Donation Tax Credit in Year Refunds 

What is the proposed change?

• Inland Revenue would be able to refund approved donation tax credits during the tax year.

• Refunds would be capped at one-third of the individual’s reportable income

• Receiving refunds during the year would be optional.

• Proposal would apply from 1 April 2028

Who would be eligible to receive donation tax credit in-year refunds?

• In-year donations tax credit refunds would only be available to individuals earning reportable income, such as salary or wages.

  • The maximum eligible donation amount would be the lower of $100,000 or the doner’s reportable income earned up to the time of the claim. 

• Donors earing only non-reportable income, such as self-employed income, would not qualify for in-year donation tax credit refunds.

  • Their donation tax credits would continue to be processed by Inland Revenue after the end of the tax year.

• Donors with both reportable and non-reportable income could receive in-year donation tax credit refunds up to the amount of their reportable income.

  • If their total taxable income at year end is higher, they may qualify for additional tax credits after the end of the year. 

How could donors claim an in-year donation tax credit refund?

• Refunds for donation credit in-year are only available through receipt upload feature in myIR.

Would charities be required to provide receipts more frequently?

• Charities do not need to change how or when they issue receipts.

Would this proposal affect donation tax credits claimed through payroll giving?

• Payroll giving arrangements will not be affected by the proposal. 

Transferring donation tax credit refunds to charities 

What is the proposal change?

• Allow donors to transfer donation tax credit refunds to charities through Inland Revenue.

• Proposal would apply from 1 April 2028

Why is this change needed?

• There is no current mechanism for transferring donation tax credit refunds to charities. 

How would a donor transfer their donation tax credit refund back to the charity they donated to?

• Donors could choose to transfer their donation tax credit refund directly to the charity.

• This choice would be made through a simple yes/no option when uploading the donation receipt in myIR.

How would transferred donation tax credit refunds be paid to charities?

• Transferred donation tax credit refunds would be paid directly into the charity’s nominated Inland Revenue bank account.

  • The transferred refunds would remain anonymous.

• Charities wanting to receive transferred donation tax credit refunds would need to provide a bank account to Inland Revenue

  • If no bank account is set up when the refund becomes payable, the refund would instead be paid to the donor. 

Could a transferred donation tax credit refund qualify for another donation tax credit?

• Transferred refunds cannot qualify for another donation tax credit.