Tax changes for charities dumped

The Abbott government’s decision to abandon plans to "Better Target Not-for-Profit Tax Concessions" has been widely welcomed.

The measure, which brought into question charities’ income producing activities, was introduced by the previous Labor government. It argued that the government was foregoing significant revenue because some of the income-producing activities of charities were not being directed to charitable purposes.

The legislation would have resulted in not-for-profits (NFPs) only receiving tax concessions if their income producing activities directly furthered the purpose for which they were established.

Assistant Treasurer Arthur Sinodinos has indicated that while he will not proceed with this legislation, he will consider other measures for charities which are inappropriately exploiting their charitable status to gain tax concessions.

David Crosbie, CEO of the Community Council for Australia (CCA), describes the measure’s abandonment as a good outcome for the one in eight Australians employed in the NFP sector and the communities that will benefit from their NFPs being both more secure and more able to diversify their income streams.

“For the past two years, charities have been concerned that their income-producing activities may jeopardise their charitable status and the concessions they receive,” says Crosbie.

“In this area, the government has clearly listened to the NFP sector and provided a measure of certainty for future planning of income-producing activities.”

Independent Disability Services (IDS) also welcomed the government’s decision not to proceed with the tax. For the last two years, we have been concerned that our funding activities may jeopardise our charitable status and the concessions we receive, taking funding away from the work we do on behalf of our clients. The decision means we will have greater security and be more able to diversify our income streams,” IDS said in a statement.

Bethwyn Serow, executive director of the Australian Major Performing Arts Group (AMPAG), describes the move as “a vote for common sense”.

"The previous government’s approach could destabilise and limit charities’ options for generating revenue to support their charitable purpose,” she says.

“This decision, combined with the start of the Charities Act on 1 January, gives greater certainty to performing arts organisations.

“The Charities Act enshrines the ability of charities to engage in activities that are not intrinsically charitable, as long as the activities aid their charitable purpose.

“The innovative activities that performing arts organisations legally undertake to raise much needed funds for pursuing their purpose will also not attract additional or crippling tax.”

Serow urges the government to fully consult with the sector while it explores its “simpler alternatives” to address illegal activity by some charities.

Other groups that have welcomed the announcement include the RSPCA, Musica Viva, Smith Family, World Vision, Mission Australia, The Big Issue, Drug Arm Australia, Good Beginnings, Lifeline, the Benevolent Society, Hammond Care and Wesley Mission.

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