A tax loophole to plug

Stuff reports:

Many New Zealanders may be unaware the maker of their favourite breakfast cereal is owned by a church.

The breakfast staple Weetbix is owned and made by Sanitarium Health and Wellbeing Company, which was established by the Seventh-day Adventist Church in 1898 to promote and produce plant-based health foods.

On its website the company said this was based on the church’s belief that plant-based diets are designated by God for the health of the human race.

But because it is a church, Sanitarium have never paid income tax.

Under New Zealand law, churches are exempt from income tax because they have a charitable purpose – they promote religion.

I don’t think the promotion of religion should be a charitable purpose, anymore than the promotion of politics should be. They are both just about promoting viewpoints.

If a religion does charitable works (soup kitchens etc) then that work should be charitable and tax deductible. But merely promoting their version of belief in a supreme being should not be.

While Sanitarium is a commercial business, it’s sole shareholder is The New Zealand Conference Association, which is a registered charitable trust.

Britain amended this charitable tax loophole in the 1920s and ACT party leader David Seymour wants New Zealand to catch up and do the same.

“I don’t know what their [Sanitarium’s] purpose is. They would argue they do charitable stuff to the same value as what they would have paid in tax,” Seymour said.

I’m sure they argue it, but I’d rather have their tax revenue.

In the year to 30 June 2016, Ngāi Tahu Holdings Corporation Limited made a net profit of $210 million, but only distributed $44m to the trust.

A Ngāi Tahu spokeswoman said the remaining profit was reinvested into Ngāi Tahu Holdings Corporation.

“Our distribution model is similar to many of the larger community trusts in New Zealand and internationally renowned Yale and Harvard Endowment Funds, so we compare well with nationally and internationally recognised intergenerational funds,” she said.

Seymour said the charitable tax loophole gives Ngāi Tahu’s Go Bus business a competitive advantage to bid for the Auckland Transport bus contract.

“People should be able to get a tax exemption for donating to charity, but when you’ve got those companies that are kind of like charity, kind of like a business, then it would make sense to split them,” Seymour said.

The commercial side of the charity can then donate to its charitable side, he said, and claim the tax credit of 33.33 per cent that applies to all charitable donations of at least $5.

That is a good way to do it.