Charities given tax reminder

Inland Revenue appears to be toughening up on tax refunds for charitable donations after clarifying the rules.

David Irving, chief executive of the Fundraising Institute, said two charities had contacted it to say longstanding donors had experienced difficulties getting refunds this year.

Irving said he had yet to follow up the queries with the tax department, and would usually wait for more evidence an issue was widespread.

‘‘But if someone is giving $100 to charity year after year and suddenly one year they get something declined, it seems a bit strange.’’

The rules allow taxpayers to claim back up to 33 cents for every dollar they donate to New Zealand charities.

But an Inland Revenue spokesman said concerns about tax refunds prompted it to issue an 11-page explainer to charities last year.

One of its golden rules is that donors can’t claim tax refunds if they receive a material benefit in return for a gift.

As well as effectively outlawing tax refunds for items bought through charity auctions, the rule is also a potential stumbling block for arts organisations that offer donors free tickets.

Inland Revenue’s advice stated that charities needed to break out the donation component of any payment as a separate line item on an invoice.

The Royal New Zealand Ballet, which offers two ballet tickets and a programme worth $240 to ‘‘dress circle’’ supporters who pay it $1000, is following that advice.

Ballet spokesman Jeremy Brick said it discussed its donation programme with Inland Revenue and tax advisers PWC late last year.

It had provided ‘‘updated information’’ to supporters, making it clear upfront that the ticket component of their payment would not be tax deductible, he said.