Understanding the charities duty exemption

Key information

Some transactions may be exempt from duty when they involve an eligible charity.

Transactions that may be exempt include:

• transferring dutiable property to an eligible charity
• declaring a trust over dutiable property for a religious, charitable or educational purpose
• declaring a trust over non-dutiable or unidentified property held solely for a charitable purpose.

These exemptions are provided under the Duties Act 2000, including sections 38(3) and 45.

The land transfer duty exemption for friendly societies was removed from 4 December 2024.

Eligibility for the exemption

To be eligible for the exemption, an organisation’s purpose must be charitable and benefit the public.

For duty purposes, charitable has a technical, legal meaning decided by the courts. We assess both the organisation’s stated purpose and its actual activities.

Both of the following criteria must be met:

1. The organisation’s purpose must fall within one of these 4 heads of charity:
   • relief of poverty
   • advancement of education
   • advancement of religion, or
   • other purposes beneficial to the community.
2. The organisation’s purpose must benefit the public or an appreciable section of the public.

Exempt organisations

The organisation must be established and maintained for a charitable purpose. It must not distribute profits for the private benefit of owners or members during its operation or at wind-up.

A charitable organisation’s constitution or memorandum of association should contain:

• a clause that prohibits distributing surplus funds, whether income or capital, to members
• a wind-up clause that requires surplus assets to be passed on to another charitable organisation and not distributed to members of either organisation.

Find out how to apply for a duty exemption for charities.