New Zealand, Missionaries, and Inland Revenue

Effective January 1, 1991, the church equalized the cost of missionary service. Before, a missionary had to pay the actual costs of his or her mission.[fn1] Now, a missionary pays a set amount to the church, and the church pays the costs of missionaries’ missions irrespective of where they go.

Why did the church make this change? A bunch of reasons, I suspect, but one was because of the tax law. I’ve blogged about Davis v. United States before, and I have a chapter in my book that goes into extensive detail about both the litigation and the thinking behind the case. The short of it, though, is that the Supreme Court held that payments from parents to their missionary children did not qualify for the charitable deduction. Donations from parents to a church-controlled fund (at least, as long as those payments weren’t earmarked particularly for their children) did qualify.

Almost thirty years after the Supreme Court decided Davis, the question of the deductibility of missionary payments is back. Kind of. [Read more…]