Donations on payday give instant rebate

A new scheme giving added incentive for workers to donate to charity is being welcomed by fundraisers and unions. But employers are wary of the extra demands it could place on them.

From today, workplaces can allow employees to donate money through the payroll and immediately receive their 33 per cent tax rebate, rather than have to wait to claim it back at the end of the financial year.

It is hoped the payroll giving scheme, already commonplace overseas, will gradually increase the amount given to charities, which were hit hard last year by the economic downturn.

Employers support the idea of more help for charities, but are concerned about the costs that will be placed on them in terms of administering it.

Many businesses are already struggling with the pressures of being the "unpaid tax collector and administrator on behalf of the Government", said Auckland Chamber of Commerce chief executive Michael Barnett.

Employers and Manufacturers Association (Northern) chief executive Alasdair Thompson said it was pleasing that employers at least had the choice whether to opt in.

His association suggested firms restrict the donations to one or two chosen charities, "which cuts down the compliance thing quite a lot".

Among the first to adopt the scheme is the chief executive of new cellphone firm 2degrees, Eric Hertz. Mr Hertz will be donating to The Hearing House, for deaf children and their families.

James Austin, chief executive of the Fundraising Institute, said the scheme had taken a while to come, but was an important part of creating a "culture of philanthropy" in New Zealand.

"Experience from overseas has shown that charities should not expect a miraculous influx of funding, because it's voluntary. But the country coped very well with KiwiSaver and so it's the same sort of basic principles."

Council of Trade Unions president Helen Kelly said the payroll scheme was good because workers would get money back that they might not have bothered to claim for in the past.

"And it also probably makes donations slightly more affordable."

PAYROLL GIVING
* Payroll giving allows employees to "give as they earn", by making donations directly from their pay to approved organisations.
* For every dollar an employee donates, they receive a third back as a tax credit in the same pay period.
* Because payroll giving is voluntary, employers have the choice of whether to offer the scheme to their employees.
* Depending on how the scheme is set up, the frequency, amount and donee organisations chosen by employees can change at the employee's discretion.
Source: Inland Revenue Department