Your charity is deregistered when it is removed from the register held by the Charities Services.
There are several reasons a charity may be deregistered. The reason will determine:
- the date of deregistration
- the tax treatment of the charity from this date
- if you need to pay income tax and meet other tax obligations.
A charity can be deregistered from the Charities Register by:
- voluntary deregistration by you
- deregistration by Charities Services.
Paying income tax
When a charity is deregistered it must pay income tax unless it qualifies for another tax exemption. Depending on why your charity was deregistered will determine when income tax will apply.
If the charity:
- Has always complied with its rules held on the Charities register, tax will apply from the later of the date it is deregistered, or all appeals or court proceedings are final or exhausted.
- Stopped complying with its rules held on the Charities register, tax will apply from the date it stopped complying.
- Never complied with its rules held on the Charities register, tax will apply as if it was never a registered charity.
- Was not registered with Charities services and did not meet the requirements of its tax exemption, tax will apply from the date it ceased to meet its requirements.
Paying tax on net assets
Your charity has one year from the date it is deregistered to dispose of or transfer its net assets for charitable purposes, or to keep to the rules on the Charities Register.
Your charity will need to pay tax on any assets, including accumulated income but less liabilities, that it has on the date its tax exemption ends. This also applies to charities who were not registered but previously qualified for an exemption.
Any income from the net assets being kept will need to be included in your income tax return for the period that includes the day one year after the end date.
A charity deregistered before 1 April 2015 by Charities Services (or before 14 April 2014 if you chose voluntary deregistration) will not be liable for tax on their net assets.
Adjustments to the accumulated net asset calculation
Some assets a charity has when it is deregistered do not have to be included when it calculates its net assets. These are:
- Assets disposed of or transferred within one year of the end date for charitable purposes or in keeping with the rules on the Charities Register.
- Assets received from the Crown to settle a Treaty of Waitangi claim or under the Maori Fisheries Act 2004.
- Assets, other than money, gifted or left to the entity when it was exempt from income tax.
Working out the value of depreciable property or financial arrangement
You will need to work out the value of depreciable property and financial arrangements to determine the tax value at the end date. This value is then used to work out the tax position in each subsequent year
For examples of how to pay tax on and calculate net assets, depreciable property and financial arrangements, check our guide.
Donee organisation status when a charity is deregistered
Your charity will keep its donee status up to the later date it was removed from the register or when all court or appeal proceedings are finalised or exhausted. This protects donors who claimed tax credits for donations in good faith. Any donations made before the charity was deregistered will still qualify for the tax credit.