Queenstown Lakes Community Housing Trust executive officer Julie Scott says the plight of Kaitaia's He Korowai Trust and other community housing providers facing a review of their charitable status reflected its own predicament.
Her trust was struck off the charities register in 2010 and subsequently lost an appeal in the High Court. Without charitable status, it could not apply for funding from the Lottery Grants Board and other funders, and its tax status was in ''limbo''.
The plight of He Korowai Trust, which was renovating former Auckland state houses for homeless families in Kaitaia, highlighted the need for reform, Ms Scott said.
''If you're providing home ownership, there's a good chance you will be deregistered and lose tax exemption.''
The Charities Act needed revision to prevent the ''ridiculous'' situation her trust faced of being helped by one arm of government and hindered by another.
Following the 2011 High Court decision, it was subjected to an Inland Revenue assessment and a $6 million tax bill. That bill was only settled on behalf of the trust by the Crown earlier this year.
Community Housing Aotearoa director Scott Figenshow said the High Court had found the trust's work of helping families into home ownership was its predominant activity rather than an ancillary one _ taking it beyond the definition of a charitable activity.
Its decision did not set a ''brightline test'' for assessing community housing providers against that definition, and the Department of Internal Affairs had been left with an unclear court decision and told to ''sort out what this means for everyone else in the country doing a similar type of activity''.
The Government could fix the problem by amending the Charities Act to say the delivery of affordable housing was a fully charitable activity, Mr Figenshow said.
It had announced new tax legislation that would provide approved providers with tax exemption until March 31 next year. He was puzzled as to why the department was reviewing the charitable status of providers when the legislation was still in the select committee stage.
