Former Reserve Bank Governor and National Party leader Dr Don Brash stated today on the Paul Henry show on TV3/Newshub that all charities running businesses should pay income tax on their profits, the same as companies.
It clearly annoys him that one way for businesses to avoid paying tax is to register themselves as charities — and it annoys us big time too. Such a sham charity operates the large property renting business next to us, and pays no tax.
There should be a level playing field for all commercial enterprises and distortions created by legal loopholes such as this need to be eliminated.
A better known example is Sanitarium Foods owned by the Seventh Day Adventist Church which makes big profits “but doesn’t pay a dime in tax.”
“One way to do it would be to make the payment to the shareholding charity a deductible payment and then have them pay tax, at the same tax rate as any other company would, on what is left,” Don Brash says. This is similar to charitable tax law in Australia.