Charities may need to pay deregistration tax when they’re removed from the Charities Register.
This applies to only deregistered charities, not to other sorts of not-for-profits that are registered with only the Companies Office.
You have 1 year after deregistering
Your charity has 1 year from the date it’s deregistered to do 1 of the following:
- re-register as a charity
- dispose of or transfer its net assets to a registered charity or a New Zealand tax-exempt entity.
If you do not do this, for example if you keep some assets or transfer assets to an overseas charity, you’ll need to pay income tax on the assets 1 year from the date you deregistered. You’ll need to include them in your charity’s income tax return for the period that includes the day 1 year after the deregistration date.
For example, if your charity was deregistered on 1 November 2023 and you kept some assets, you’d need to include these assets in the charity’s 2025 income tax return. That’s because 1 November 2024 (1 year after the deregistration date) is in the 2025 tax year.
Working out the value of depreciable property or financial arrangement
After your charity is deregistered, you'll need to work out the value of any depreciable property and financial arrangements you hold. You'll use this value to work out tax for each following year.
Our Charitable and donee organisations – IR255 guide has examples of how to pay tax on and calculate net assets, depreciable property and financial arrangements.
When you do not have to pay deregistration tax
There are 2 situations when your deregistered charity will not have to pay tax on assets it keeps. You do not have to pay the deregistration tax if your charity:
- was deregistered by Charities Services before 1 April 2015 (or before 14 April 2014 if you chose voluntary deregistration)
- has net assets worth $10,000 or less on the date it deregisters. This applies from 1 April 2019.
From 1 April 2019, only charities with net assets worth over $10,000 will have to pay deregistration tax on the total value of the net assets. The total value includes the initial $10,000.
When you work out the value of your charity's net assets, do not include:
- assets received from the Crown to settle a Treaty of Waitangi claim or under the Māori Fisheries Act 2004
- assets, other than money, gifted or left to the organisation when it was exempt from income tax
- marae land and improvements under the Te Ture Whenua Māori Act 1993.