New payroll scheme is expected to help Church

The scheme, which came into effect in January, allows employees to make donations directly from their pay to approved charities, and get one-third back immediately as a tax credit, reducing their tax paid in that pay period. Employers forward the donations to the charity.

The scheme is available only for employers who file tax returns online. Those employers can choose whether to offer the scheme to employees.

The charities must be Inland Revenue-approved as "donee organisations".

Speaking on behalf of New Zealand Catholic diocesan managers, Hamilton diocese general manager Greg Schmidt told NZ Catholic the scheme could lead to a society with a "more charitable giving and volunteer culture".

"The ability to receive donations electronically on a constant and regular basis will, no doubt, be a positive for any charity," Mr Schmidt said.

"For some of our parishioners, it may remove the burden of remembering to take a pledge envelope to Mass, having cash available, [or needing] to set up or change an automatic payment."

Mr Schmidt said getting an immediate tax rebate would improve donors' cash flow and possibly remove the need for them to file for an annual tax rebate.

But he wonders if there will be issues around employers deciding whether or not to offer the scheme, and, if they do, whether they could constrain the number and type of approved charities given to, as well as the amounts given. Employers' decisions could depend on employee demand, he added.

Society of St Vincent de Paul executive officer Anne-Marie McCarten said the scheme could help improve income for the society and may increase the amount people give.

Ms McCarten compares it to KiwiSaver as the deduction is made before net pay is received, so funds can't be spent on other things.

But having it at employers' discretion and letting them decide how it will operate and which charities can be chosen is a pitfall, as is the fact that not all employers can take part, she said.

"IRD released information about the scheme in November, and to date I have received no questions from employers," Ms McCarten said.

Voice for Life administration manager Paula Middleton said the scheme would be great for those for whom it is available and who stay with the same employer for a long time.

But Ms Middleton warned many employers don't like doing IRD's work for them and might not offer this service. There's also a risk of employees changing jobs and forgetting to set up donations again.

"A direct connection between the donor and the organisation they have chosen to support seems more reliable," she said.