An outdated tax anomaly – charitable status of relgion

Here is a New Zealand Kickstarter project well worth supporting – a film which sets out to answer the questions:

  • Why do religions pay few taxes?
  • Why do companies owned by religions also avoid tax?
  • With more non-believers than ever – is this fair?

Pennies from Heaven – A Documentary about religion and tax. by Toby Ricketts — Kickstarter.

The tax-free and rates-free  charitable status of religions in this day and age is an anomaly which will eventually need resolving.  As the proposal says:

Despite this huge rise in the number of non-believers and increased focus on the importance of separation of church and state, most ‘secular’ governments continue to subsidise religious organisations; providing them with broad tax immunity (including any companies or corporations that they own), local rates exemptions and other entitlements. While the public expectation is that all religions are behaving as charities in the traditional sense (working to relieve poverty and advance the public good, etc.), the reality is that some churches are behaving more like corporations; stockpiling cash and buying external investments (putting aside for the moment the mansions, sports cars and diamond rings sported by bishops and ministers). The result of this tax break for the religious is that there is less money for education, healthcare, conservation and other core state functions that would benefit a nation as a whole.”

The problem is highlighted in this report – Religious financial privileges in New Zealand.

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112 responses to “An outdated tax anomaly – charitable status of relgion

  1. Christopher Atkinson

    I think the problematic definition of a “Charity” it’s far larger than just religion, the definition hasn’t changed much since 1601; Charitable Uses Act of 1601.

    The four heads (Education, Religion, Poverty and Other) that define what a Charity are outmoded and need revision to resemble something actually worthy of attracting tax relief.

    Private schools, Private hospitals, Churches and breakfast cereal manufacturers (well one of them anyway!) – not to mention businesses and other elaborate legal structures all hiding behind these antiquated definitions.

    Yet even if this problem were addressed, there is still no requirement in legislation whatsoever for a Charity to be charitable!

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  2. Pingback: The Weekly Gnuz & Lynx Roundup: 2014/04/14 | The Call of Troythulu

  3. I doubt the “music is my religion” guy will be financially any better off as a charity than he would as a company or sole trader.

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  4. Maybe. But seems he could be a company or sole grader and still get charitable tax free status as he current law is interpreted.

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  5. I think charity status would only be of benefit to him if he gives his profits away.

    Although it would really benefit those he’s giving to… but any recipient would still have to declare the gift and be taxed on it.

    Charity status avoids a double tax scenario.

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  6. Like Sanitarium?

    >

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  7. Yes, like sanitarium.

    I attended an SDA church for a few months – they explained where the profits of Sanitarium went on a regular basis. From memory it was mostly to help people in developing countries get food and clean water.

    Would you prefer their profits be taxed than spent on the poor?

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  8. Christopher Atkinson

    Hi Ministyofjustice,

    Part of the problem with “Charitible Status” is the lack of transparency.

    You say that Santitarium gave most of its profits to developing countries? Do you have any evidence for this?

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  9. Ministry of justice – I would prefer that money raised for genuine charitable purposes not be taxed. Unfortunately the religious provision distorts the meaning as it in no way provides for helping the poor. That is not a requirement. It provides only for dissemination and promotion of supernatural beliefs. And they must be supernatural.

    Remove the religious status provision and money can still be given to the poor. It would be a more honest position for genuine religious charities to be in. Such bodies could still register under the other provisions.

    The irrationality of the religious provision is that it requires supernatural beliefs and their promotion. This excludes secular organisations and is unfair on that basis. However, I don’t believe any organisation should get charitable tax exemption for promotion of their beliefs – supernatural or non-supernatural.

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  10. Hi Christopher,

    No I don’t have evidence for this other than my probably faulty memory. As I recall it Sanitarium gave through ADRA. That was more than 10 years ago and they may have changed since.

    But consider the “music is my religion” guy. He can’t benefit from being a charity and neither can Sanitarium. All they can legally do is give away their profits.

    If the “music is my religion” guy wants to give away the profits why would anyone want his religion’s profits to be taxed?

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  11. Ken
    From the Humanist Society Site

    The Humanist Society of New Zealand is a registered Charity. Our Charity Number is: CC36074.

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  12. MoJ – I am well aware of the registration of the Humanist society. But this is under the sectors Education / training / research – not religion. It would be impossible for the Humanist society to register under the religion sector because it does not have or promote a supernatural belief. (and there is no sector for non-supernatural beleif).

    However, your example does illustrate that it is possible for genuine charities to register without resorting to the religion sector justification. And consequently, under the current practice it is possible for organisations without a charitable bone in their bodies to register under the religious sector, and get tax and rates exemption. And it happens.

    It would be more honest, and also more supportive of genuine charities, to remove the religious justification all together. Genuine charities would still survive.

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  13. I can’t see why humanists would be denied religious status. “Religious activities” is listed as one of the Humanist Society’s purposes on the register.

    You say “supernatural” is a requirement but I can’t see any reference to “supernatural” in the legislation.

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  14. MoJ – because to qualify for the religious sector the goup must show a declared belief in the supernatural and evidence that it promotes that belief. It may, or may not, be in the legislation specifically but legal procedures has determined the qualifications.

    From the Charities website:

    Advancement of religion

    To be charitable under this category, your organisation’s purpose must:

  15. be for the benefit of a religion; and
  16. aim to pass on the relevant religious faith to others.
  17. The term “religion” includes many different faiths and belief systems (for example, Christianity, Judaism, Islam, Hinduism, and Buddhism). Generally, however, to be religious there needs to be:

  18. … a belief in a supernatural being, thing, or principle
  19. … an acceptance of conduct in order to give effect to that belief.
  20. To “advance” religion, the faith must be passed on to others by spreading its message and taking positive steps to sustain and increase the religious belief.

    For example, a court has said that religion is not advanced by an entirely enclosed religious order where the activities consist only of private prayer. (Alternatively, a court has said that offering public prayers for the soul of a deceased person gives benefit to all who hear them.)

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