Charities Registration Backdating

The High Court decision in Otaraua Hapū Management Committee Incorporated v Commissioner of Inland Revenue highlights the consequences of deregistration and the corollary observation that filing obligations are core to charitable accountability.

By way of background Otaraua Hapū Management Committee Incorporated (Otaraua) was a registered charity providing services to its hapū and wider community. After Otaraua failed to file financial statements for the 2020 and 2021 financial years (notwithstanding repeated reminders and warnings from Charities Services) Otaraua was deregistered on 9 March 2022. Otaraua did not appeal within the statutory 20 working days.

Otaraua was subsequently re-registered in November 2023, with registration backdated by the Board to 21 September 2023 Otaraua having persuaded the Charities Registration Board (the Board) that it continued to meet the requirements of a registered charity and provide charitable services to its hapu and wider community.

However, because more than 12 months had elapsed since deregistration, Otaraua lost its tax exemption status and became liable for deregistration tax on its accumulated assets. Otaraua subsequently applied for leave to appeal out of time against both
the deregistration decision and the limited backdating of its re-registration.

The High Court did not consider it to be in the interests of justice for a temporary period of disorganisation to have such a significant effect on Otaraua’s ability to service the community. It therefore exercised its broad power to allow the appeal and ordered that Otaraua’s registration be backdated to 3 March 2023, subject to compliance conditions, to avoid deregistration tax consequences.

The High Court declined leave in respect of the deregistration, finding no error and a lengthy unexplained delay, but granted leave in respect of the backdating decision. The Court exercised its broad power under s 61 of the Charities Act 2005
to backdate re-registration to avoid deregistration tax consequences.

The decision in The High Court decision in Otaraua Hapū Management Committee Incorporated v Commissioner of Inland Revenue draws attention to the practical reality that the High Court has a broader power than the Board to backdate registration.

References:

• Otaraua Hapū Management Committee Incorporated v Commissioner of Inland Revenue [2026] NZHC 1304
• Charities Act 2005, s 61