Donations required by Latter-Day Saints Church when adherents leave for mission service overseas are not eligible for a tax credit as a charitable gift if the donation is made by the missionary personally or a parent or grandparent, but are eligible for tax credits if made by wider extended family, the High Court ruled. The ruling turned on questions of who benefitted from donations.
To spread its faith, the wider Church currently has some 70,000 young members undertaking 18-24 months missionary service worldwide; about three hundred of them from New Zealand. Families are expected, but not forced, to contribute financially when a child is ‘called to service’. For missionaries from New Zealand, expected donations are currently about $5700 per year. This money is not used directly to support the family member whilst overseas. It is paid to the Church in New Zealand and used to support overseas missionaries in this country. Individuals are provided with food and accommodation, plus a subsistence allowance. New Zealanders on missionary service overseas are funded similarly by the church in their host country.
The High Court was asked to rule on the tax status of donations made to the Church in New Zealand by families of missionaries heading overseas. It does not pay any of the missionary expenses for people travelling from New Zealand; the New Zealand Church pays for missionaries who come here. The Church said the donations qualified as charitable giving for religious work done in New Zealand.
Justice Hinton ruled that while the annual payment was voluntary, there was an indirect benefit to immediate family. No tax credit was available for them. By making payment as requested, family knew and anticipated the person on whose behalf they were paying would go on overseas service and correspondingly would receive financial support from the host country church. There was a link between the two. Parents and grandparents benefitted by seeing ‘their child’ extend life education by being able to travel, live overseas and experience being a missionary abroad. This benefit did not extend to other relatives such as siblings and extended family, Justice Hinton ruled. Unlike parents and grandparents, they do not generally feel the same sense of obligation. Their donations did qualify for a tax credit as charitable giving.
Church of the Latter-Day Saints Trust Board v. Inland Revenue – High Court (1.02.19)
19.035
Post judgment note: In May 2020 the Court of Appeal ruled all relatives, including parents and grandparents could claim a tax credit for donations made when a family member is 'called to service.' Their donations are received by the New Zealand Church and used for charitable works in New Zealand. Parents and close relatives do not gain a material benefit from the donation; they gain the spiritual and moral satisfaction of supporting Church work.
Post judgment note: In May 2020 the Court of Appeal ruled all relatives, including parents and grandparents could claim a tax credit for donations made when a family member is 'called to service.' Their donations are received by the New Zealand Church and used for charitable works in New Zealand. Parents and close relatives do not gain a material benefit from the donation; they gain the spiritual and moral satisfaction of supporting Church work.