Have Your Say on Inland Revenue’s Proposed Tax Changes

18 June 2025

Inland Revenue is currently consulting on its draft operational statement ED0265: Mutual Transactions of Associations (Including Clubs and Societies). This proposal sets out the departments interpretation of how income tax applies to not-for-profit clubs, particularly in relation to income received from members, such as subscriptions, bar sales, and social events.

If adopted as written, the changes could have a significant impact by introducing new tax obligations and compliance costs on the not-for-profit club sector.

What is being proposed?

The draft statement proposes that:

• Membership subscriptions may be taxable if your club cannot distribute surplus (as is the case for Incorporated Societies).
• Revenue from trading within members such as bar or kitchen sales, housie, raffles and club events may be fully taxable, even if not-for-profit in nature.
• Donations and welfare income such as poppy funds or legacy gifts may not be exempt.

While the mutuality principal once protected clubs from being taxed on these types of income, Inland Revenue now argues that it has limited application under current legislation.

Clubs New Zealand's Response

Clubs New Zealand has prepared a response on behalf of members, our submission highlights:

• The risk that these changes will place unsustainable tax and compliance burdens on not-for-profit clubs.
• The importance of preserving the non-taxable treatment of membership subscriptions, donations and welfare-focused funds.
• The need for clear guidance, a safe harbour for small clubs, and a more proportionate and practical interpretation of the rules.

We have also emphasised that the principle of mutuality, while narrowed in law, still holds true in practice: members of a club should not be taxed simply for contributing to their own shared space.

Download Clubs New Zealand's Submission here (please note this is in draft form).

Have your Say

We strongly encourage clubs to make their own submissions in support of Clubs New Zealand's position.

To make this easy, we've prepared a template submission that your club can personalise. The more clubs that reinforce this message, the stronger our collective voice will be.

Download the template submission here (please ensure you amend or remove all sections highlighted in yellow)

Submissions are due by Tuesday 25 June 2025, so we encourage you to act quickly.

We appreciate that there is only a short window to make this submission. Please know that a great deal of work has gone into preparing the Clubs New Zealand submission and the accompanying template to ensure that your club's interest are clearly represented.