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NZ High Court says interest-free mortgage scheme to 'advance religion' is legal

By Max Wallace - posted Monday, 3 October 2011


Next week's tax summit in Canberra will be facing sober questions about the scale of tax required for governments to meet their many commitments to citizens in the future. You can be sure that one area will be quarantined from any discussion: the centuries old exemption from taxation for purely religious purposes. To their credit, the government announced in its last budget that the commercial businesses of organisations owned by religious organisations will now be taxed. It was also said that a charities commission will be established to monitor charities in the future, as in England and Wales, and in New Zealand.

However, on 2 June 2011 the New Zealand High Court added another burden on taxpayers there when it ruled that an interest-free mortgage scheme devised by the Christian Liberty Trust organisation of Whakatane 'advanced religion'.

The case

In 2010 the New Zealand Charities Commission decided that the Liberty Trust organisation did not fit the legal definition of charity and de-registered them from the Charities register.


Liberty Trust is a Christian organisation that states that ''teaching the Bible's financial principles' has always been their first purpose. The Chairman of the Trustees of Liberty Trust is Kelvin Deal, described in their newsletter as a Chartered Accountant.

Liberty Trust appealed the Charities Commission decision to the High Court and won. The matter came before Justice Mallon on 28 March 2011 and the Judgment delivered on 2 June 2011.

Liberty Trust was registered as a charitable entity in 2007. Its main activity was a mortgage lending scheme funded by donations from 'contributors'. To quote Justice Mallon

Those who contribute to Liberty Trust for five to ten years are eligible for an interest free loan. Once there are sufficient funds, loans are offered in the order of joining Liberty Trust. The standard contribution rate is 20 per cent of the loan application for ten years. For this the contributor can expect to be offered a seven year interest free loan of five times their contribution balance. To receive a longer repayment period the contributor can choose to wait longer or contribute more. Similarly, to receive a loan sooner the contributor can contribute more than 20 per cent. Loans are offered for up to 100 per cent of the valuation of a property and are secured by mortgage over the property.

Justice Mallon states that anyone can join the scheme and cites Liberty Trust's words:

We do not know if any of our donors follow the Christian religion because Liberty Trust exists to serve all people regardless of their beliefs (or lack of beliefs for that matter.) We seek to assist all people socially, physically, spiritually and emotionally as a demonstration of Christian care, and for the advancement of the Gospel of the Kingdom of God.


While the paragraph above states clearly that anyone is eligible for join the Trust and apply for a loan, the application form moves the goalposts considerably. Whereas anyone can apply, the application form requires that an applicant 'covenants' to

  • contribute $_____per week/fortnight/month, to be applied by the Trustees in furtherance of the Trust's charitable objectives;

  • to research and teach principles relating to finance from God's Word; and

  • to outwork those principles by practical ministries.

It concludes:

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About the Author

Max Wallace is vice-president of the Rationalists Assn of NSW and a council member of the New Zealand Assn of Rationalists and Humanists.

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All articles by Max Wallace

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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