New Zealand: Charitable trusts – what you need to know

If you are thinking about establishing a charitable trust to promote a cause that you support, it's important to start with the fundamentals.

You will need to consider:

  • Why you want to set up a charitable trust;
  • Who or what the Trust is going to benefit;
  • What activities the Trust is likely to carry out;
  • How you will raise funds to support the Trust's purposes;
  • The role of trustees and how they will be appointed.

While we refer to charitable trusts in this information sheet, the information is relevant for any entity established exclusively for charitable purposes, including companies and incorporated societies.

The distinctive features of a charity

  • Donations may be tax deductible;
  • Possible exemptions from income tax;
  • Charitable trusts can continue in perpetuity if desired, as compared to other types of trusts (e.g. family trusts) that can (currently) only continue for a maximum of 80 years.

There are important distinctions between the various registrations and approvals that are available to charitable trusts.

Charitable status under the Charities Act 2005: Registering as a 'charitable entity' under the Charities Act 2005 means the Trust could be exempt from income tax on all or some of its income. To be a charitable entity, you need to register the Trust with Charities Services (part of the Department of Internal Affairs) under the Charities Act 2005. Once registered, the Trust can enjoy the tax advantages available to registered charitable entities under the Income Tax Act 2007.

Incorporation under the Charitable Trusts Act 1957: Incorporation under this Act will mean that the Trust has separate legal status. The key advantage of registration is that the Trust Board, not the trustees personally, will enter into all obligations. Incorporation does not affect the charitable/tax status of the Trust.

Donee status: This means that individuals who donate money to the Trust can claim a rebate and companies can claim a deduction. Donee status is not dependent on a Trust being a registered charity or being incorporated. Donee status is granted by the IRD if it is satisfied that the tests in the Income Tax Act 2007 are met. This includes that the purposes of the Trust are charitable, benevolent, philanthropic or cultural. Generally, the process for obtaining 'donee status' is automatically triggered if you apply for registration under the Charities Act 2005.

You do not have to be registered, incorporated or hold donee status to call your trust a 'charitable trust.'

What information is required to form a charitable trust?

Establishment of a charitable trust requires a Trust Deed, for which you will need:

  • The name of the Trust;
  • Its purpose i.e. what the trustees can apply the trust money towards;
  • The number of trustees, and the names, addresses and occupations of the initial trustees; and
  • The process for appointing new trustees.

Appointment of the board of trustees

The board of the Trust should be large enough to ensure that there is a range of knowledge, views and experience, but not so large as to be inefficient. Our general recommendation is that a charitable trust board has at least three, but no more than five, members.

The process for appointing the board of trustees is usually tailored to each Trust, and will reflect the size, purpose and complexity of the Trust. Some considerations include:

  • Whether certain individuals, groups or entities should have the right to appoint any trustees (e.g. key supporters/funders);
  • Whether the trustees should include, for example:
  • A person with a specified level of experience in a specified industry;
  • An accountant or lawyer of at least 10 years' experience;
  • A person with a significant amount of previous governance experience.

What is the charitable purpose?

To be registered with Charities Services and enjoy the tax exemptions available to registered charitable entities, the purposes of the Trust must be "charitable," under the Charities Act 2005.

For a purpose to be charitable, it must:

  • Fall within one of the four charitable purposes, namely relief of poverty, the advancement of education, the advancement of religion, or any other matter beneficial to the community;
  • Provide a public benefit (i.e. a benefit that is available to the general public or wide section of the public); and
  • Not be for the benefit of any private individual.

A copy of the Trust Deed will be lodged with the application for registration as a charitable entity, and Charities Services will make its decision based on an assessment of:

  • The purposes as stated in the Trust Deed;
  • Any activities that have already been carried out by the Trust; and
  • Other information available about the Trust's activities and focus, e.g. a business plan, or the Trust's website.

We can provide specific advice once we have detail on the intended purposes of your proposed Trust.

Charities Services also needs to be satisfied that the Trust meets other tests, including:

  • That the Trust is not carried on for private financial benefit or profit to an individual.
  • A clause that directs all of the Trust's assets to charitable purposes or other charitable organisations on a winding up of the Trust.

What compliance is required?

Trusts registered as charitable entities with Charities Services under the Charities Act 2005 must file an annual return each year that includes a copy of the Trust's financial statements. The reporting standards that apply to financial statements are part of a tiered system, and the tier that a Trust reports under will be dictated by the annual expenses or operating payments of the previous two financial years.

New audit and review requirements for financial statements have also recently been incorporated into the Charities Act 2005. A registered charitable entity will be required to have its financial statements audited or reviewed if its total operating expenditure exceeds prescribed levels. No audit or review is required under the Charities Act 2005 if total operating expenditure is less than $500,000. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.