Changes that will make it easier to claim donation tax credits

Published 27 February 2019.

Inland Revenue is working on some proposed changes(external link) to make our tax system more straightforward for you. The changes are currently going through Parliament and are designed to simplify the end of year tax process for everyone.

One of these changes will simplify the way your charity’s donors can claim donation tax credits if your charity has approved donee status. Making it easier to claim donation tax credits will help reinforce and encourage giving to your charity.

Key changes

From 1 April 2019 Inland Revenue will accept donation receipts which are submitted electronically using myIR(external link). myIR is Inland Revenue’s secure online service. It allows you to access a range of online services when and where you want.

The donation receipts will be able to be submitted during the tax year, rather than after the end of the tax year. This reduces the risk that they could be forgotten or lost before being able to be submitted.

At year-end, if a person has submitted donation receipts during the year and Inland Revenue considers the person is entitled to the donation tax credit, the refund will be issued without the need to submit a tax credit claim request.

Donors will still be able to file a separate paper-based donation tax credit claim if they choose to do so.

What does this mean for your charity

This simplification means your charity may wish to review the advice you provide to your donors. For example, you may decide to let your donors know about these simplification changes.

You may also decide to review your donation receipts and make sure they can be provided electronically. In order to be a valid donation receipt, it must include:

• donor’s full name
• the amount they donated
• the date they donated
• a clear statement that it was a donation
• your organisation’s name, Charities Services registration number and IRD number
• your official stamp or logo or letterhead
• The full name, designation, and signature of an authorised person from your organisation
• A receipt number, unique to each receipt

We also recommend that you include your organisation’s IRD number and/or your Charities Services number (preferably both).

You can find more information about donation receipts in the booklet Charitable organisations (IR255)(external link) on page 28.

Other donation options

In addition to making a donation directly to your charity, don’t forget that your donors may also be able to donate through their salary and wages if their employers offer payroll-giving. Payroll-giving rules are very efficient as they give donors the benefit of a tax credit immediately instead of having to wait until the end of the tax year. If you would like more information about payroll-giving, have a look our payroll-giving guide IR 617(external link).

Visit the Changing for You website to find out more about the proposed changes and what they could mean for you and your charity’s donors.

You can find more information about tax changes that affect not-for-profits on the Inland Revenue non-profit organisations news and updates page.