Deplexify
← Back to blog
Compliance25 September 2026·9 min read

Your charity's annual return and performance report — Tier 3 and Tier 4, what goes in, and the six-month deadline

Every NZ registered charity must file an annual return within six months of balance date. Which performance report format you use, Tier 3 or Tier 4, depends on your annual operating payments. Whether you also need an audit or review depends on a completely different Charities Act measure. Miss the deadline twice running and deregistration — plus a tax bill on your own assets — can follow.

Every one of the more than 27,000 charities on the Charities Register has the same basic job each year: file an annual return, with a performance report attached, within six months of balance date. Which format that performance report takes — Tier 3 or Tier 4 — depends on how much your charity pays out each year. Whether your charity also needs an audit or review depends on an entirely separate test under the Charities Act 2005. Get the deadline wrong twice in a row, and the consequence isn't just a late fee — it can mean deregistration, followed by a tax bill on your charity's own assets.

Three different money tests — keep them apart

This is where most treasurers trip up, because three different rules all ask "how big is my charity" using three different measures, and it's easy to assume one answer settles all three.

Test What it decides What it measures Threshold
XRB Tier 4 eligibility Whether you can use the simpler, cash-based Tier 4 performance report Annual operating payments (a cash measure — total payments made during the year, other than capital payments) Under $140,000
XRB Tier 3 size criteria Whether Tier 3 (accrual) is the right tier rather than a higher one Total expenses (an accrual measure, defined in the Standard's own size criteria) Under $5 million
Charities Act audit/review duty Whether your financial statements must be audited, reviewed, or neither Total operating expenditure of the entity and any entities it controls, across the two preceding accounting periods $550,000 — audit or review required. $1.1 million — full audit only

Annual operating payments, total expenses, and total operating expenditure are three distinct terms doing three distinct jobs. Crossing one threshold doesn't tell you where you stand on either of the others — sort out your reporting tier first, then check the audit question separately using its own numbers.

Which tier applies to your charity

A charity can use Tier 4 — the simpler, cash-based performance report — if it doesn't have what the standards call "public accountability" and its annual operating payments are under $140,000. Annual operating payments means the total payments the charity actually makes during the financial year, including grant payments, but excluding capital payments.

If your charity is above that $140,000 payments threshold, or does have public accountability, Tier 3 is generally where you land instead. Tier 3 covers charities with annual expenses under $5 million — measured on an accrual basis, which is a different measure from both the Tier 4 payments test above and the Charities Act audit thresholds below.

If your operating payments went over $140,000 this year, you are probably not out of Tier 4 yet. Charities Services lets a charity stay in a tier it no longer meets for two reporting periods, so a charity at $145,000 does not have to move to accrual accounting straight away.

One flexibility worth knowing about: even if your charity is small enough to qualify for Tier 4, you can still choose to report under Tier 3 instead if you'd rather keep doing accrual accounting. What you can't do is mix the two — once you elect Tier 3, you have to follow every one of its requirements, including preparing a full Statement of Cash Flows, rather than picking whichever parts of each standard suit you.

What a Tier 4 performance report must contain

A Tier 4 performance report has four parts: Entity Information, a Statement of Service Performance, a Statement of Cash Received and Cash Paid, and Notes. Because Tier 4 is cash-based, the entity reports the cash actually received and paid during the financial year — the transactions that moved through its bank accounts and any cash on hand — rather than transactions as they were earned or incurred. That has one direct practical consequence: depreciation doesn't appear in a Tier 4 report at all, because it isn't a cash transaction — there's no money changing hands when an asset's book value is written down.

What a Tier 3 performance report must contain

Tier 3 is built on accrual accounting: transactions are recorded as they occur, not necessarily when money actually moves in or out of the bank account, which means debtors, creditors and depreciation all have to be recorded properly rather than left out. A Tier 3 performance report has more components than Tier 4: Entity Information, a Statement of Service Performance, a Statement of Financial Performance, a Statement of Financial Position, a Statement of Cash Flows, a Statement of Accounting Policies, and Notes to the Performance Report.

The Entity Information section carries more detail than most treasurers expect. It has to cover the entity's name and legal basis, its purpose or mission, its structure, its governance arrangements, any entities it controls, and its reliance on volunteers or donated goods and services — descriptive information meant to let a reader who's never encountered your charity before understand what it actually is, ahead of any dollar figure.

