Tax and finance reform
Tax Laws Amendment (Special Conditions For Not-For-Profit Concessions) Bill 2012 Introduced to Parliament
The Tax Laws Amendment (Special Conditions For Not-For-Profit Concessions) Bill 2012 was introduced into the House of Representatives on 23 August 2012.
The aim of the Bill is to clarify the approach to the 'In Australia' requirement and the definition of 'not-for-profit' for the purposes of tax concessions. If the Bill is passed, organisations will need to alter their constitutions or rules to ensure that they comply with the new requirements.
This Bill is now before parliament, however there has not been an indication of when debate will continue. For further information, please refer to the Parliament of Australia webiste http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd1213a/13bd024
2012 Treasury Consultation Paper - Revised exposure draft regarding the special conditions for tax concession entities (including the ‘in Australia' conditions)
In July 2011, the Federal Government released for consultation an Exposure Draft restating the ‘in Australia' requirement for tax concession entities. The consultation process revealed a number of concerns from the sector. Responding to these concerns, in April 2012 the Assistant Treasurer released for public consultation a revised Exposure Draft of legislation that will restate and standardise the special conditions for tax concession entities (including the ‘in Australia' conditions). The proposed legislation would introduce requirements for entities to operate ‘in Australia' for the purposes of tax concessions, and introduce a standard definition of ‘not-for-profit'.
Whilst PilchConnect acknowledges that a number of our original concerns (as set out in our previous submission, available here) have been addressed by the Revised Exposure Draft, we remain concerned about the impact of the proposed measures on small/medium not-for-profits. In particular, the proposed test for the ‘in Australia' requirement is unclear. The additional requirements on DGRs to pursue their purposes solely in Australia is unnecessarily restrictive and the effect of failing to comply with the special condition particularly harsh.
To review our submission, and the Melbourne University Submission that PilchConnect has endorsed, follow the link:
2011 Treasury Consultation Paper - Charity definition
On 28 October 2011, the Assistant Treasurer released a Consultation Paper outlining the background to a statutory definition of charity, including previous recommendations and inquiries, as well as developments that have occurred since exposure draft of the Charities Bill 2003 was released (but not proceeded with).
PilchConnect's submission emphasised several points of particular concern for small to medium not-for-profit's (NFPs) and endorses the detailed submission prepared by the University of Melbourne Law School's Not-for-Profit Project.
In our view, it should be possible for a non-lawyer to work out from reading the legislation if the NFP they are involved with is clearly eligible for charity status. While specialist charity law advice will always be necessary for those at the margins of the definitions, the need to pay for legal assistance for those which are clearly eligible diverts scarce financial resources away from NFP service delivery. For many small groups, the lack of clarity also means they do not obtain the concessions they are eligible for.
2011 Treasury Consultation Paper exposure draft - 'In Australia' special conditions for tax concession entities
In July 2011, the Assistant Treasurer released for public consultation an exposure draft of legislation that will restate the 'in Australia' special conditions for tax concession entities.
PilchConnect's submission sought to bring to the attention of Treasury particular concerns that we have regarding the impact that the draft legislation may have on small not-for-profit (NFP) organisations. We referred to the submission prepared by the University of Melbourne Law School's Not-for-Profit Project (Melbourne University) for a fuller discussion of these and other salient issues arising from the proposed reforms.
PilchConnect is particularly concerned that the Treasury has not provided a sufficient explanation or justification for what we believe will be the wide-reaching implications of the Exposure Draft in its current form.
PilchConnect endorsed the recommendations put forward by Melbourne University in its submission, and strongly urged the Treasury to have due regard to the matters raised in this submission.
2011 Treasury Consultation Paper - Better Targeting of NFP Tax Concessions
In May 2011, the Federal Government called for public views on possible approaches to the implementation of the Government's 2011-12 Budget announcement regarding income tax concessions for NFPs. The Treasury consultation paper, "Better targeting of not-for-profit tax concessions", canvassed issues relating to the Government's commitment that income tax concessions will only apply to profits generated by the unrelated commercial activities of NFPs if they are directed to the NFPs altruistic purpose.
2010 Commonwealth Senate inquiry - 'Tax Laws Amendment (Public Benefit Test) Bill 2010'
The Senate Economics Committee is currently considering proposed reforms to Australia’s tax laws which, if adopted, would require religious and charitable organisations to satisfy a 'public benefit' test before being entitled to tax concessions or exemptions. The Inquiry is taking place in response to concerns raised by certain Senators about the tax deductibility of some organisations currently classified as religious institutions.
A 'public benefit' test is currently in place within other jurisdictions, including England and Wales where, in 2006, legislation was passed which requires that a charity's purpose must be for the public benefit. This test is applied in the UK by the Charity Commission, an independent regulator for the charitable sector.
2008 Commonwealth Senate - Henry Tax Inquiry
The Australia’s Future Tax System Review Panel by the Senate Economics Committee became known as the 'Henry Review'.
PilchConnect made submissions with regard to tax concessions provided to charitable and related entities under taxation legislation as regulated by the Australian Taxation Office.
This submission should be read in light of overarching recommendations for a better regulatory framework for the not-for-profit sector made in our more comprehensive submission to the Senate Inquiry into Disclosure Regimes for Charities and Not-For-Profit Organisations (see Federal not-for-profit sector reform).