1 00:00:00,120 --> 00:00:02,800 Speaker 1: Interesting developments around tax treatment of charities. Last year, the 2 00:00:02,840 --> 00:00:05,040 Speaker 1: Finance Minister made no secret of the fact that they 3 00:00:05,080 --> 00:00:08,319 Speaker 1: were in her sights and change was coming. Now it's 4 00:00:08,320 --> 00:00:10,559 Speaker 1: not no change coming in the budget next month. Former 5 00:00:10,600 --> 00:00:13,960 Speaker 1: PwC partner and independent tax expert Jeff Nightingale as with 6 00:00:14,080 --> 00:00:17,680 Speaker 1: us Jeff morning, Good morning Mite. Are there complexities here 7 00:00:17,720 --> 00:00:19,560 Speaker 1: that you could have seen and warned her about or 8 00:00:19,640 --> 00:00:20,919 Speaker 1: is this come as a shock. 9 00:00:22,239 --> 00:00:25,040 Speaker 2: No, I think the complexities were always there. I think 10 00:00:25,800 --> 00:00:28,240 Speaker 2: this is a sensible decision not to rush it because 11 00:00:28,520 --> 00:00:31,320 Speaker 2: I think the government's looked at nine hundred submissions that 12 00:00:31,360 --> 00:00:33,200 Speaker 2: they got, even though the Ernie gave a very short 13 00:00:33,200 --> 00:00:36,600 Speaker 2: time for submissions, they got nine hundred apparently, and those 14 00:00:36,600 --> 00:00:39,160 Speaker 2: have pointed out a whole lot of problems coupled really 15 00:00:39,159 --> 00:00:42,200 Speaker 2: big problems at least that they need more time to consider. 16 00:00:42,960 --> 00:00:46,000 Speaker 1: In considering them, can they do something that will allow 17 00:00:46,080 --> 00:00:48,199 Speaker 1: them to get access to charity money or is this 18 00:00:48,520 --> 00:00:49,920 Speaker 1: going to be ultimately too hard? 19 00:00:52,040 --> 00:00:54,720 Speaker 2: My guess would be it's mainly ultimately too hard. We've 20 00:00:54,720 --> 00:00:57,000 Speaker 2: had several goes at this over the last twenty years. 21 00:00:57,000 --> 00:00:59,320 Speaker 2: I mean, the main problem I think they've identified is 22 00:00:59,360 --> 00:01:01,880 Speaker 2: there's not the tax revenue there that they thought there was. 23 00:01:02,320 --> 00:01:05,440 Speaker 2: And the issue is is that, you know, charities don't 24 00:01:05,760 --> 00:01:09,360 Speaker 2: do a lot of tax structuring, and because they don't 25 00:01:09,360 --> 00:01:11,920 Speaker 2: have to, because they tax exement, and if you then 26 00:01:11,959 --> 00:01:13,680 Speaker 2: started to tax them, there would be a lot of 27 00:01:13,840 --> 00:01:17,440 Speaker 2: tax structuring between their charitable enterprise and their business enterprise, 28 00:01:17,680 --> 00:01:20,720 Speaker 2: which means the tax revenue that you might think is 29 00:01:20,760 --> 00:01:23,520 Speaker 2: there will evaporate. So that's the main problem. The other 30 00:01:23,520 --> 00:01:25,760 Speaker 2: issue is really just the complexity of the definitions. 31 00:01:25,959 --> 00:01:27,959 Speaker 1: What about all the headline stuff that we hear that 32 00:01:28,120 --> 00:01:30,520 Speaker 1: are they're not really a charity, they shouldn't be a charity, 33 00:01:30,560 --> 00:01:34,960 Speaker 1: Destini's Church, Sanitarium, Marie authorities. Is it that simple or not? Really? 34 00:01:36,840 --> 00:01:38,520 Speaker 2: There is still an issue there that needs to be 35 00:01:38,520 --> 00:01:40,399 Speaker 2: addressed and I think they'll still be working on that. 36 00:01:40,440 --> 00:01:44,959 Speaker 2: And there's two issues there. One is where this religions 37 00:01:45,080 --> 00:01:49,120 Speaker 2: should generally get charitable relief, and that's a very competitive, complex, 38 00:01:49,280 --> 00:01:51,920 Speaker 2: values driven thing. The other issue is whether or not 39 00:01:52,200 --> 00:01:55,440 Speaker 2: businesses operated by charities get a competitive advantage because they 40 00:01:55,440 --> 00:01:57,920 Speaker 2: don't pay tax, and there are two schools of thought 41 00:01:58,000 --> 00:02:00,200 Speaker 2: on that, and there's more work to be done there. 