Associate
Disclaimer
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
