Incorporated Societies

The definition of operating payments is set by XRB A2. Total operating payments refer to the total of all payments made by your society either in cash or from your bank account during the year (including grant payments and income tax payments), except for capital payments such as those relating to purchasing assets or repayments of loan borrowings.

The definition of current assets has been set by section 15 of the Incorporated Societies Regulations 2023. Total current assets refers to the value of all the assets of the society that meet one or more of the following conditions:

(a) the society expects the asset to be realised, consumed, sold, or otherwise disposed of within 12 months after the society’s balance date of the relevant period (such as accounts receivable or, a fixed asset expecting to be sold within 12 months like a car or a building):

(b) the asset is primarily held for the purpose of being traded(such as stock that is onsold, sports equipment or clothing, stock not yet sold for fundraising activities):

(c) the asset is a cash or a cash equivalent and is not restricted from being exchanged or used to settle a liability for at least 12 months after the society’s balance date of the relevant period (such as bank account, short term deposit).

 See the Regulations for definitions of value and cash or a cash equivalent.

Donee organisations are organisations who have arranged with Inland Revenue for their donors to receive tax benefits for any donations made. If your society just has a letter from Inland Revenue recognising it as a not-for-profit, that’s not enough to be considered a donee organisation.

Total expenses means the total expenses recognised within the statement of comprehensive revenue and expenditure, or the statement of financial performance by an entity in accordance with its applicable accounting standards (excluding any components included within other comprehensive revenue and expense). Total expenses are determined on an accrual basis whereas operating payments in contrast are determined on a cash basis.

In 2023, the Government introduced the Incorporated Societies Act 2022, and so all incorporated societies are required to reregister with the Companies Office in order to maintain their legal status as an incorporated society. The Act now requires some incorporated societies to produce financial statements using External Reporting Board (XRB) reporting standards.  

Any society that does not reregister by 5 April 2026 will cease to exist. 

For additional information on reregistration and the new regime, please refer to the Law Changes Hub on the Companies Office website.

Before you register your society it’s also important to understand how the changes will impact your society from a financial reporting perspective. For more information click here.

The Tier sizes for the not-for-profit standards are based on your total expenses for the year.

If you have total expenses over $33 million for the year you will be required to apply Tier 1.

If you have total expenses between $5 million and $33 million  for the year you will be able to apply Tier 2.

If you have total expenses less than $5 million but operating payments greater than $140,000 you will be able to apply Tier 3.

If you have operating payments less than $140,000 you will be able to apply Tier 4.

Read more here.

If your society is also a registered charity you are already required to apply XRB Accounting Standards under section 42A of the Charities Act 2005.

However, there may be other changes in the 2022 Act which do affect your society. More information on these other changes can be found on the New Zealand Companies Office website and the Charities Services website.