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Charitable Trusts, Gifting, Income Tax, Taxation

Is debt forgiveness on account of a loan to a charity a gift that allows a tax credit?

In Roberts v CIR the question for the court is whether the forgiveness of debt a monetary gift for the purposes of s LD 3(1)(a) of the Income Tax Act 2007?


The Oasis Charitable Trust (the Trust), a registered charitable trust, was settled by Mrs Roberts and her late husband on 14 October 2007 to facilitate the growth of the Christian faith in New Zealand.  On 16 October 2008 Mr and Mrs Roberts “transferred $1,708,080.90 to the Trust by way of loan.”

A gifting program was commenced, and gifts made by way of forgiveness of debt for the years ending 31 March 2011 to 2015.  Tax credits were claimed on account of the forgiveness of debt.  These were initially allowed.  However, on 1 December 2015 the CIR initiated a risk review.

The decision in Roberts v CIR usefully canvasses the statutory scheme to s LD 1 of the Income Tax Act 2007 and the circumstances in which a tax credit is available on account of a charitable gift and the parameters of a monetary gift as defined in s LD 3 of the income Tax Act 2007.

LD 3 Meaning of charitable or other public benefit gift


(1) For the purposes of this subpart, a charitable or other public benefit gift—

(a) means a monetary gift of $5 or more that is paid to a society, institution, association, organisation, trust, or fund, described in subsection (2) or listed in schedule 32 (Recipients of charitable or other public benefit gifts) (the entity):


In conclusion the court was satisfied that a monetary gift of $5 or more does not require cash payment.  However, the gift must be a specific sum and not a chattel or property. As noted at [74]:

“I have reached the view that a monetary gift of “$5 or more” does not require a cash payment. Consistent with the policy approach to the legislative amendment, it must be a gift that is sum specific, not a chattel or property item of uncertain value. It must pertain to money, which includes not only actual cash, but a credit of a specified amount, such as a forgiveness of debt. I also accept that payment can be effected by the crediting and debiting of accounts that is involved in giving effect to a reduction of debt.”


  • Roberts v CIR[2018] NZHC 2153


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