Cooking The Books: Boost your karma while protecting your wallet

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Manage episode 197288815 series 2000499
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Each week, the NZ Herald and Newstalk ZB's Cooking The Books podcast tackles a different money problem. Today, it's how to donate smart and make your charitable dollars go further. Hosted by Frances Cook. OPINION: Just because you're feeling charitable doesn't mean you need to shoot yourself in the foot. You're able to get a tax rebate worth a third of your charitable donations, and yet, only about half of kiwis take the Government up on that offer. It makes no sense to leave that money going begging. You could get the rebate back, and donate it all over again. Or you could take yourself out for breakfast to reward yourself for being one of the good ones. Both are great options, but first, you need that cash in your pocket. The point is, the Government set up this sweetener for a reason. It's designed to encourage people to keep giving to charities. Just because you're doing the right thing doesn't mean you need to pinch your wallet any harder than necessary. And yet, the issue is actually getting worse. Since 2008 the number of people picking up their rebate has dropped by almost 10 percent. That's leaving hundreds of millions extra in the tax man's purse. It's a great thing to give money to charity. You put your money where your mouth is, making sure the causes you care about get that little bit extra. Sure, you're not saving the world all by yourself, but you're giving it a nudge in the right direction. Claiming some of that cash back is just getting what you're owed from the tax man, not undermining your good deed. In my view, anything that encourages people to give more money to charity is a good thing. So I talked to Tax Management NZ chief executive Chris Cunniffe, to find out how to get your rebate. He said New Zealanders were "world class givers", donating around $1.3 billion each year. That covered street collections, automatic payments to charities, donations to churches, as well as donations to schools and kindergartens. But only 54 percent of donations had the rebate claimed back. "It'll be around $200 million sitting unclaimed," Cunniffe said. "That's cash that the government is happy to give back to people in recognition of the donations that they've made." He said many people didn't realise they only needed to have donated $5 to be over the rebate threshold. "People are not generally required to interact with Inland Revenue. "You roll back the years and people used to sit down and file a tax return, and when they did that, they also claimed their donations rebate at the same time. "Now there's millions of people who don't interact with Inland Revenue at all. "While that removes a lot of angst and unnecessary paperwork from the system, those people have also stopped thinking about what they're entitled to. " Cunniffe had also come across people who thought the tax rebate came out of the charity's pocket. He said it was actually a partial refund of the income tax you had paid to the Government. It was designed to reward charitable donations. For those worried it could take a lot of paperwork, Cunniffe said it was actually an easy process. "The key thing you need is the receipt. If you have the receipt you can get a form online from Inland Revenue. "Very easy form to fill in, you basically just add up the total of your receipts, attach the receipts and post them off to Inland Revenue." For those who use an accountant, the accountant can submit your donations rebate on your behalf. Tax Management NZ also offers a service to claim rebates, and either send you your refund, or automatically regift the rebate to the charity you originally donated to. Cunniffe said it best when asked if there was any reason not to claim it. "Look, it's money for jam." For the full interview, listen to the podcast. If you have questions about the podcast, or ideas for future episodes, I'd love to hear from you. You can find me on Facebook here https://www.facebook.com/FrancesCookJournalist/ or on...

120 episodes available. A new episode about every 5 days averaging 15 mins duration .