Charity and not-for-profit expenses in New Zealand: the complete GST guide

A New Zealand charity’s income tax exemption stops at income tax. GST and PAYE still apply, and New Zealand’s GST treatment of not-for-profits differs from its neighbours in one big way: grants and subsidies are income a registered charity includes in its GST return, so the GST on the costs of grant-funded work is generally claimable too. Donations are not, because an unconditional gift isn’t payment for anything. And the exempt side is short but easy to miss: op-shop sales of donated goods, residential rent and interest carry no GST and no claims. This guide walks through the whole ledger with a verdict before the detail. Every figure is sourced to Inland Revenue in the Sources section, retrieved 10 October 2026.

What this guide covers: GST registration, which income goes in the GST return, donations and grants, exempt income, claiming GST on purchases, assets, volunteers and honoraria, entertainment, staff and KiwiSaver, and records.

The charity’s ledger at a glance

The rest of this guide walks through each row, and every section opens with its verdict.

Where ExpenseFlow fits

A charity’s purchase ledger is programme supplies, venue hire, printing, volunteer reimbursements and op-shop costs. ExpenseFlow captures each document (email forward, upload or phone), reads the line items and GST, codes each line with a written reason, and routes anything uncertain to a person before it posts. Its nonprofit check comes from the rules on this page: a line or account that reads as grant-funded, fundraising, koha, appeal, donor-funded, bursary, outreach or beneficiary support is flagged, because a registered charity recovers GST only to the extent costs support its taxable activity, which may need apportioning between taxable and non-taxable use at period end. After approval the bill syncs to Xero with the source document attached, or to QuickBooks Online as a coded bill.

What it does not do: it never decides whether income is in or out of the return, never apportions shared costs and never runs the honoraria withholding.

The ExpenseFlow for charities and nonprofits page covers these checks across all five countries.

GST registration

A charity’s income tax exemption does not extend to GST or PAYE; a taxable activity follows the normal GST rules ^[1] . You must register once turnover reaches $60,000 in the last 12 months or is expected to in the next 12 ^[2] . Because grants and subsidies count as income in the return ^[3] , a grant-funded charity can pass the threshold even with no trading at all, and registering usually pays because it unlocks claims on programme costs.

Which income goes in the GST return

A registered not-for-profit includes these income types in its GST return and claims the expenses related to them: subscriptions, grants, subsidies, suspensory loans, trading activities, raffle or housie proceeds, admission fees, affiliation fees, sales of purchased goods, sales of assets, insurance receipts, hall or equipment hire, commercial rent, penalty payments, advertising or sponsorship, and gaming machine proceeds ^[3] . Sales of donated goods or services, residential rent, interest and dividends, and other exempt supplies are left out of the return, and you don’t claim expenses on them ^[3] . An unconditional gift paid to a not-for-profit is not consideration for a supply, so it carries no GST ^[4] .

Claiming GST on purchases

The costs you can claim are the ones linked to income in the return; costs linked to exempt income are not claimable ^[3] . Over $200, you need taxable supply information from the supplier, which they must provide within 28 days of a request ^[4] . A charity that runs both a grant-funded programme and an op shop out of one building splits the rent, power and insurance between the taxable and exempt sides.

Assets

If a not-for-profit claims GST when it buys an asset, the asset is part of its taxable activity, and it pays GST on the income when it sells or disposes of it, including an insurance payout or deregistration ^[3] . Assets you chose to pay GST on that weren’t part of the taxable activity before 31 March 2021 don’t attract GST on sale ^[3] .

Volunteers and honoraria

Expenses repaid to volunteers are not taxed when they are actual expenses or a reasonable estimate of the likely cost ^[5] . Payments for services should be taxed as PAYE or as a schedular payment; honoraria to someone who is not an employee are schedular payments at a flat rate ^[5] , which is 33% for honoraria under the schedular rates ^[6] . Where a payment is part honoraria and part reimbursement, the record must show the split, otherwise the whole payment is treated as honoraria ^[5] .

Entertainment

Businesses make a GST adjustment on entertainment based on the part not deductible for income tax; organisations not liable for income tax, such as not-for-profits and charities, do not need to make it ^[4] . The claim still has to link to income in the return.

Staff and records

The default employer KiwiSaver rate is 3.5% from 1 April 2026, rising to 4% from 1 April 2028 ^[7] . Donee organisations issue receipts so donors can claim donation tax credits, an income-side matter separate from GST ^[8] . The GST guide, GST return guide and record-keeping guide cover the rest.

Common mistakes

• Assuming the charity’s income tax exemption covers GST ^[1] .
• Leaving grants out of the GST return ^[3] .
• Charging GST on unconditional donations ^[4] .
• Claiming GST on op-shop costs ^[3] .
• Paying honoraria gross to non-employees ^[5] .
• Making the 50% entertainment adjustment when the charity isn’t liable for income tax ^[4] .