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Chartered Accountants

Trusted advisers of all tax compliance and annual accounting issues facing both individuals and small businesses.

Charitable Trusts

What is a charitable trust?

A charitable trust is specifically set up to hold and protect assets for charitable purposes

It can be set up to aid in the relief of poverty, the advancement of education or religion, or any other matter for the public benefit

How does it work?

Trustees are appointed to administer the charitable trust, and ensure the assets are invested to provide lasting benefits and your (you being the Settlor) intentions are carried out long after you’re gone, or before your’e gone

You can decide the purpose to benefit and how; and you can donate as much as you want and will receive a tax credit up to a maximum of 1/3rd of your income

Case Study

Mrs A is nearing 90 yo, has no dependants, her Estate is valued at $10M, of which $5M is effectively in cash assets.

Apart from some specific legacies to friends, her Will leaves the bulk of her estate to charity.

I am her executor.  Her Will is a very short document leaving me very little guidance on her death.

What did we do……..

  1. with the assistance of a lawyer we established a Charitable Trust which was registered with the Charities Commission
  2. in year 1 Mrs A donated $500,000 and received a donation tax credit of $165,000, her income was very high this year due to the winding up of her business
  3. in each subsequent year the intention is that she donates up to the level of her income, normally about $50,000 per annum
  4. in some years a donation may not be made if the annual sustainable spending analysis indicates her cash and investments may not outlive her
  5. during her lifetime the charitable trust makes annual distributions to a wide variety of charitable causes that would not otherwise benefit until after Mrs A’s gone
  6. the fulfilment Mrs A gets from presenting annual distributions is immeasurable
  7. and she gets 1/3rd back each year in donation tax credits which would not be available after she has gone

 

 

 

 

 

I would like to confirm that Garry Hughes has been my accountant for some years now and I can honestly say that I would not consider changing accountants under any circumstances. I am a USA Citizen having retired to New Zealand, therefore I require both a USA tax return completed every year as required by Congressional law and a New Zealand tax return completed every year as required by New Zealand tax law. Obviously this becomes quite a professional understanding by Garry as to what must be reported by each country and the dead lines for reporting and paying. Garry Hughes always performs a totally professional task and I have to say that I have not run into any problems with the work Garry does. I would not consider another accountant.
W. Bruce Johnson

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Changes to provisional tax

Posted on April 16, 2018 by BDS Hughes

Small businesses, sole traders and contractors can choose a new pay-as-you-earn option rather than paying provisional tax instalments several times a year as changes to pay-as-you-earn tax have come into place this April. The changes were made to help small businesses pay provisional tax based on their cash flow rather than the previous year’s earnings or estimated earnings for the current year. Paying provisional tax as you earn profit provides more certainty about cash flow. This new method is known as the Accounting Income Method (AIM). It is optional and only available for businesses with an annual turnover of less […]

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P: 09 426 2999 | F: 09 426 0812 | M: 021 790765
E: GARRY@BDSHUGHES.CO.NZ