Charity or business? Orchard runs tax-free operation
By Heather du Plessis-Allan
If a fruit business owns $209 million worth of assets and earns $31 million a year, should it pay tax?
You would think so, but this operation we're talking about isn't paying a cent. Why? Because it's a charity.
So Story decided to investigate how much charity it's actually doing.
"This is a commercial operation, trading in a commercial market, making a net surplus and not paying income tax," says charities expert Michael Gousmett.
The charity that owns the property is called Trinity Lands. It's Brethren-run. Its purpose is to "promote the spread of the Christian gospel", and it's got plenty of material possessions to help it to spread the good word.
The charity owns 6400 hectares of land. It's the fifth-biggest shareholder in kiwifruit exporter Zespri.
If it weren't a charity, Trinity Lands would have paid $1.2 million in tax last year alone.
"That's $1.2 million in revenue that the Government has not got from a commercial operation," says Mr Gousmett.
He thinks it's wrong that big businesses run as tax-exempt charities at all, and he thinks it's time we changed a law dating back to 1892.
"I don't think the Parliamentarians in 1892 foresaw that we would have commercial operations of this scale claiming to be charitable and therefore exempt from income tax."
Between 2012 and 2014, Trinity Lands gave $4.3 million in donations. That's just a little bit more than it gave in business to its directors and executives or organisations they're involved in.
In other words, the people who run the charity are getting as much money, albeit in business, as charitable causes are.
The Department of Internal Affairs has received a complaint about the charity and has decided to launch a review of Trinity Lands.
The charity's managing director, Ian Elliott, says Trinity Lands has been around for more than 50 years, distributing significant funds to charitable causes.
He says without the support, many of those community causes would simply fail.
Trinity Lands isn't the only charity doing a lot of business. Queenstown's world-famous jet boat ride, the Shotover Jet, is owned and run by none other than Ngai Tahu Charitable Group, which also runs other ventures Rainbow Springs and Dart River Tours.
Hawke's Bay's Mission Estate Winery, legally known as Marist Holdings Greenmeadows Limited, has been registered as a charity since 2008.
So, who benefits from this? According to Charities Services, religious groups do, namely the Society of Mary New Zealand Catholic Religious Order.
Christchurch's private hospital, St George's, is also a charity, and has been since 2008.
There are plenty of New Zealand businesses operating as businesses but giving millions to charities and also paying tax.
The question isn't whether the charity is doing good work; it's whether it's doing enough good work to get away with paying no tax at all.
Watch the video for the full Story report.