Government Benches Proposed New Charity Taxes

The Federal Government has delayed the introduction of its controversial 2011-12 Budget measure to introduce new charity taxes until July 1, 2014 – a move welcomed by the Not for Profit sector.

Originating out of the Government’s ‘Better Targeting of NFP Tax Concessions’ model, the start date of July 1, 2014 is proposed to apply to activities that commenced after 7:30 pm (AEST) on May 10, 2011. The measure will not impact on tax concessions that were used for these activities prior to July 1, 2014.

The Government says as part of transitional arrangements, relevant activities that commenced prior to 7:30 pm (AEST) on May 10, 2011 will not become subject to the measure until July 1, 2015. The measure will not impact on tax concessions that were used for these activities prior to July 1, 2015.

“The Government is committed to working closely with the NFP sector to ensure that any taxation or regulatory changes are designed effectively and with a strong focus on the future of the sector and the needs of the community,” Assistant Treasurer David Bradbury said.

“This extension will enable further consultation and engagement with the NFP sector on this measure and ensure there is an opportunity for detailed stakeholder input to be provided.”

The delay has been widely welcomed by the Not for Profit sector.

“Benching a proposed new tax on charities is good news for our communities,” CEO of the Community Council for Australia (CCA) David Crosbie said.

“The whole Not for Profit sector will welcome the announcement that the proposed new tax on the commercial activities of Not for Profit organisations is to be delayed by at least two years.

“Not for Profits support the Australian Taxation Office in preventing commercial organisations posing as NFP organisations to avoid taxation, but that does not mean the government should create a new tax that forces every Not for Profit in the country to question every income producing activity.

“This announcement gives us two years to work with government and find a better way of stopping tax avoidance from organisations posing as charities,” he said.

Chair of CCA and CEO of World Vision, Rev Tim Costello, said all governments want to see the $43 billion dollar NFP sector supported in its efforts to diversify income and rely less on government funding.

“This sector is critical, not only employing one million Australians, but also providing the support that enables our communities to be strong and resilient even in tough times,” Costello said.

“The government needs to be very careful not to suffocate social enterprise or innovation in the Not for Profit sector for the sake of preventing a very small minority of not-for-profit organisations misusing their charitable status.”

CEO of HammondCare, Dr Stephen Judd, said: “The proposed new tax was really like imposing a massive sledge hammer to crack a small nut.”

Mission Australia CEO Toby Hall said: “If we want our communities to flourish, we must support our Not for Profit sector and get the regulatory and taxation environment right. This government has done some good work to support the NFP sector.”

“Delaying an unnecessary tax is another step in the right direction, although we still have quite a way to go if we want our sector to be more productive and effective.”

Wesley Mission CEO Rev Keith Garner said that the value of the work carried out by charities in Australia cannot be over-stated.

“It has seemed strange to me that the Australian Taxation Office would seek to squash innovation through new taxes on their income. Thank goodness common sense has prevailed and we are delaying this proposed new tax.”