Differences between version 5 and predecessor to the previous major change of NewZealandIncorporatedSocietyHowto.
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| Newer page: | version 5 | Last edited on Wednesday, October 13, 2004 8:47:19 pm | by CraigBox | Revert |
| Older page: | version 4 | Last edited on Wednesday, October 13, 2004 12:02:48 pm | by DavidHallett | Revert |
@@ -2,8 +2,9 @@
!!!New Zealand Incorporated Society HOWTO.
Author: DanielLawson
+
!!Introduction
Turning a club or society into an Incorporated Society (IS) is a reasonably straightforward thing to do, however there are a lot of things that aren't obvious to start with. When the Waikato Linux Users Group decided to go down this path, it took a long time before everything was made obvious. Hopefully this resource will help other clubs of any nature painlessly work their way through the steps required.
@@ -28,10 +29,28 @@
The biggest reason is time, in my opinion. It is a lot of hassle. Also, once you have a set of rules in place as to how the society must operate, you actually _have_ to follow this. The benefit might actually be fairly minimal for your society.
!Financial Requirements
-It's worth stressing that if your club or society becomes an IS, then there are some fairly strict requirements about how finances are handled that will impact upon your non-profit (and therefore tax-exempt) status
. In particular, being a
non-profit society implies
that funds
the society raises
are not distributed back to its
members. The society can employ people, and I believe can pay honorariums to its committee, however these have to be fair and current market rates.
+It's worth stressing that if your club or society becomes an IS, then there are some fairly strict requirements about how finances are handled.
+
+!Non profit organisation
+
+A
non-profit organisation is any
society, association or organisation:
+
+* not carried on for the profit or gain of any member, and
+* whose rules do not allow money, property, or any other benefits to be distributed to any of its members.
+
+You will have to make sure
that the rules of your IS state that (especially that in liquidation) that money/property
are not to be
distributed back to members, and you will need a rule that says that the previous rule can't be altered (perhaps without consulting the IRD)
.
+
+
The society can employ people, and I believe can pay honorariums to its committee, however these have to be fair and current market rates. (Confirm this?)
+
+!Tax exemptions
+
+There is a [$1000 tax rebate available to non profit organisations|http://www.ird.govt.nz/incometaxbusiness/payingtax/taxrates/non-profittax.html].
+
+Subs, Fees, Grants, and Donations are not taxable as an Incorporated Society. You pay tax on interest earned, and there may be other forms of income which an IS will pay tax on. If you have a bank account that does not give you interest (such as an ASB IS business account) then you can apply to the IRD for an exception on resident withholding tax on interest, by way of a letter and providing financial statements to this effect. This will mean you don't have to file a tax return every year
.
+Unless you are a charity, you probably won't get any other type of tax exemption. If you are a charity, read the IRD's [Charity Guide|http://www.ird.govt.nz/library/publications/geninfo/ir255.pdf]. (I assume) Becoming a charitable society is outside the scope of this HOWTO.
!!Steps to follow
* Preparation
@@ -58,19 +77,19 @@
The declaration of rules must be filled in with a Justice of the Peace. There are usually several of these in any town, so it shouldn't be a problem finding one.
!Financial / Tax responsibilities
-Just because you're an IS doesn't make you tax-
exempt automatically
. The first thing you should be doing as an Incoporated Society (ie, as soon as you get your Certificate of Incorporation back from the Companies Office) is obtaining an IRD number, opening bank accounts, and applying to the IRD for tax exempt status.
+Just because you're an IS doesn't make you exempt from income tax
.
The first thing you should be doing as an Incoporated Society (ie, as soon as you get your Certificate of Incorporation back from the Companies Office) is obtaining an IRD number, opening bank accounts, and possibly
applying to the IRD for tax exempt status.
-One thing to be aware of here is that the IRD has certain requirements that must be met by your rules before you can qualify for tax-exempt status
. It is probably worth submitting your proposed rules or charter to the IRD for verification _before_ you register with the Companies Office. This is merely a time-saving device however - if the IRD wants you to make changes to the charter, you have to have a special meeting to make the changes, get them verified by a JP, and register them with the Companies Office again.
+One thing to be aware of here is that the IRD has certain requirements that must be met by your rules before you can qualify for any
tax exemptions
. It is probably worth submitting your proposed rules or charter to the IRD for verification _before_ you register with the Companies Office. This is merely a time-saving device however - if the IRD wants you to make changes to the charter, you have to have a special meeting to make the changes, get them verified by a JP, and register them with the Companies Office again.
Note: A JP does not actually verify your changes, just your signatures. That is, they verify that you are who you say you are, and that you are requesting these changes.
-Subs, Fees, Grants, and Donations are not taxable as an Incorporated Society. You pay tax on interest earned, and there may be other forms of income which an IS will pay tax on. However, if
you are not tax-exempt, you will have to fill in tax returns and so on
every year.
+If
you are not tax-exempt, you will have to fill in a
tax return (a nil return if you make no income)
every year.
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AddToMe
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[1]http://www.med.govt.nz/ri/co_reg/incsociety1.html
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CategoryAdministration
