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Charitable Trusts




Registering a Charitable Trust

Since 1 July 2012, all organisations that wish to qualify for exemptions from income tax and gift and estate duty based on the grounds of charitable purpose need to be registered with the Charities Commission (now part of the Department of Internal Affairs).


The Charities Commission will register sports and recreation organisations, as long as they meet the essential requirements for registration as a charitable entity under the Charities Act, including having a charitable purpose.


In assessing applications, the Charities Commission looks at an organisation’s purposes, and applies section 5 of the Charities Act to assess whether the purposes are “charitable purposes”.


Charitable purpose has a special meaning in the law that is more limited than the meaning people generally give to those words. To have a charitable purpose, the rules or governing document of an organisation must clearly state that its purpose is to:

      • Relieve poverty
      • Advance education
      • Advance religion
      • or otherwise benefit the community.
 

 

 

 

 

In some cases, a specific Act of Parliament will state that the purposes of a particular organisation are charitable.


Section 61A of the Charitable Trusts Act 1957 says that it is charitable to provide, or help to provide, facilities for recreation or other leisure time occupation, if the facilities are provided in the interests of social welfare and there is a public benefit. (This includes providing land, buildings, and equipment and extends to the organising of recreational activities.)


“In the interests of social welfare” means that:


(a) the facilities must be provided to improve the conditions of life for the people for whom the facilities are primarily intended and


(b) either:
those people need those facilities because of their youth, age, infirmity, disability, poverty, race, occupation, or social or economic circumstances; or
the facilities are available to all members of the public, or to all male or all female members of the public.


 

 

 

 

The Income Tax Act 2007 provides a specific exemption for bodies promoting amateur games and sports as follows:


Income Tax Act 2007 — CW 46 - Bodies promoting amateur games and sports. An amount of income derived by a club, society, or association is exempt income if:

      • the club, society, or association is established mainly to promote an amateur game or sport; and
      • the game or sport is conducted for the recreation or entertainment of the general public; and
      • no part of the funds of the club, society, or association is used or is available to be used for the private pecuniary profit of a member, proprietor, shareholder, or associate of any of them.


 

 

 

Some examples of the charitable purposes of sports and recreation organisations that have registered with the Commission are:


To be beneficial to the community by …

      • establishing an athletic and recreation facility which will serve people with disabilities
      • providing recreational facilities [for the community]
      • improving the physical and psychological well being of people who have had breast cancer, by participating in dragon boat racing


 

 

To advance education by ...

      • teaching ball-handling skills to school children

 

The Name

No trustees or society may be incorporated as a charitable trust board under a name which is identical, or almost identical to, the name of another board, company or body corporate, unless consent is given to the use of that name.


The Registrar of Incorporated Societies must also be satisfied that the name chosen will not be contrary to public interest.


You may wish to check existing names at the Companies Office.


Registration of the Charitable Trust under the Charitable Trusts Act 1957

For this purpose each Trust will need to sign:


1. An application for incorporation of a trust board under the Charitable Trusts Act 1957. All Trustees must all sign, and their signature must be witnessed by an adult (over 20) who must sign, and print their full names, occupation and city. The witness must not be one of the Trustees. There can be several witnesses.


2. Declaration under s 10 of the Charitable Trusts Act 1957 by one of the Trustees. Please advise which of the Trustees will sign this declaration in front of a solicitor or Justice of the Peace.


 

 

 

 

These forms which we will complete for you are here: http://www.societies.govt.nz/cms/pdf-library/charitable-trusts-forms/form-ct1-application-by-trustees-for-incorporation-as-a-charitable-trust-board-pdf


An application cannot be made by a society if it is already incorporated under another Act or if the trustees of the society are already incorporated under another Act.


Trust Deed

A deed of trust or a document setting out the aims of the trust and how it will be run must be drawn up. There must be a clear intention to devote property to a charitable purpose, the property must be clearly defined and the purpose must be of a public nature, that is, for the benefit of the community or a section of the community. The purpose of the trust must either comply with the meaning of the term `charitable' as defined in the Act or be religious or educational in character.


A copy of the trust deed must be certified as being a `true and correct copy' by one of the trustees and attached to the registration documents for incorporation. The date of certification must be after the date on which the application was completed. Original documents may accompany an application instead of copies.


The Registrar of Incorporated Societies must be satisfied that the trust's activities are lawful and that the trustees will not gain any personal advantage or pecuniary gain from the assets of the trust before the application is approved.


Change of Name, Alteration of Rules or Trusts

The name of a registered charitable trust may be changed. You can apply to the Registrar of Incorporated Societies for the name to be changed.


Any alteration to the rules in the constitution of the board or any variation in the trusts on which the board holds property must be notified to the Registrar of Incorporated Societies within one month from the date of variation.


Where an alteration is made in the latter instance, notification to the Registrar of Incorporated Societies must be made in the form of a certified copy of the relevant new part of the trust, accompanied by a statutory declaration from a trustee setting forth the variation of the trust on which the additional property is held.


The information contained in this document is for guidance only. We recommend you seek professional advice if you intend to register a charitable trust under the Charitable Trusts Act 1957.


Registration with the Charities Commission (now part of the Department of Internal Affairs)

To register, organisations have to:

  • complete the prescribed application form, which includes information about their current and proposed charitable activities
  • submit a copy of their rules, constitution, trust document or similar
  • certify the officers of the organisation by completing a prescribed officer form. To qualify, an officer must not be:
  • An undischarged bankrupt
  • Younger than 16
  • Convicted of a crime of dishonesty and sentenced within the last seven years
  • Disqualified from being an officer under the rules of their organisation
  • Disqualified by the Commission under section 31(4) of the Charities Act
  • Subject to a property order under the Protection of Personal and Property Rights Act 1988, or have their property managed by a trustee corporation under section 32 of that Act (this relates to people who are not fully able to manage their affairs)
  • Prohibited from being a director or promoter of, or being concerned or taking part in the management of, an incorporated or unincorporated body under the Companies Act 1993, the Securities Act 1978, the Securities Markets Act 1988, or the Takeovers Act 1993
  • A body corporate that is being wound up, in liquidation or receivership or subject to statutory management under the Corporations (Investigation and Management) Act 1989.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Once registered, organisations need to:

  • file an Annual Return within six months of their balance date
  • notify the Commission within three months if certain information about their organisation changes.


 

To start registration you: Go to registration page . We suggest that you look at this process now so that you can gather the information needed to complete the Charities Commission registration.

 
 

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