The existing
legislation should be amended to provide that profits from trading derived
directly or indirectly by charitable organisations and dividends derived from
any company substantially owned by such organisations are assessable for income
tax at normal rates.
Taxation Review
Committee, 1967
The competitive
advantage a charity could gain through the ability to accumulate tax-free
profits [enables] a faster accumulation of funds [which would allow it] to
expand more rapidly than its competitors.
[This was] the real competitive advantage that trading activities owned
by charities have over their competitors.
Trading operations owned by charities would be subject to tax in the
same way as other businesses.
Tax and Charities, IRD, June 2001