New Zealand's tax credit problem

New Zealand's tax credit problem: we know it exists. So why aren't we claiming it?

By Community Foundations of Aotearoa New Zealand
13 May 2026

9 in 10 New Zealanders know about the 33% tax credit on charitable donations. Less than half claim it. And 40% of those who don't say the reason is simple: it's too hard.

These are some of the findings from our Giving in Aotearoa New Zealand research, and they point to something that should concern anyone who cares about equitable outcomes in communities and having a system that creates optimal conditions for New Zealand's generous culture to thrive.

New Zealanders are generous people. We give to causes we care about, we volunteer, we look out for our communities. But when it comes to one of the most practical tools available to support that generosity, our 33% tax credit on charitable donations, something is going wrong.

The disconnect is striking. 90% of New Zealanders are aware the rebate exists. Yet only 48% claim it. That's nearly half the country leaving money on the table. Money that, if returned, could fuel even more giving.

So, what's getting in the way?

When we asked those who don't claim the credit why not, the answer was telling: 40% said the process is simply too hard. Not that they didn't know about it. Not that they didn't want it. The system itself is the barrier.

And here's where it gets inequitable. Among higher-income earners, the claim rate rises to 65%. Those who arguably have more resources, including time, advisors and administrative support, are the ones most likely to navigate the process successfully.

An outdated system in a digital world

The donation credit process in New Zealand has seen little meaningful change since the mid-2000s. In the same period, we've seen the rise of contactless payments, instant bank transfers, digital tax returns, and app-based giving platforms. The infrastructure for a frictionless experience exists.

Imagine a world where your tax credit arrived automatically, or at least with a single tap, rather than requiring you to gather receipts, complete forms, and wait. The technology is there and the will to shift outdated systems is what is needed.

What would change if we fixed this?

More people claiming the credit means more money flowing, and it also sends a powerful signal: your generosity matters, and the system supports it. Our practice and international research tells us that the tax credit can be a powerful enabler for more giving.

A streamlined, near-instant credit system wouldn't just reduce administration, it would make generosity more equitable, reinforcing participation across all income groups, not just those with the time and resources to navigate the system.

Reducing friction in the tax credit process isn't just an administrative improvement. It's a statement about equity and about who philanthropy is for, and it's central to whether the system does, in fact, encourage even more generosity.

What would it take to modernise New Zealand's donation tax credit system?

This is the first in a series of findings from CFANZ's Giving in Aotearoa New Zealand research. Stay tuned for more insights into how and why New Zealanders give, and what barriers get in the way.

See more about NZ's tax credit on donations here>>