Island Life by David Slack

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Island Life: The World Is Full of Cu*ts

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  • David Slack,

    Paul, I take it that tax-exempt income you're referring to is church income rather than the personal income of Brian Tamaki? My understanding, and what I believe was the case that Matthew set out earlier, is that no-one (save the Governor-General?) is exempt from tax on personal income?

    (And the point I was raising in my post: is this a gift or is it personal income? And is it therefore taxable or not?)

    Devonport • Since Nov 2006 • 599 posts Report Reply

  • Kyle Matthews,

    The classification of charitable purpose (religion, education, relief of poverty and general good - I think you got the last one wrong Matthew: culture is not a purpose in itself, so far as I know) was the result of a 19th Century judgment by the Law Lords of the House of Lords, in the Old Country. It has never been before our House of Representatives, it has never been law.

    Actually parliament defined it in the Charities Act 2005:

    5 (1) In this Act, unless the context otherwise requires, charitable purpose includes every charitable purpose, whether it relates to the relief of poverty, the advancement of education or religion, or any other matter beneficial to the community.

    I still maintain that labelling any income churches receive as a charitable donation no matter what it's used for is dodgy, though.

    Why? In most churches, the money will go towards maintaining and providing the premises and providing a priest or other spiritual leader, whose income will be taxed at the other end.

    I fail to see why that is any less worthy of charitable status than a sports club or cultural entity. Are we so overrun with such heinous/overly rich religions in NZ that we need to suddenly tax their income? I fail to see any widespread problem requiring a fix.

    Since Nov 2006 • 6243 posts Report Reply

  • Matthew Poole,

    It has never been before our House of Representatives, it has never been law.

    Never been in our statute law? Balls. I quote from section 5 of the Charities Act 2005: charitable purpose includes every charitable purpose, whether it relates to the relief of poverty, the advancement of education or religion, or any other matter beneficial to the community

    You are indeed correct that I was incorrect in saying that advancement of culture is a specific category of charitable work (rusty memory of a lecture that only mentioned the classes of charitable work), but that's as far as it goes. Advancement of religion absolutely is a statutorily-defined category of charitable activity under NZ law. Even if it weren't, the intervening decades of case law, from the Privy Council on down, have bedded it in so thoroughly that it would require explicit legislation to overturn that position.

    the likes of Tamaki and a whole bunch of other people do not have to pay income tax because of a legal decision made more than a century ago in another country

    Again, balls. Destiny Church is tax-exempt, certainly, but Pope Brian ain't. Not on his salary from Destiny, and not on any of the money he gets from Proton. Not on anything that Destiny supplies that could be considered a fringe benefit, either. Whether or not the donations from his congregation are tax-exempt has nothing to do with the church thing and everything to do with the gift thing. It's not even certain that those donations are tax-exempt, as I alluded to on the previous page.

    The tax exemption extends as far as the income of the charitable organisation, and no further. It does not extend to the employees, and it does not extend to taxable benefits paid to those employees. It does not, by reading of the Estate and Gift Duties Act 1968 extend to gifts made by the organisation, either, except where those gifts go to other tax-exempt organisations.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Matthew Poole,

    My understanding, and what I believe was the case that Matthew set out earlier, is that no-one (save the Governor-General?) is exempt from tax on personal income?

    That certainly meshes with my understanding, and that particular understanding is actually formally educated rather than just gleaned from too much time spent browsing legislation.govt.nz :P Well, on the question of nobody being exempt on income tax, anyway. Not totally certain about the GG, but that does ring bells and I'm pretty sure that Pope Brian is remunerated to a far higher level than the GG in any case.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Sacha,

    Like most wealthier kiwis, you can guarantee that the Tamakis have a tidy family trust or trusts that receive dividends from Proton and income from their church. Or they need a better accountant.

    Ak • Since May 2008 • 19729 posts Report Reply

  • Matthew Poole,

    Like most wealthier kiwis, you can guarantee that the Tamakis have a tidy family trust or trusts that receive dividends from Proton and income from their church. Or they need a better accountant.

    Oh, sure. But that's not something uniquely available to Pope Brian in his role as a cleric. Also, using trusts as tax-avoidance mechanisms is technically illegal. The IRD has the power to go through trusts to ensure that tax is being paid, and if they start investigating the affairs of Destiny and the Tamakis you can be quite sure that they'll look very, very closely at everything.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Sacha,

    Agreed.

    Also, using trusts as tax-avoidance mechanisms is technically illegal

    Although there's something about exempt gifting to the trust's beneficiaries, isn't there?

    Ak • Since May 2008 • 19729 posts Report Reply

  • Matthew Poole,

    Although there's something about exempt gifting to the trust's beneficiaries, isn't there?

    Yes. To the tune of $27k/year per trust. Multiple trusts with identical trustees will get the spidey-senses of IRD investigators going, too, so it's not a particularly easy restriction to get around.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • AllanM,

    "Yes. To the tune of $27k/year per trust."

