Prior to 2015, the Tax Commissioner of the New Zealand Inland Revenue department (NZ’s IRS) allowed Church members who donated to the ward missionary fund to claim a 33% charitable gift tax credit. However, effective 2015, the Commissioner changed her position and began disallowing such credits.
The Church filed a legal action against Inland Revenue
contesting this new position. Justice
Hinton of the High Court (trial court of NZ) issued her decision on June 25,
2018, finding that a donation to the missionary fund resulted in a material
benefit to the missionary and family (room, board, travel, educational
experience) and thus was not a true gift for tax purposes. Accordingly, she held that a donation by the
missionary, parents and grandparents was not entitled to the tax credit,
but that a donation by siblings, aunts/uncles, or anyone else was
entitled to the tax credit. She wrote
“This may seem arbitrary, and to an extent it is.” The Church of Jesus Christ of Latter-day
Saints Trust Bd. V. Commissioner of IR (2019) NZHC 52. Neither party liked the split decision so the
Church appealed, and the Commissioner cross-appealed.
On May 6, 2020, the New Zealand Court of Appeal unanimously
found in favor of the Church, confirming that all ward missionary fund
donations made by members to The Church of Jesus Christ of Latter-day Saints (New
Zealand) Trust Board are gifts for which the tax credit is available.
However, the Commissioner was not done yet, so she had her
Crown Law firm file an application with the New Zealand Supreme Court for
leave to appeal. After further oral
argument, on September 30, 2020, the Supreme Court denied the application,
finding that a tax credit for missionary donations to the Church “is an intensely
fact-specific question”, and “we are not satisfied that a matter of general and
public importance arises.” In other
words, the issue as framed is unique to our Church, and does not have general
application in other charitable donation situations. The Church was awarded costs, and this matter
is now finally concluded in favor of the Church and its members.
New Zealand Church members will now be able to retroactively to 2015 claim credits for donations to the ward missionary fund, and going forward.
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