The Len Reynolds Trust has actively engaged in the Inland Revenue’s recent consultation on the taxation of charities and not-for-profits. Led by CEO Melissa Gibson, the Trust’s submission to the Issues Paper: Taxation and the Not-for-Profit Sector calls attention to concerns regarding the potential unintended consequences of proposed tax changes.
Specifically, the submission warns that these changes could have a negative impact on the very communities that not-for-profit organisations aim to serve. The Trust has stressed the need for tax policies that enable rather than constrain the generosity and sustainability of charitable organisations.
"We are concerned that the current process is too narrowly focused on revenue collection, overlooking the broader economic, social, and environmental contributions made by the charitable sector," said Gibson. "If implemented as is, these changes could result in fewer resources for organisations working with Māori communities, rural youth, and those experiencing inequality, mental distress, and other challenges."
As a philanthropic funder, the Len Reynolds Trust operates with a long-term vision, prioritising the preservation of capital and generating income for charitable purposes. With approximately 25% of its annual grant funding derived from a commercial property investment, the Trust emphasises that taxing passive income could significantly reduce its ability to support projects focused on community development and environmental sustainability.
In its submission, the Trust advocates for maintaining the destination-based income tax exemption for charitable entities and protecting passive income used for charitable purposes from taxation. The submission further calls for clear guidance and exemptions for perpetual trusts, like the Len Reynolds Trust, whose model relies on long-term capital preservation.
"We believe that taxing unrelated business income could undermine sustainable funding models that have been built over decades," added Gibson. "These income streams, including property and investment income, are not for private gain, but to advance charitable missions, ensuring that future generations can continue to benefit from the work being done today."
The Len Reynolds Trust also voiced support for a more strategic and collaborative approach to taxation, one that involves ongoing consultation with the charitable sector, particularly with Māori-led organisations and rural communities. The Trust’s submission urges Inland Revenue to consider the broader impacts of tax reforms, ensuring that they do not place undue burdens on smaller organisations or those with community-centric missions.
The Len Reynolds Trust maintains a strong dedication to supporting long-term, community-led change and through this submission, the Trust continues to advocate for tax policies that sustain the vital work of the charitable sector and foster resilience in the communities they serve.