The Ins and Outs of Annual Reporting for NZ Charities

Get to know the ins and outs of annual reporting for charities in Aotearoa New Zealand so that when your balance date arrives, you don’t even have to think twice.

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We often talk about annual reporting for businesses – but what about for charities? Despite what many would assume, the reporting requirements for New Zealand charities are actually quite different.

But from a quick Google search, it’s not hard to see why there may be some confusion. While there’s a lot of information out there, it can be pretty hard to figure out which information is relevant to you and your charity.

At Thankyou Payroll, we’re privileged to run free payroll services for hundreds of kiwi charities. Part of this service is making your life easier, beyond the software we provide. That’s why we thought we’d lay out the ‘need to knows’ about annual reporting for charities so that when your balance date arrives, you don’t even have to think twice.

What are my legal obligations as a NZ charity?

As a New Zealand charity, you’re legally required to file the following information with Charities Services:

  1. An annual return
  2. A financial report or a performance report (depending on the size of your charity)

This information must be filed within 6 months of your balance date (the last day of your financial year). Balance dates can vary from charity to charity, but here’s a few of the more common ones as an example:

Balance Date 6 Months After Balance Date Report Submission Deadline
31st March 2022 30th September 2022 1st October 2022
30th June 2022 31st December 2022 1st January 2022
30th September 2022 31st March 2023 1st April 2023
31st December 2022 30th June 2023 1st July 2023

You can check when your balance date is by looking up your charity on the Charities Register.

How do I know which reports I need to file?

The specific information you are required to file with Charities Services depends on whether you are a Tier 1, Tier 2, Tier 3, or Tier 4 charity.

What does that mean? The Tier system was created to allow smaller charities to prepare reports in a more simple form, and to hold larger charities to a larger set of accounting standards.

To determine which Tier your charity sits in, you’ll need to know:

  1. Your annual expenses or operating payments for your previous two periods. You can look at your last two annual financial statements to find this information.
  2. Whether your charity has public accountability. In other words, whether your charity is responsible for holding cash or assets on behalf of others as one of its main activities.

Once you’ve got this information on hand, simply refer to the tables below to find out which Tier you belong to and which reporting standards you’re expected to follow…

Tier  1
Criteria

Annual expenses* > $30m

OR

public accountability

Accounting Standards Full standards
Audit Required Y/N Yes
Reports Required Financial report + annual return
Tier  2
Criteria

Annual expenses* ≤ $30m

AND

no public accountability

Accounting Standards Full standards – reduced disclosure regime
Audit Required Y/N Yes
Reports Required Financial report + annual return
Tier  3
Criteria

Annual expenses* ≤ $2m

AND

no public accountability

Accounting Standards Simple format report – accrual
Audit Required Y/N

For annual expenses* >$1.1m, Yes

For annual expenses* >$550K, a review is required

For annual expenses* <$550K, No

Reports Required Performance report + annual return
Tier  4
Criteria

Annual operating payments* < $140K

AND

no public accountability

Accounting Standards Simple format report – cash
Audit Required Y/N No
Reports Required Performance report + annual return

*for each of your previous two accounting periods

How do I create my reports?

 

Performance reports

If you are one of the 97% of NZ charities who belong to Tier 3 or Tier 4, you’re required to create and file a performance report within 6 months of your balance date.

NOTE: If you are a Tier 1 or 2 charity, you can visit the Charities Services website or refer to the table above for your specific reporting requirements.

A performance report should include both financial and nonfinancial information. Essentially, it’s a summary of your charity’s activity for your last financial year – your story, if you will.

Sounds a bit vague, right? Lucky for you, Charities Services has an abundance of free resources and templates to help Tier 3 and Tier 4 charities to create these reports. You’ll be an expert in no time.

Annual returns

No matter which tier your charity fits into, you must submit an annual return to Charities Services within 6 months of your balance date. You’ll find this step A LOT easier if you complete your performance report (or financial report) first – because this information can then be repurposed.

The key purpose of the annual return is to give kiwis easily accessible basic information about your charity. It’s the information you see when you look up your charity’s name in the Charities Register so it’s important that you make sure everything is informative and accurate.

Again, while this may sound overwhelming at first, everything you need to provide is actually compacted into a simple form for you to fill out and submit. You can do this online or on paper – although you’ll find the former is a lot easier, faster, and cheaper. All you need to do is log in to your charity’s account and you can be done in less than half an hour.

Accessing Information from the Thankyou Payroll System

When creating your annual reports, you’ll need to find and include various pieces of financial information about your charity – including your payroll.

If you’re a Thankyou Payroll customer, take a look at our End of Financial Year Reports Guide for everything you need to know to access the information you need. Or, if you’re after some one-on-one guidance, our payroll experts are just an email or a phone call away.

Staying ahead of the game

While it’s easy to sit back on these reports and ignore the 6 month deadline until the last minute, it’s a good idea to start planning your reports months in advance. That way you won’t be swamped with work and you can ensure everything is accurate and accounted for.

Although the topic of financial reporting can be a bit dry, there’s still a silver lining for you. That’s because while these reports are a legal requirement, they’re also a fantastic opportunity to tell your charity’s story, showcasing the awesome work you do.

So what are you waiting for? Let’s get reporting.

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