Source: Federated Farmers
Federated Farmers is welcoming confirmation that controversial tax proposals impacting the not-for-profit sector won’t proceed without political oversight and legislative change.
“This is a significant win for Federated Farmers, which earlier this week called on the Revenue Minister to act quickly on these proposals,” national board member Richard McIntyre says.
“We’ve strongly opposed the change – calling it a fundamental shift in tax policy disguised as legal interpretation – and urged Simon Watts to rule it out.
“It’s a huge concern for the thousands of not-for-profits across New Zealand who rely on membership subscriptions to fund their work.”
An Inland Revenue draft interpretation of tax law would see not-for-profits taxed on their membership income for the first time.
But Revenue Minister Simon Watts yesterday told Federated Farmers he has taken the issue out of IRD’s hands and into the political realm, stating:
“I have heard concerns about how this would impact many not-for-profit organisations.
“When Inland Revenue revises its interpretation of tax law, the Government will consider the impacts and respond with a law change before any new interpretation comes into force.
“I have asked for advice on how the primary legislation could be amended to ensure there is a fair and practical outcome in this area.”
This follows weeks of sustained pressure from Federated Farmers.
“We were among the first to sound the alarm that the draft interpretation would overturn 20 years of settled tax treatment for mutual associations,” McIntyre says.
The proposal would have seen Federated Farmers – and around 9000 other not-for-profits, including unions, community groups, and political parties – taxed on membership fees.
“The Minister’s move to consider legislative change before any new interpretation takes effect provides clarity that changes won’t be forced on the sector without public scrutiny,” McIntyre says.
Federated Farmers also acknowledges the support of other not-for-profits who helped push this issue up the political agenda.
“This is a textbook example of effective advocacy – early political pressure and commonsense reasoning ensured the Government took control before serious harm was done.”