    As with any entity to entity gifting - eg Trust to individual, individual to individual, company to individiual.

    Also, note that trusts in themselves are liable for income tax as with any other entity.

    Auck • Since Nov 2009 • 10 posts Report Reply

  • Keir Leslie,

    I fail to see why that is any less worthy of charitable status than a sports club or cultural entity. Are we so overrun with such heinous/overly rich religions in NZ that we need to suddenly tax their income? I fail to see any widespread problem requiring a fix.

    Because in fact I don't think religion is a Good Thing, but I do, broadly speaking, think sport and culture are. Likewise, I am quite happy with the idea that the government should promote sports and culture, but if the government started promoting religion I should be very very unhappy.

    Since Jul 2008 • 1452 posts Report Reply

  • Lucy Stewart,

    I fail to see why that is any less worthy of charitable status than a sports club or cultural entity.

    It's more that, as the situation stands, anyone can set up an organisation whose income is tax-exempt by declaring it's religious. With sports clubs and cultural entities, there are quantifiable community benefits. Some of those same community benefits apply to religious groups (communal activity and such) but that's not *because* they're religious; it's more an offshoot. I fail to see why there should be an exemption specifically for religious bodies on the grounds that their religiosity and promulgation thereof is of benefit to the community, when that in and of itself is not necessarily the case. It may be enshrined in law. It doesn't make it right.

    Wellington • Since Nov 2006 • 2105 posts Report Reply

  • Matthew Poole,

    OK, here's a question for those of you who would like to see the religion exemption on income tax removed: how many charities that do the work of alleviating poverty have no religious ties? Where would you draw the line?

    The simple fact is, the major churches do an enormous amount of work in their communities. Whether or not you think organised religion is a good thing, it is impossible to argue that there is nothing good that comes from what the churches do. Much of that is supported by the scriptural calls for caring for those who are in a less-privileged position to oneself. Similarly, you would find that a lot of people consider spiritual wellness to be of no lesser import to quality-of-life than physical and intellectual wellness. It's not a popular position on PAS, but it's one that is actually supported by medical observation. You may not believe in a higher being, but a lot of people do. Who are you to declare that, just because it offends your agnostic/atheistic sensibilities, attending to the spiritual needs of people is of less value than attending to their need for education and exercise?

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • giovanni tiso,

    Who are you to declare that, just because it offends your agnostic/atheistic sensibilities, attending to the spiritual needs of people is of less value than attending to their need for education and exercise?

    Poets attend to my spiritual needs, and yet the state insists that they pay their taxes. Go figure.

    I think you're overcomplicating the issue. I say cancel every tax exemption currently extended to religious organisations, and make them reapply on the basis the portion of their income that goes into supporting their charity activities. Same as any old corporate body.

    Wellington • Since Jun 2007 • 7473 posts Report Reply

  • Lucy Stewart,

    The simple fact is, the major churches do an enormous amount of work in their communities. Whether or not you think organised religion is a good thing, it is impossible to argue that there is nothing good that comes from what the churches do.

    I think I've been pretty clear that I think religious organisations often do good things, and obviously very many would qualify for tax-exempt status based on the charitable stuff they do, which is of immense importance to the community. I'm not calling for the banning of religious charities here.

    But that doesn't mean the reason they should get that exception should be because they're religious. Religion can be an important and helpful part of people's lives. It can also do a huge amount of damage to people. Faith in a higher power doesn't make what you do right, or helpful, or anything except, well, religious. It certainly doesn't make you charitable. Nor does promulgating religion necessarily do anything except spread religion - which is not automatically of benefit. So why does the law, in this instance, act as though it is?

    Wellington • Since Nov 2006 • 2105 posts Report Reply

  • Keir Leslie,

    Well, the ICRC has no religious ties. Oxfam doesn't.

    The argument is not that organisations which are religious should be ineligible for charitable status, but rather that organisations should not be considered charitable purely because they are religious.

    I mean, I don't particularly care if religion has good effects on the world -- suppose you were to discover that Buddhism led to better outcomes than Christianity, would you support pro-Buddhist government propaganda? No, of course not, that'd be obscene.

    Since Jul 2008 • 1452 posts Report Reply

  • andin,

    how many charities that do the work of alleviating poverty have no religious ties?

    There are quite a few Oxfam, Red Cross more here:
    http://www.hunch.com/charities/toplists/no-religious-affiliation/103823/
    Its not a list only focused on poverty alleviation.

    To me the work that religious organisations is mainly focussed on human problems it a product of their past activities based on their underlying chauvinism that human beings are the pinnacle of creation in this physical manifestation by their supreme being, whichever that is. And helping out others was codified in their literature.
    So religious environmental organisations are either non existent or in their infancy. The earth wasnt that important to religious charities up until I would guess the 1970's. This gap was gleefully filled during that silly season called The New Age.

