Payroll Giving - A New Way to Give
The Government continues to try to encourage a culture of generosity in New Zealand, and has introduced a new payroll giving scheme, due to take effect early next year.
Last year, the $1,890 cap for which individuals could claim a tax rebate for cash donations to donee organisations was removed (the caps for companies and Maori authorities were also lifted). Now, individuals can claim a rebate of one-third (33.33%) of all donations they make, limited only by the level of their annual taxable income.
The Charities Commission is working with Inland Revenue, the Office for the Community and Voluntary Sector, and other agencies, to provide ongoing information to the sector about the new scheme.
Inland Revenue is mailing a pack to employers starting on 9 November, explaining how to set up a Payroll Giving scheme.
In brief though:
Voluntary payroll giving scheme introduced – from 7 January 2010
The Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill was signed into law on 6 October 2009. This introduced a voluntary payroll giving scheme that will allow employees to make regular charitable donations directly from their pay, as part of an employer-initiated workplace giving scheme.
The scheme will be available to employers who wish to offer it to their employees from 7 January 2010. Only employers who electronically file their employer monthly schedule (EMS) and deduction form can choose to offer payroll giving to their employees.
Where offered by an employer, payroll giving gives employees the opportunity to donate to approved donee organisations direct from their pay, and to receive immediate tax credits that reduces the total tax payable. This means employees don’t need to wait until the end of the year to claim the tax credit.
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