42 00:02:00,240 --> 00:02:00,800 Speaker 2: I think what. 43 00:02:00,800 --> 00:02:03,160 Speaker 1: About the Mario authorities and is that too political? 44 00:02:04,360 --> 00:02:07,920 Speaker 2: I think that was probably a bigger issue than they anticipated. 45 00:02:08,760 --> 00:02:12,600 Speaker 2: Many of the Maria authorities use charities in their group 46 00:02:12,639 --> 00:02:16,200 Speaker 2: structures to hold some of their settlement assets, and that's 47 00:02:16,280 --> 00:02:18,880 Speaker 2: quite a political can of worms to rip the top 48 00:02:18,919 --> 00:02:19,160 Speaker 2: off that. 49 00:02:19,639 --> 00:02:21,839 Speaker 1: So what have we got there? Is it politics that's 50 00:02:21,880 --> 00:02:25,600 Speaker 1: defeated her, or complexity that could be fixed if she 51 00:02:25,720 --> 00:02:28,840 Speaker 1: wanted to really have a go. Or I had a 52 00:02:28,840 --> 00:02:31,079 Speaker 1: look anyway, and there's a handful of change and it's 53 00:02:31,080 --> 00:02:31,919 Speaker 1: not worth my time. 54 00:02:33,600 --> 00:02:36,760 Speaker 2: I think it's a combination of all three. Mike. I 55 00:02:36,800 --> 00:02:42,240 Speaker 2: think there's not enough tax revenue to justify the political fight. 56 00:02:42,960 --> 00:02:46,320 Speaker 2: And secondly, I think that the changes are harder than 57 00:02:46,320 --> 00:02:50,000 Speaker 2: they might have first anticipated. What Minister Finance did say 58 00:02:50,040 --> 00:02:52,480 Speaker 2: that there is still change coming, whether it'll becoming at 59 00:02:52,480 --> 00:02:55,760 Speaker 2: a more considered pace. They'll do a lot more work 60 00:02:55,840 --> 00:02:59,200 Speaker 2: and it'll probably be a lot narrower focused change. 61 00:02:59,400 --> 00:03:02,040 Speaker 1: Reputation. Has she been damaged at all by this in 62 00:03:02,080 --> 00:03:04,040 Speaker 1: your view? I mean she was gun ho and decem 63 00:03:04,120 --> 00:03:05,560 Speaker 1: but she was going to get the money and it 64 00:03:05,639 --> 00:03:07,680 Speaker 1: was all on. Now it's on. Whoops. I didn't realize 65 00:03:07,720 --> 00:03:08,639 Speaker 1: it was going to be this hard. 66 00:03:09,760 --> 00:03:11,720 Speaker 2: Yeah, look, I don't think she has I think this 67 00:03:11,840 --> 00:03:15,120 Speaker 2: is New Zealand's We have this world leading generic tax 68 00:03:15,240 --> 00:03:18,040 Speaker 2: policy process which is the way we do tax, and 69 00:03:18,080 --> 00:03:21,480 Speaker 2: that involves various stages of consultation, and it involves real 70 00:03:21,520 --> 00:03:24,720 Speaker 2: consultation with the government putting out ideas and listening to 71 00:03:25,240 --> 00:03:28,120 Speaker 2: experts and the community and the affected parties. And I 72 00:03:28,120 --> 00:03:30,120 Speaker 2: think in this case, they put out a proposal that 73 00:03:30,280 --> 00:03:31,960 Speaker 2: was you know, it's a valid thing to think about. 74 00:03:32,120 --> 00:03:34,160 Speaker 2: They've listened to feedback and they've slowed it down, so 75 00:03:34,440 --> 00:03:36,600 Speaker 2: at least from my perspective, I don't I think this 76 00:03:36,680 --> 00:03:38,160 Speaker 2: is the way the system works. 77 00:03:38,400 --> 00:03:40,240 Speaker 1: I was enjoying a company. JEF appreciate it very much. 78 00:03:40,280 --> 00:03:43,600 Speaker 1: Jeff Nightingale form a PwC partner independent tax expert. These Days. 79 00:03:44,040 --> 00:03:46,920 Speaker 1: For more from the Mic Asking Breakfast, listen live to 80 00:03:47,040 --> 00:03:50,120 Speaker 1: news talks that'd be from six am weekdays, or follow 81 00:03:50,160 --> 00:03:51,720 Speaker 1: the podcast on iHeartRadio.