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Tax incentives for company donors

Company donors can claim for donations to an IRD-approved donee organisation.

Some considerations:

  • Companies must keep the receipt for the donation. 
  • Companies can deduct the total amount of donations they have made from their yearly taxable income, eg Company Ltd donated $20,000 to an organisation. Company Ltd’s annual income before tax is $200,000, and its net income after tax (before making the donations deduction) is $150,000. Because its $20,000 donation is less than its $150,000 net income, Company Ltd can deduct the full $20,000 from its annual tax return and file for an income of $180,000. 
  • Companies can deduct the total amount of donations they have made as long as it is not more than the company’s net income (as worked out before taking the deduction into account).

Māori authorities

Māori authorities have the same rules as companies. They can deduct the total amount of donations they’ve made for the financial year from their annual tax return, as long as it’s not more than the Māori authority’s net income (as worked out before taking the deduction into account).

Payroll Giving

Payroll giving is a way for someone to donate to an organisation straight from their pay. This means the person can receive the tax credits immediately, rather than having to file for them at the end of the financial year. An individual can only participate in this scheme if their employers are eligible and choose to offer it.

Companies that can offer payroll giving

Only companies that file their EMS (IR348) and EDF (IR345) electronically using ir-File can offer payroll giving.

If an employer chooses to offer the scheme, they are responsible for:

  • deducting the donation
  • calculating the employee’s tax credits
  • passing the donations on to the donee organisation
  • keeping records of all donations and tax credits.

See the IRD site about payroll giving for employers.

Go to payrollgivinginfo.org.nz, or visit the IRD website

Next: Checklist for accepting donations

Development and resources : Tax incentives for company donors