    Now it was thought that if a person fell on hard times it was because he or she had in some way strayed from a path designated by a force that person would become able to comprehend in some meaningful way until they had been around for awhile - 15 20 yrs I guess.
    So there is always going to be so many unspoken assumptions going on, and maybe even some peer pressure. If you want to get back on track some god, and by extension those giving the charity, his followers would be of more help if you buy into their version of god.
    So sure religious organisations do charity better cause they have more practice at it, and it is where new recruits to boost their numbers will be found.

    So Kyle I think your question is loaded. Or is it rhetorical?

    spiritual wellness to be of no lesser import to quality-of-life than physical and intellectual wellness.

    But what is spiritual wellness?
    Is it having a god to believe in so that you dont feel alone while you are here on earth and alive. But the definition can be as expansive as you want it to be.
    And sometimes a person's expectation of their spiritual wellness can become as inflated as a person's waistline.
    I am really curious as to how you define spiritual wellness?

    raglan • Since Mar 2007 • 1890 posts Report Reply

  • Russell Brown,

    I think you're overcomplicating the issue. I say cancel every tax exemption currently extended to religious organisations, and make them reapply on the basis the portion of their income that goes into supporting their charity activities. Same as any old corporate body

    That seems fair.

    Auckland • Since Nov 2006 • 22839 posts Report Reply

  • Michael Homer,

    The churches could also just set up affiliated organisations to carry out their actual charitable work. Those could register as charities on the same basis as anything else. In part they've already done that.

    Wellington • Since Nov 2006 • 85 posts Report Reply

  • slarty,

    I reckon Lucy's on the right track...

    ----------------------
    How will we know whether our organisation has a “charitable purpose”?

    In order for a purpose to be charitable, it must —

    * fall within one of the four charitable purposes set out in section 5(1) of the Charities Act and
    * provide a public benefit and
    * not be aimed at creating private financial profit.

    -----------------------

    So it's not enough to believe in the great soup-dragon: you have to clearly intend not intend to make a living so to speak, and distribute all that soupy goodness to your fellow dragon bretheren.

    Since Nov 2006 • 290 posts Report Reply

  • Joe Wylie,

    Evangelicals tend to regard charity as a transaction, and often expect a commitment to their belief system in exchange for the help they may provide. Mainstream denominations such as Baptists, the clergy of which are often heavily involved in providing material assistance, largely treat such work as a Christian duty, and rarely impose conditions upon those who receive their help. As for that Cthulhu-tentacled entity the Catholic Church, there are both armies of selfless volunteers who provide assistance regardless of denomination and, as Craig mentioned earlier, mean-spirited elements that seek to extend their influence by coercion.

    As Michael Homer notes, some churches have set up independent entities to administer their work. Most of these appear to be in response to the need for professionalisation, such as the Salvation Army moving into areas where their members lack specialised skills, such as vocational training, or the vast range of activities carried out by Presbyterian Social Services.

    While some degree of reform as to what constitutes a charitable activity may well be necessary, in practice government regulation can lead to a form of collusion between church and state. John Howard's appointment of a reactionary Salvation Army officer to oversee a cynically conceived drug policy, and the use of poorly trained members of that Church as probation officers in Florida, are a couple of unfortunate examples.

    flat earth • Since Jan 2007 • 4593 posts Report Reply

  • Lucy Stewart,

    While some degree of reform as to what constitutes a charitable activity may well be necessary, in practice government regulation can lead to a form of collusion between church and state.

    I'm pretty sure there's a clear distinction between offering tax exemptions to those parts of organised religion which do recognised charitable work and appointing them to administer government tasks, in that one is a tax exemption and the other is...appointing them to administer government tasks.

    Wellington • Since Nov 2006 • 2105 posts Report Reply

  • Joe Wylie,

    Agreed Lucy. All I'm saying is that any potential fudging of the division between church and state can be - and has been - taken advantage of, by both parties.

    flat earth • Since Jan 2007 • 4593 posts Report Reply

  • Juha Saarinen,

    There's a lot of bashing the Brian bishop going on here.

    Since Nov 2006 • 529 posts Report Reply

  • Rich of Observationz,

    Religion is just a system of thought that invokes a deity.

    Groups promoting systems of thought that don't invoke deities, like the National Party, Greenpeace or the Wellington Anarchist Collective don't get charitable status. But religions do. And their apologists argue that removing that status is an attack on freedom of religion. Seems to me it's promoting the right to adhere to any religion or none.

    All that's needed is a change to the charity law to remove "the advancement of religion" as a charitable purpose. This would have zero impact on any group that doesn't rely on religion for its charitable status.

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • Lucy Stewart,

    All I'm saying is that any potential fudging of the division between church and state can be - and has been - taken advantage of, by both parties.

    I guess I'm just a little confused as to how removing the advancement of religion as a charitable purpose fudges the division between church and state. You could argue that having it there, and thereby requiring the state to decide what is and is not the advancement of religion, fudges the lines considerably more. Treating religious bodies as the same as any other group which wishes to engage in charitable work seems less fudg-y to me.

    Wellington • Since Nov 2006 • 2105 posts Report Reply

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