NEW ZEALAND Law and Practice Contributed by: Brent Wicks, Violet Yu, Jonathon Russell and Sandy Chen, Cone Marshall Limited
out of wedlock), that child may be able to bring a claim for further provision, against the deceased parent’s estate, under the Family Protection Act 1955 (see 2.3 Forced Heirship Laws ). With respect to trusts, the terms of the trust deed, including its beneficiaries, can be drafted to include specific children. There is no obligation for a settlor to include all their children as beneficiaries of a trust. 9.2 Same-Sex Marriage Same-sex marriage has been legal in New Zealand since August 2013. Previously, “civil unions” were more widely used. New Zealand promotes charitable giving through tax incentives under the Income Tax Act 2007, which is based around “donee status” for approved charities or entities (eg, registered charities, schools). Donations to a charitable entity with donee status allows donors to receive a 33.33% tax credit for cash donations of NZD5 or more. Likewise, charita - ble bequests in a will are income tax exempt, and can reduce estate tax liability. Companies and Māori authorities may deduct donations to donee organisa - tions from their taxable income. 10. Charitable Planning 10.1 Charitable Giving Registered charities are exempt from income tax and resident withholding tax on non-business income. Combined with donee status, the framework encour - ages charitable giving. 10.2 Common Charitable Structures New Zealand’s charitable planning primarily utilises charitable trusts , incorporated societies and charitable companies , which must register under the Charities Act 2005 to gain donee status and tax benefits. In order to qualify as a charity, the structure must align with one of the four charitable purposes:
• relief of poverty; • advancement of education; • religion; or • community benefit.
Charitable trusts, governed by the Trusts Act 2019, are popular for their simplicity and flexibility. Custom - isable trust deeds can support goals like education or welfare, with amendment powers (used cautiously to preserve charitable purposes). Registered trusts are exempt from income tax and resident withholding tax on non-business and enable 33.33% donor tax credits. However, trustees face personal liability for breaches, and the Charities Act 2005 compliance can be rigorous. Scalability is limited by reliance on dona - tions, small trustee groups and restricted commercial activities, which must directly serve charitable goals. Incorporated societies, distinct entities under the Incorporated Societies Act 2022, may register as char - ities if pursuing charitable purposes. They offer limited liability, democratic governance suited for community initiatives, and tax exemptions if registered. However, complex rules, mandatory meetings and member - ship management demand time and resources. If the society participates in non-charitable activities, it risks deregistration. Charitable companies, formed under the Companies Act 1993 and registered as charities, suit larger opera - tions. They provide limited liability, commercial flexibil - ity to fund charitable purposes, and tax exemptions. However, dual compliance with the Companies Act 1993 (Section 131) and Charities Act 2005 increases costs. Commercial activities may attract scrutiny, deterring donors, and winding up can be complex due to the requirement to transfer assets to a charity with similar purposes.
428 CHAMBERS.COM
Powered by FlippingBook