Inland Revenue is proceeding with consultations on a proposal requiring organisations that collect membership fees to pay tax on that revenue.
In May, accountants voiced strong concerns over IR’s proposal to tax membership fees for certain societies and associations. Federated Farmers and Chartered Accountants Australia New Zealand have likewise raised objections.
However, in November, IR moved forward to the next phase by distributing a consultation document to 50 organisations, without opening it up for public consultation.
The Taxpayers Union referenced a Federated Farmers statement from June indicating that the organisation had been informed the potential change was paused.
“Yet IRD was instructed to continue the work behind closed doors, consulting only with insiders while shutting out critics. It is a blatant breach of New Zealand’s open tax-policy process.”
An Inland Revenue spokesperson said the latest consultation involved individuals and groups who provided feedback during the February consultation.
“Targeted consultation is a method of consultation on detailed design issues we often use with tax professionals and affected parties,” the spokesperson said.
“It allows us to explore technical detail without first having to cover background. It is for this reason that we contacted groups who had shown particular interest in the topics canvassed.”
The spokesperson said the consultation will take place from November 2025 until December 24.
“If need be, we will clarify points from submitters in the new year. Final decisions can then be made in early 2026.”
Angus Ogilvie, managing director of Generate Accounting and NZ division councillor for CPA Australia, voiced concerns about the potential change earlier this year.
“The original proposal received a very significant amount of feedback. CPA Australia highlighted that the Australian case used by IRD to justify the removal of the mutuality principle for membership fees was ultimately overturned by the Federal Parliament,” Ogilvie said.
“There was such a backlash at the High Court ruling that the government of the day moved legislation to restore the mutuality principle.”
“We remain opposed to allowing membership fees to enter the tax net. It is a legitimate way to pool members’ funds to meet the overheads of an organisation. It has the potential to impact many incorporated societies at a time when the for-purpose sector is under such strain.
“The government backed away from tax changes to charities but seems intent on imposing changes to incorporated societies. That seems at best inconsistent.”
Ogilvie said what’s even more concerning is that only a select group of stakeholders, likely chosen by the department, are being invited to provide feedback on the proposal.
“This seems to fly in the face of the Generic Tax Policy Process.”