Guide to Giving
MEDIA, JOBS & RESOURCES FOR THE COMMON GOOD
NEWS  | 

ATO Appeals Charity ‘Business’ Decision


Thursday, 24th January 2008 at 3:25 pm
Staff Reporter
The Commissioner of Taxation has applied for special leave to appeal to the High Court against a decision made last November that a charity could raise money through business without paying company tax as long as the charitable purpose is its only motive for making profit.

Thursday, 24th January 2008
at 3:25 pm
Staff Reporter


0 Comments


FREE SOCIAL
SECTOR NEWS

 Print
ATO Appeals Charity ‘Business’ Decision
Thursday, 24th January 2008 at 3:25 pm

The Commissioner of Taxation has applied for special leave to appeal to the High Court against a decision made last November that a charity could raise money through business without paying company tax as long as the charitable purpose is its only motive for making profit.

The Federal Court ruling in November relates to the case of a Melbourne funeral business called Bethel Funerals, which is run to raise money for the Not for Profit organisation Wycliffe Bible Translators to translate the Bible into hundreds of different languages.

The business was set up under the name of Word Investment Limited.

Wycliffe’s solicitor, Murray Baird of Moores Legal Services told The Age newspaper that the drying up of government funding for charities, combined with donor fatigue, meant that charities had to become more entrepreneurial to survive.

The Tax Office took the view that they had crossed the line, that churches and charities must not be too entrepreneurial.

But the Tax Office had been over-ruled in the Administrative Appeals Tribunal and the Federal Court, and then the full bench of the Federal Court confirmed that businesses were not taxable as long as the profits were entirely used for the charity and to advance religion.

The ATO says it will continue to apply the Tax Office view pending the High Court’s decision on the application for special leave to appeal and any subsequent decision should the application be granted.

However, solicitor, Murray Baird says it’s surprising that the ATO has decided not to abide by the Federal Court ruling until the appeal process is complete.

He says Special leave application is a process whereby the High Court decides whether it will hear a proposed appeal.
The Court primarily has regard to two matters:
1. whether the question of law in the case is of public importance; or
2. whether the Court should resolve differences of opinion between Courts as to the state of the law.

Baird says it could take some months for the application to be heard. In the meantime, the law is as stated by the Full Court of the Federal Court. Provided the purpose of activity is charitable then the fruits of that activity ought not to be subject to income tax.

According to tax experts the ruling means that charities may seek millions of dollars back from the Australian Taxation Office and may venture into new businesses.

Tax lawyer Duncan Baxter told The Age newspaper that the outcome was doubly helpful for charities, because they won the case and because it clearly showed what they could do while staying tax-exempt.

Baxter, the practice head-tax at the law firm, Blake Dawson is reported as saying charities would be well-advised to have a close look at their activities and see whether some can be extended.



Guide to Giving

FEATURED SUPPLIERS


...


HLB Mann Judd is a specialist Accounting and Advisory firm t...

HLB Mann Judd

Yes we’re lawyers, but we do a lot more....

Moores

NGO Recruitment is Australia’s not-for-profit sector recru...

NGO Recruitment

More Suppliers

Tags : Taxation,

Get more stories like this

FREE SOCIAL
SECTOR NEWS

YOU MAY ALSO LIKE

Susan Pascoe Appointed Head of Newly Formed Community Directors Council

Luke Michael

Friday, 22nd September 2017 at 5:21 pm

Recruitment Expert Says NFPs Need Thorough Process to Hire Honest Candidates

Luke Michael

Friday, 22nd September 2017 at 4:50 pm

Thinkers Look to Melbourne to Grow SA Purpose Economy

Wendy Williams

Thursday, 21st September 2017 at 4:44 pm

Mental Health Groups Call for Same-Sex Marriage to Prevent Suicide

Luke Michael

Thursday, 21st September 2017 at 4:24 pm

POPULAR

Moves to Stop Volunteering at Overseas Orphanages

Luke Michael

Wednesday, 13th September 2017 at 1:54 pm

Future Uncertain for Disability Organisations Following Funding Cuts

Wendy Williams

Tuesday, 19th September 2017 at 8:29 am

Majority of NFPs Are Not Believed to be Well-Run, According to New Survey

Luke Michael

Tuesday, 12th September 2017 at 4:14 pm

More Australians Are Giving Time Not Money

Wendy Williams

Monday, 11th September 2017 at 5:07 pm

Write a Reply or Comment

Your email address will not be published. Required fields are marked *


Guide to Giving
pba inverse logo
Subscribe Twitter Facebook

Get the social sector's most essential news coverage. Delivered free to your inbox every Tuesday and Thursday morning.

You have Successfully Subscribed!