{"id":471585,"date":"2026-06-11T06:40:11","date_gmt":"2026-06-11T06:40:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/471585\/"},"modified":"2026-06-11T06:40:11","modified_gmt":"2026-06-11T06:40:11","slug":"the-government-cap-on-tax-credits-for-charitable-donations-beyond-100k-will-inhibit-generosity-say-legal-experts","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/471585\/","title":{"rendered":"The Government cap on tax credits for charitable donations beyond $100k will inhibit generosity, say legal experts"},"content":{"rendered":"

At its heart, donation tax credits exist to encourage generosity. They recognise that when charities are properly resourced, communities are strengthened and pressure on government services is reduced. When community organisations cannot meet local needs, those needs do not disappear. The burden simply shifts elsewhere, often back to the taxpayer.<\/p>\n

The Government\u2019s Regulatory Impact Statement acknowledges that evidence on how major donors respond to tax incentives is limited. <\/p>\n

Donor behaviour, particularly among those making significant gifts, varies considerably. Yet despite that uncertainty, the Government has proceeded with a policy that could materially alter giving patterns across the charitable sector.<\/p>\n

That should concern us all.<\/p>\n

Large gifts often fund capital projects, community facilities, social services, scholarships, medical research and long-term programmes that smaller donations alone cannot sustain. For some charities, even a modest reduction in major gifts could mean delaying projects, reducing services, postponing maintenance, or cutting staff.<\/p>\n

The change may also discourage the establishment of new philanthropic structures. Family foundations and charitable trusts are often created through substantial initial gifts. A cap on donation credits risks sending a message that New Zealand welcomes generosity \u2014 but only up to a point.<\/p>\n

The Government has framed the change as a matter of improving \u201cvalue for money\u201d for taxpayers. But that misunderstands the fundamental role charities play in society.<\/p>\n

Charitable giving is not simply a fiscal transaction. It is one of the ways communities care for one another, support vulnerable people and strengthen social cohesion. Justice Williams observed in the Supreme Court\u2019s Family First decision<\/a> that an advocacy group cannot claim charitable status because societies place a high value on giving to the wider community without expecting equivalent value in return. Such giving is one of the ways social cohesion is supported.<\/p>\n

Justice Williams also noted that charity is embedded in tikanga M\u0101ori through values such as aroha, manaakitanga, whanaungatanga and kaitiakitanga. In other words, generosity is not peripheral to New Zealand\u2019s social fabric. It is part of it.<\/p>\n

Thus New Zealand\u2019s very own underlying culture and first legal system promotes charity over and above financial constraint, which is contrary to that which the Government is implementing.<\/p>\n

This is why another part of the Government\u2019s analysis deserves serious attention. Inland Revenue noted that one option considered was removing certain recognised charitable purposes altogether. Although that option was not progressed, the fact it was seriously considered should give the sector pause.<\/p>\n

New Zealand already has a relatively narrow definition of charitable purposes compared with similar jurisdictions such as the United Kingdom. Any move to narrow those purposes further would have profound consequences for many organisations and the communities they serve.<\/p>\n

The Government\u2019s key message around why this change is necessary is to stop donor-controlled charities misusing the existing rules. However, if the Government\u2019s real concern is donor-controlled charities or perceived misuse of the existing rules, it should address those issues directly. <\/p>\n

Inland Revenue already has powers to investigate, regulate and enforce compliance. Targeted action would be more proportionate than a broad policy change affecting every major donor.<\/p>\n

New Zealand also appears to be moving against the international trend. Comparable countries such as Australia, Canada and the United Kingdom continue to look for ways to encourage philanthropy and expand charitable giving. A 2025 report by the Charities Aid Foundation found that people are more likely to give when they believe the government supports and values charitable contributions.<\/p>\n

A cap sends the opposite message.<\/p>\n

The charitable sector exists because communities care about one another. It provides support, dignity and opportunity to people who might otherwise be overlooked. Generosity is not a problem to be managed. It is a public good to be encouraged.<\/p>\n

Before this policy is implemented, the Government should pause, gather stronger evidence and properly assess the consequences. A policy designed to save money today may ultimately cost communities far more tomorrow.<\/p>\n

New Zealand\u2019s charities deserve better than assumptions. They deserve decisions grounded in evidence, informed by consultation and guided by a genuine understanding of the value they create.<\/p>\n

This is a pre-publication version of a longer academic piece which will appear in the June edition of the New Zealand Law Journal.<\/p>\n

Dr. Juliet Chevalier-Watts is Associate Professor at the School of Law, Philosophy and Politics, at University of Waikato. Steven Moe is a partner and co-lead of the Impact Team at Parry Field Lawyers. <\/p>\n

Catch up on the debates that dominated the week by signing up to our Opinion newsletter<\/a> \u2013 a weekly round-up of our best commentary.<\/p>\n","protected":false},"excerpt":{"rendered":"At its heart, donation tax credits exist to encourage generosity. They recognise that when charities are properly resourced,…\n","protected":false},"author":2,"featured_media":471586,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[114305,27245,138,4464,64582,60993,33489,5658,3278,2082,39198,266,238295,6712,111,139,69,90,5659,7496,223,1533],"class_list":["post-471585","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-100k","tag-beyond","tag-business","tag-cap","tag-charitable","tag-credits","tag-donations","tag-experts","tag-facts","tag-for","tag-generosity","tag-government","tag-inhibit","tag-legal","tag-new-zealand","tag-newzealand","tag-nz","tag-on","tag-say","tag-tax","tag-the","tag-will"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/471585","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=471585"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/471585\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/471586"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=471585"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=471585"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=471585"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}