Charities Amendment Bill

The Charities Amendment Bill (the Bill) was introduced to Parliament on 21 September 2022.  The Bill is the result of a process to review and modernise the Charities Act 2005 (the Act) which began in 2018 and, like many things, experienced delays due to the COVID-19 pandemic.  The intention of the Bill is to increase transparency within the charities sector, improve access to justice services, and reduce the barriers faced by smaller charities.  Below, we set out some of the amendments proposed by the Bill.

• The appeals framework is expanded to allow appeals against the decisions of the Charities Registration Board (or certain decisions of the Chief Executive) to be heard by the Taxation Review Authority (the Authority). It is intended that the Authority will be a faster, less formal, and cheaper avenue than the High Court.  The High Court would remain as an appeal court for the Authority’s decisions.  Charities would be able to represent themselves, further reducing legal costs, and the timeframe to lodge an appeal is increased from 20 working days to two months.  Appealable decisions are also expanded to include, among other things, all decisions of the Charities Registration Board.
• The Chief Executive of the Department of Internal Affairs will be able to exempt ‘very small charities’ from meeting the current reporting standards. Exempt charities would still be required to provide an annual return with ‘minimum information’.  What constitutes a very small charity and minimum information will be defined by future, supplementary regulations.  This is a particularly welcome change as even the tier 4 reporting standards can be onerous in terms of time and cost for very small charities. 
• The roles and responsibilities of officers is also clarified within the Bill. The grounds for disqualification of officers are outlined and expanded on, and the Charities Registration Board is given the power to disqualify officers for serious wrongdoing or significant/consistent failures to meet their obligations.
• One key change to be aware of is that the Bill would require charities to review their rules/governance procedures annually. Many charities may already undertake such reviews as a matter of good practice, however for smaller charities this may become a more onerous task.  This does present a timely reminder to charities to ensure that they are both following their rules and that their rules are fit for purpose.

Notably, amendments relating to the definition of charitable purposes or around political purposes are not considered by the Bill. The sector has been calling for a more thorough review for some time, and such a review is still intended to be undertaken in the future alongside additional non-legislative changes to improve the sector.  In the meantime, the Bill – if passed in its current form – does provide practical improvements to reporting requirements, appeals, governance, decision-making and compliance.

Public submissions are now open until 10 November 2022, and more information around making a submission can be found here Charities Amendment Bill - New Zealand Parliament (www.parliament.nz).  The Bill does not propose significant changes to the Charities Act 2005, therefore there is little required of charities while the Bill is in its early stages.  It will be worth reviewing the Bill as it progresses through Parliament to consider whether action is required at a later date.  The McCaw Lewis team can assist you in reviewing your charity’s rules and understanding what changes apply to your charity.

Kaylee is a Senior Solicitor in our Asset Planning Team and can be contacted on 07 808 6066.