Future of Charities and Tax School of Tax and Business Law Future prospects for Charity Law, Accounting and Regulation Conference 2019 Future of Charities and Tax Professor Fiona Martin School of Taxation and Business Law Business School f.martin@unsw.edu.au Wellington, New Zealand, 11-12 April 2019

Charity Profiles Australia New Zealand No of charities 53,000 27,000 Staff employed 10.6% of all employees 180,000 (full time and part time) Main charitable purposes Religion and education Education and religion Income /size 67.3% charities income < $250,000 58% charities expenditure < $125,000

Income Tax Exemptions Country All income exempt Limitations to exemption from income tax Australia Yes Nil New Zealand Business income exempt except where charity carries out its charitable purposes outside NZ New provision that trading subsidiary must also be a charity to be income tax exempt England Partly All business income. Charitable trade income taxable if not used for the charities’ charitable purposes. But not taxable if under a certain threshold depending on the annual gross income of the charity USA Unrelated business income is taxable Hong Kong Unrelated business income is generally taxable Income Tax Act 2007 (NZ) s CW 41. ibid (NZ) s CW 42(1). Income Tax Act 2007 (UK), c 3 s 525; Corporation Tax Act 2010 (UK), s 478. 26 USC §§ 511–14 (2006); Department of the Treasury, ‘Tax on Unrelated Business Income of Exempt Organisations’ (Publication 598, Internal Revenue Service 7 January 2015). Inland Revenue Ordinance (Cap 112, Laws of Hong Kong) § 88 states, ‘and either (a) the trade or business is exercised in the course of the actual carrying out of the expressed objects of such institution or trust; or (b) the work in connection with the trade or business is mainly carried on by persons for whose benefit such institution or trust is established’.