NFPs Concerned Over Tax Concession Draft
7 March 2013 at 4:33 pm
Nine out of 10 Not for Profit organisations are concerned they would be worse off if the Federal Government replaced the sector’s income tax exemptions with grants, according to a report by national accounting association BDO.
The BDO Not for Profit Tax Concession Survey 2013 report polled almost 180 NFP organisations across Australia to gauge industry sentiment following the recent consultation paper from the Federal Government’s Not-for-profit Sector Tax Concession Working Group.
Among the changes being considered by the Government are limits on deductibility for donations, changes to Fringe Benefits Tax (FBT) concessions and limits on the entities eligible for Deductible Gift Recipient status.
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"Are you confident that if any tax concessions were removed, compensation through grants from government would ensure you are no worse off?" – BDO Report
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BDO National Tax Director Lance Cunningham said the survey findings highlighted the sector’s concern for its future funding and operations, should current concessions change.
“It is clear the sector is particularly concerned about the proposed changes to Fringe Benefits Tax concessions, with almost 92 per cent of respondents saying it should continue to be provided to employees,” Cunningham said.
“FBT concessions are a key means for Not for Profits to attract and retain talented staff and many said it should be increased by some degree.
“The sector has already felt the pinch from the recent economic climate and NFP’s fear that any further changes would significantly compromise their capacity. If there are to be any restrictions to the FBT concessions, they should be replaced with other concessions or compensation that will allow the sector to retain its talented staff.”
Key findings:
- 93.9 per cent of respondents are either not confident or not sure that if any tax concession were removed, compensation through grants from government would ensure they are no worse off
- 93.6 per cent of respondents said their organisation would be limited to some extent if their organisation did not have income tax exemption
- 78 per cent of respondents potentially qualify for refunds of franking credits, but only 32 per cent of these respondents have investments that facilitate these refunds
- 91.8 per cent of respondents believe FBT concessions should continue to be provided to NFP employers
- 70 per cent of respondents said the FBT concession thresholds should be increased by some degree
- 69.2 per cent of respondents said if tax deductibility of donations is limited, their organisation’s donation base would decrease to some extent
Lance Cunningham said that not every issue was clear cut.
“Perhaps the issue that most divided respondents was the question of raising the level of deductibility for donations to $25,” Cunningham said.
“Respondents were split right down the middle with 46.5 per cent saying raising the limit would decrease their donation base and 51.7 per cent saying it would have no impact on donations received.
“A division like this would suggest that more work needs to be done by the Government to understand how Not for Profit organisations may be affected before they consider pushing ahead with such sweeping changes,” he said.
Cunningham said another divide highlighted by the survey findings is the number of respondents who do or do not have investments that provide refunds of franking credits.
“While not all respondents who qualify for franking credit refunds have investments that allow for them, most of those that do receive the refunds rely on them as an important source of their funding,” he said.
“The services these NFPs provide would be greatly reduced if franking credit refunds were no longer available, as many of these bodies use the refunds to cover their administration costs so they can then use 100 per cent of the donations they receive directly for their charitable/community works.”
The Federal Government’s Not-for-profit Sector Tax Concession Working Group is yet to announce its recommendations.