When it's due: six months after balance date

The Charities Act sets this out directly: every charitable entity must ensure that, within six months after each balance date, a completed and signed annual return is sent or delivered to the chief executive. The Tier 3 Standard restates the same rule from the accounting side — the Act requires financial statements to accompany the annual return, and that return must be filed within six months of the end of the financial year.

For a charity with a 31 March balance date, that means filing by 30 September. Applying the same six-month rule to other common balance dates:

Balance date Filing deadline (6 months later)
31 March 30 September
30 June 31 December
31 December 30 June

There's no tier-based extension built into this. A Tier 4 charity with a simple cash statement and a Tier 3 charity with a full set of accrual statements work to exactly the same six-month clock.

What filing actually involves

Filing online carries a processing fee of around $50, and you have to pay that fee before your annual return is actually listed on the Charities Register — it isn't optional paperwork you can settle later. If you already know you're going to miss the deadline, get in touch with Charities Services and ask for an extension before the date passes, rather than after.

What happens if you don't file — and the tax bill that can follow

Charities that don't file their annual return are removed from the Charities Register. Mechanically, that happens when the Charities Registration Board directs that a notice be registered stating the charity is removed and giving the effective date — the entity ceases to be a charitable entity from that date. In practice, the pattern that actually triggers this is well established: many thousands of charities have been deregistered specifically for failing to file two consecutive annual returns, not for a single late filing.

Deregistration itself isn't the end of the story. Under section HR 12 of the Income Tax Act 2007, a charity that's been deregistered — for whatever reason — has 12 months to either re-register under the Charities Act 2005 or divest itself of all its assets. Miss that 12-month window, and the charity becomes liable to pay tax on the market value of its net assets, potentially with interest and penalties on top. That's a materially harder deadline than the six-month annual return, because it only starts running once deregistration has already happened, and it's easy to miss if nobody's watching for it.

One point worth taking seriously if your charity uses an accountant, bookkeeper or filing agent: Inland Revenue is actively enforcing this deregistration tax, including in cases where a third party was actually responsible for missing the filing. The charity remains responsible regardless of whose fault the missed return was. Outsourcing the filing doesn't outsource the liability.

When an audit or review is required

This sits entirely apart from your reporting tier, and it's worth re-stating because the two are so easy to blur. A charitable entity is large — and its financial statements must be audited by a qualified auditor — if, in each of the two preceding accounting periods, the total operating expenditure of the entity and any entities it controls is $1.1 million or more. A charitable entity is of medium size — and its financial statements must be either audited or reviewed by a qualified auditor — if it isn't large under that test, but total operating expenditure was still $550,000 or more in each of the two preceding accounting periods.

Both thresholds look back two full accounting periods, not just the current year, and both count the entity together with any entities it controls, not the standalone charity in isolation — worth checking carefully if your charity sits inside a wider group structure. Failing to comply with this audit or review duty is an offence, carrying a fine of up to $50,000 on conviction. That's a serious enough number that "we'll sort the audit out next year" isn't a safe plan once you've crossed either threshold.

Frequently Asked Questions

Can I use Tier 3 even though I qualify for Tier 4? Yes. A Tier 4-eligible charity can elect to report under Tier 3 instead, but once it does, it has to meet every Tier 3 requirement in full, including the Statement of Cash Flows — there's no partial adoption of the more detailed standard.

What if I know we're going to file late? Contact Charities Services and ask for an extension before the six-month deadline passes, rather than waiting until afterwards.

What actually happens if we never file? The charity is removed from the Charities Register. Deregistration specifically for failing to file has typically followed two consecutive missed annual returns, and once deregistered, the charity has 12 months to re-register or divest its assets, or it becomes liable for tax on the market value of its net assets.

Our accountant handles our filing — are we still on the hook if they miss it? Yes. Inland Revenue has pursued the deregistration tax even where a third party was responsible for the missed filing. The charity remains legally responsible regardless of who actually dropped the ball.

Is there a fee to file the annual return? Yes — around $50 for the online return, and it must be paid before the return is listed on the Charities Register.

Not sure which tier you are in? Deplexify's free Which tier am I? check answers it in six questions. Our charity pack prepares the performance report and annual return from NZ$249 for Tier 4 and NZ$595 for Tier 3.

Sources

Want this done for you?
One call to scope out what we can take on straight away.
Book a call →