Sunday, October 4, 2020

SUMMARY OF WARD MISSIONARY FUND TAX CREDIT CASE THAT WENT BEFORE THE NEW ZEALAND SUPREME COURT

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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