Election 2001- Offerings for Not for Profits
29 October 2001 at 12:10 pm
Whether the November 10 Federal election campaign is being run on international issues of leadership and security or domestic issues of health, education and the GST, what’s in it for the Not for Profit sector?
The Australian Democrats claim to have the only national policy to accommodate the charitable sector’s concerns.
The Democrats would increase the GST exemption level for charities from $100,000 to $500,000 and introduce a simplified compliance regime under its Charities and Not-for-Profit Policy launched in Brisbane.
The policy proposes that larger charities should have the option of claiming a fixed percentage of GST tax credits as a low cost alternative to full accounting, taking government grants completely out of the GST net and broadening the definition of charities used in tax law.
Democrats’ Charities spokesperson, Senator John Cherry says more demands are being placed on the charitable sector with more administration compliance costs – but there’s been no attempt by the other major parties at an overall national policy.
He says the Democrats have been active in defending the interests of charities for a long time and this policy demonstrates their commitment to a new deal for charities.
The Democrats say they will reduce tax compliance costs by giving smaller community groups a series of options, including the right to opt out of the GST, a simplified GST compliance regime based on fixed rebates, a simplified FBT exemption, and the exemption of grants from GST treatment.
The Democrats believe that the size of the sector requires a new Government body to regulate and assist the sector – and not the tax office. It is proposing a Charities Commission based on the UK model to manage the issues affecting the sector, together with training and assistance to those running charities.
It was pressure from the democrats that saw the Federal Government carry out the Charity Inquiry earlier this year.
An overall approach is fine but without a significant balance of power it is still up to the major parties, Labor and the Liberal/National Coalition to address the Not for Profit issues.
The Labor Party is approaching each issue individually such as the GST and a promise to review the impact of the GST on charities.
If Beazley wins office a Labor Government promises to compensate Australia’s charities for their inability under the Howard Government’s GST tax system to claim input tax credits for services supplied directly to individuals in need.
The ALP says the problem is illustrated by the example of a charity paying an electricity bill for a needy person. A recent Tax Office ruling states that because the electricity service was not supplied to the charity, it cannot claim an input tax credit on the bill it has paid.
As the charities’ “clients” are not registered for GST, the input tax credit can’t be claimed by anyone, and so the ALP says it is effectively a windfall for the Commonwealth.
It says the same problem also applies in situations where charities, for example, provide living expenses to a family taking in a foster child; or providing clothing vouchers for struggling families.
The ALP says the situation is more absurd where many of these services are provided with funding from the Commonwealth Government’s own Emergency Relief budget – currently around $26 million per annum.
This denial of GST credits effectively imposes a GST on the emergency relief activities of charities, contrary to the government’s promises that non-commercial activities of charities would be GST-free.
Labor says as an immediate measure it proposes to increase the annual Commonwealth Emergency Relief budget by $15 million as compensation for these lost input tax credits.
The Liberal Party takes an individual approach to issues affecting the sector with a list of funding priorities and reforms within the sector scattered through its 258-page web site policy statement.
How do you think the major parties have addressed issues affecting the sector in this election campaign? Post your opinion on our on-line Forum at