Accountants expressed concerns in May about IR plans to make some societies' and associations' membership fees subject to tax. Photo: RNZ
Inland Revenue is pushing ahead with consultation on a plan that would see organisations that charge membership fees having to pay tax on that income.
In May, accountants expressed concerns about IR plans to make some societies' and associations' membership fees subject to tax.
Federated Farmers and Chartered Accountants Australia New Zealand also objected.
But in November, IR pushed ahead with the next stage, with a consultation document circulated to 50 organisations, not for public consultation.
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The Taxpayers Union pointed to a Federated Farmers release in June that indicated the organisation had been told a potential change had been paused or stopped.
"Yet IRD was instructed to continue the work behind closed doors, consulting only with insiders while shutting out critics. It is a blatant breach of New Zealand's open tax-policy process."
A spokesperson for Inland Revenue said the latest consultation was with people and groups who gave feedback on the February consultation.
"Targeted consultation is a method of consultation on detailed design issues we often use with tax professionals and affected parties. It allows us to explore technical detail without first having to cover background. It is for this reason that we contacted groups who had shown particular interest in the topics canvassed.
"Consultation will occur over the period November 2025 to 24 December. If need be, we will clarify points from submitters in the new year. Final decisions can then be made in early 2026."
He said anyone who wanted a copy of the document could request one.
Angus Ogilvie, managing director of Generate Accounting and NZ division councillor for CPA Australia, expressed concern about the potential change earlier in the year.
He said he was still worried. "The original proposal received a very significant amount of feedback. CPA Australia highlighted that the Australian case used by IRD to justify the removal of the mutuality principle for membership fees was ultimate[ly] overturned by the Federal Parliament.
"There was such a backlash at the High Court ruling that the government of the day moved legislation to restore the mutuality principle. We remain opposed to allowing membership fees to enter the tax net. It is a legitimate way to pool members funds to meet the overheads of an organisation. It has the potential to impact many incorporated societies at a time when the for-purpose sector is under such strain.
"The government backed away from tax changes to charities but seems intent on imposing changes to incorporated societies. That seems at best inconsistent. Even more worrying is the fact that only a select number of interested parties, presumably hand picked by the department, are being asked to respond to the proposal. This seems to fly in the face of the Generic Tax Policy Process."
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