Latest News [index] Payroll-Giving: A Real-time Benefit For Charitable Giving
A new voluntary payroll-giving scheme for charitable donations, comes into effect on 7 January 2010.
The key points of the scheme are:
- participation in voluntary for employers and employees;
- the scheme is only available to employees whose employers choose to offer payroll giving;
- an employer cannot offer payroll giving unless the employer must file their employer monthly schedules and PAYE deduction forms electronically, using the ir-File service;
- employees who choose to make payroll donations will receive a 33â..." % tax credit on the amount of the donation made. The tax credit is offset against the PAYE amount calculated on the employee's gross pay, thereby reducing the amount of PAYE payable for that period;
- the maximum tax credit available is an ammount equal to the tax portion of the PAYE deduction on the employee's pay;
- payroll donations must be made to a donee organisation. A donee organisation is a society, institution, association, organisation, trust or fund as described in section LD 3(2) or an organisation listed in schedule 32 of the Income Tax Act 2007;
- A full list of donee organisations can be found at www.ird.govt.nz/doneeorganisations;
- employees are responsible for ensuring that the chosen recipient is in fact a donee organisation;
- employers are responsible for ensuring that payroll donations are transferred to the chosen donee organisations;
- employees who donate through payroll giving are not eligible for the end-ofyear rebate;
- the end of year rebate (the current system) is still avaialable for employees who do not donate through payroll giving.
For back ground information regarding payroll-giving see the discussion document released on 27 November 2007, which explores the possibility of introducing a voluntary payroll-giving scheme that will allow employees to make donations directly from salary or wages with immediate tax relief.
For further information see Payroll Giving - A special report from the Policy Advice Division of the Inland Revenue (13 October 2009) (www.taxpolicy.ird.govt.nz)