6 Aug 2011

Call for clarity on fund-raising

8:00 am on 6 August 2011

Sports clubs and schools are being warned that a crackdown by the tax authorities on the charities sector could have implications for them.

Inland Revenue has made it known it will pay closer attention to donations made to charities, particularly when money is passed to an individual who then donates the funds raised to an organisation.

In this case, the organisation does not have to account for GST and the donor claims a tax credit.

PricewaterhouseCoopers partner Eugen Trombitas says this type of arrangement is common and may catch genuine cases unawares.

He says that when it comes to fund-raising there has been a lot of confusion and misunderstanding about when an exchange of money is a true donation or a payment for services.

Mr Trombitas says people who volunteer tend to concentrate on that rather than thinking about their tax obligations.

He suggests guidelines would be useful to bring clarity to this area.