Taxation and the not-for-profit sector – IRD consultation

Recreation Aotearoa welcomed the opportunity to provide feedback on the Inland Revenue Department’s consultation on Taxation and the Not-for-Profit Sector.

Overview of general comments

We support the goal of maintaining a fair and effective tax system but have raised significant concerns about how the proposed changes could affect the play, active recreation, and sport sector.

Our submission highlights that many recreation organisations rely on income from commercial activities — such as events, programmes, or facility hire — to subsidise community access and participation. The proposed removal of tax exemptions for income deemed ‘unrelated’ to charitable purposes risks creating uncertainty, higher compliance costs, and reduced community benefits.

We also caution that the proposed financial threshold may capture organisations that play a vital role in community wellbeing, despite not operating as large commercial entities.

Our key recommendations include:

• Providing clear definitions and examples of “unrelated business income” relevant to the recreation sector.
• Setting fair and targeted thresholds that focus on genuine commercial activity, not community-based organisations.
• Considering simplified compliance measures or exemptions for smaller charities.
• Retaining the existing income tax exemption for organisations established mainly to promote an amateur game or sport.

Read our submission

For more detail, please read:

Submission on Taxation and the Not-for-Profit Sector – IRD Consultation

Questions or feedback

If you have any questions, or want to share your views, contact our Advocacy Manager, Sam Newton, at sam@nzrecreation.org.nz.