Payroll tax exemptions for charities

Charitable institutions registered under the Taxation Administration Act 2001 may be exempt from payroll tax in particular circumstances.

Payroll tax exemptions apply to wages paid or payable by a registered charitable institution to a person who is engaged exclusively in work for:

  • your charitable institution for a 'qualifying exempt purpose'
  • another charitable institution that is either a hospital or 'non-tertiary educational institution'. To claim an exemption, the employee must be doing the kind of work usually performed by a hospital or non-tertiary educational institution.

Definition of qualifying exempt purpose

A qualifying exempt purpose means:

  • religious activities
  • educational purposes (including running a kindergarten, but excluding a university or university college)
  • public benevolent purposes
  • caring for sick, aged, infirm, afflicted or incorrigible people
  • relief of poverty
  • caring full-time for children by providing for their general wellbeing and providing them with food, clothing and shelter
  • another charitable purpose or promotion of the public good
  • providing a residence to a minister or member(s) of a religious order conducting a previously listed activity.

Definition of non-tertiary educational institutions

A non-tertiary educational institution is not operated by or on behalf of the state and has one or more of the following as its primary purpose or pursuit:

  • the education of students in primary or secondary schools, or both
  • the conduct of a rural training school
  • the conduct of a kindergarten or preschool.