The following general points can be made, but please note that every club’s situation is different, and our advice is neither prescriptive nor a “fix-all solution”. Also note that this resource is not a legal opinion.
We’ll attempt to clarify the somewhat complex rules and legislation which cover the two main situations clubs can find themselves in.
- Vehicles provided by the members: Car-pooling using members’ cars
- Vehicles provided by the club, such as hiring a van for a specific trip, or owning and operating a club van.
What are we trying to avoid?
Any time a vehicle is driven by someone for ‘Hire or reward’ the driver requires a P-endorsement, and the organisation involved needs to hold a “Passenger Service Licence”. If a driver is pulled over by the police, and the licences and licence requirements are not met, hefty fines and punishments can be issued.
These licences are expensive and time consuming to gain and to hold. The good news is, that if we are careful with the way we do things, we can legally keep doing what we’re doing without the requirement to have either.
Vehicles provided by members
Cost sharing for ‘Traditional Carpooling’ is fine
When a group shares a vehicle, it’s the socially accepted thing to do for passengers to chip in a reasonable amount to the driver, in order to share the cost of the journey.
Traditional carpooling is specifically exempt from any requirements for additional driver (or club) licences. Sometimes the passengers and driver come to some agreement, and sometimes the club sets a recommended rate for cost reimbursement.
Actual and reasonable costs
It is important however, that any payment can be justified as purely to cover the actual and reasonable costs of the journey. This includes an allowance for reasonable wear and tear on a vehicle. You can’t legally include a little extra as a ‘donation’, any amount intended as payment for the act of doing the driving, or any amount as a ‘thank you’ to the owner for using their car. These would invokes the legal case law definition of ‘Hire or reward’, which means the licences are required.
If a club chooses to state a formula for working out the actual and reasonable costs, then make sure you can justify how you’ve come up with the figures. The AA regularly publishes rates on the cost of vehicle ownership, which the IRD says is acceptable for tax purposes, so that’s a pretty good place to start.
Vehicles rented or owned by the club
Clubs are normally automatically exempt from the licensing requirements.
In the Land Transport Rule: Operator licensing, the category of exempt organisations which apply to clubs is that of an ““an incorporated charitable organisation, or an incorporated organisation registered under the Charities Act 2005 …”
First up, your club needs to be an incorporated society, (which most FMC clubs are)
Then, if your club is also a registered charity, it’s clearly exempt from the licensing requirements. Although to remain exempt, it still has to follow several rules, which are covered later on. Whether or not to become a registered charity is beyond the scope of this guidance, but let’s just say that it requires some paperwork and annual reporting which is not insignificant.
For the rest of the clubs, unfortunately “incorporated charitable organisation” is not a defined legal term. NZ Transport Authority, who administer and enforce the rule, were unwilling to draw a conclusion about what the term actually means, or whether a particular incorporated society was in fact an “incorporated charitable organisation” for the purpose of the exemption.
What does this mean for clubs? Our legal reference group had a go and couldn’t provide an absolute answer either, but they did take a “robust view that an incorporated [outdoors] club which largely fits within the objects outlined in the Charities’ website extract could treat itself as an “incorporated charitable organisation” entitled to the licensing exemption (assuming it complies with the other requirements of that exemption).”
How can you justify your club as being an “incorporated charitable organisation”?
Your club needs to be able to meet the requirements to be eligible for charitable status; (The linked page explains when sport and recreation organisations may be considered to be charitable.)
The requirements relevant to a club are that it “Pursues a charitable purpose” which can be “promotion of health.. [in the community]” by “encouraging the participation in cardiovascular exercise”.
The club also needs to provide a ‘public health benefit’, available to “a significant section of the public, not primarily for an elite few”. And in order to do that, the club must not have “excessive membership fees” and not be involved with a sport that is “excessively dangerous (in that the danger outweighs any potential health benefits)”
These requirements clearly match the majority of tramping and outdoor clubs, which means you should be able to reasonably justify being an “incorporated charitable organisation” and therefore exempt from the licensing requirements.
If your club is still not comfortable with that justification alone, then the club would need to ask for a ruling from Charities services, or apply for and be granted registration as a charitable organisation (which takes time, money and ongoing annual effort).
Another avenue to help justify being an “incorporated charitable organisation” is being granted income tax exempt status by IRD. Most clubs should be aware of this, and have gained this exemption, but if not, it’s well worth applying!
What else to we need to ensure to remain exempt from the licensing requirements?
Hire and reward
It’s important that the way any money is collected, and the value amount remains outside the definition of hire and reward, i.e. only for actual and reasonable costs, as explained previously in the carpooling section.
No more than 12 seats in your vehicle
If your vehicle has more, (and the number includes the driver) the club and driver are no longer exempt from the licensing requirements.
It doesn’t matter where the vehicle comes from
Whether it is provided by the club member, hired by the club, or owned by the club is irrelevant. For more reading, have a look at the NZTA website;
This resource was compiled with the assistance of FMC’s legal reference group. It is intended only to assist clubs with their own interpretation of the relevant laws. It is not a legal opinion, and each club remains responsible to determine for itself the legal obligations it has.