This draft operational statement explains the income tax treatment of amounts societies, clubs and other associations receive from members, other than amounts subject to a specific tax exemption such as for charities or sports clubs.

It explains that the mutual association provisions override the mutuality principle for trading stock and services supplied to members. It also explains that subscriptions and levies will not be covered by the mutuality principle if the association is not able to distribute to members. Such amounts may be business income or income under ordinary concepts, depending on the circumstances.  

According to CA ANZ, the Commissioner’s revised position, set out in the draft statement was briefly referenced in the February 2025 public consultation document Taxation and the Not-for-Profit Sector (the issues paper). 

In addition to its earlier submission, CA ANZ highlights the following key concerns regarding the draft statement:

• The conclusions reached in the draft statement create further uncertainty and confusion.
• CA ANZ disagrees that the Australian Federal Court’s decision in Coleambally Irrigation Mutual Co-operative Ltd v FCT (2004) ATC 4,126 (Coleambally) would, or should, be adopted in the New Zealand context.
• The practical implications of the Commissioner’s revised view, particularly the increased compliance burden on Inland Revenue and the not-for-profit sector, have not been adequately considered in the draft statement.