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A document has emerged raising questions over how the Sensible Sentencing Trust is structured to allow tax advantages.
It comes as the Department of Internal Affairs, which regulates charities, described the legal distinction behind the structure as confusing but legally sound.
Internal Affairs was prompted to comment after remarks by tough-on-crime lobbyist Garth McVicar sparked anger.
Hawke's Bay-based McVicar last month congratulated police for shooting a man after he approached them with a machete, writing on Facebook: "One less to clog the prisons!"
It led to an online petition and 20 complaints to the Department of Internal Affairs to strip the Sensible Sentencing Group Trust of its charitable status.
The complaints were rejected by the Department of Internal Affairs this week with a spokesman saying McVicar had no connection to the "Sensible Sentencing Group Trust" organisation which appeared on the Charities Register.
The register instead shows McVicar's wife Anne is a trustee of the Sensible Sentencing Group Trust.
Garth McVicar is a trustee of the Sensible Sentencing Trust — still technically a charity but with no tax benefits and administered by the Companies Office.
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The different groups were created because the Sensible Sentencing Trust's political lobbying bars it from being a charity that offers tax advantages to donors.
In contrast, the Sensible Sentencing Group Trust did no lobbying but stated its purpose as existing to educate the public over the "plight of victims" and provide victim support.
Justice advocate Roger Brooking — one of the 20 to complain — has now produced a receipt showing how a donation paid to the organisation fronted by Garth McVicar resulted in a tax-deductible receipt for the organisation run by his wife.
The receipt and other documentation showed the donation was made to the Sensible Sentencing Trust on April 11, 2018, but the receipt for the donation a month later showed it had been accepted by the Sensible Sentencing Group Trust.
It meant the receipt could be used to claim tax deductions — a benefit impossible in law to obtain for donations to the Sensible Sentencing Trust.
Brooking said: "Everyone knows that Garth McVicar represents the Sensible Sentencing Trust and what they stand for. And most people have never heard of the Sensible Sentencing Group Trust."
Brooking said the two groups were a clear device to offer tax benefits while allowing political lobbying and most people would consider them the same.
The groups shared the same website, the same phone number and had the same address.
On viewing the receipt, a spokesman for Internal Affairs said the Sensible Sentencing Group Trust would be contacted to remind it of the importance of the two groups being separate.
He said Internal Affairs had carefully examined the Sensible Sentencing Group Trust when it was registered as a charity and it considered nothing had changed.
While the groups shared some service, he said they kept separate bank accounts for donations.
Anne McVicar said the issue of the receipt was likely an "admin mistake". "They're very separate and that's very unusual for that to happen."
"I would just hope there are no other mistakes out there. We're all about victims and that's where the money goes to."
Garth McVicar said the Sensible Sentencing Trust had a well-known brand because of its tough-on-crime advocacy.
He said visitors to the website would find a clear explanation and different paths to donate to either.
Legal charity law expert Richard Gray, managing partner of Meares Williams law firm, said it was "vitally important" the two groups were separate.
"It comes down to the ability to accept tax-deductible donations. If they are looking at tax deductibility, the [donor] money must be directed to the charity and receipt issued by the [same] charity."