Archive for the 'Not for Profit' Category
Not-for-Profit Seminar Invitation December 2009
A pdf of the invitation is available here: nfp-seminar-dec-2009-invitation.pdf
No commentsNot-for-Profit Bulletin - October 2009
This edition of the Not-for-Profit Bulletin covers:
- Productivity Commission releases its draft research report
- The ATO has a win in the C of T -v- Aid/Watch Incorporated appeal; and
- Amendments to private ancillary funds commence and guidelines promulgated
The Bulletin is available as a pdf here: Not-for-Profit Bulletin October 2009
No commentsGovernment response to Word Investment case
Government announces its interim response to the High Court’s decision in the Word Investment case in budget papers
The Hon Chris Bowen MP, Assistant Treasurer and Minister for Competition, Policy & Consumer Affairs announced last night the Government’s interim response to the High Court decision in the Word Investments case at the end of last year.
As the Minister’s media release (No. 043) points out in relation to the High Court decision, 2 issues were resolved in favour of the taxpayer and contrary to long standing ATO tax rulings; namely:
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“commercial businesses with charitable objects that direct their profits to charities are eligible for endorsement by the ATO as tax concession charities and therefore have access to a number of tax concessions; and
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charities are considered to be pursuing their objectives principally ‘in Australia’ if they merely pass funds within Australia to another charity that conducts its activities overseas“.
The key aspect of Word has of course been the commercial activities conducted by charities. In that respect the Minister notes the competitive neutrality issues around the case of charitable organisations being able to run businesses for a profit whilst enjoying the various tax concessions of a tax concession charity.
However, the Minister said that the Government intends to await the outcome of the Henry review into Australia’s future tax system and the Productivity Commission’s inquiry into the contribution of the not-for-profit sector before responding to the Court’s decision.
The Government has taken the view that it would be pre-emptive for it to determine the best reform for the charitable sector while specialised reviews are expected to examine the issue in detail and obtain community views.
In relation to the aspect of Word dealing with the passing of funds to overseas charities, the Minister’s media release states the following:
“The Government will amend the ‘in Australia’ requirements in Division 50 of the Income Tax Assessment Act 1997 to ensure that Parliament retains the ability to fully scrutinise those organisations seeking to pass money to overseas charities and other entities. This measure will have effect from the date of Royal assent of the amending legislation.”
The measure will reverse the decision that charities and other income tax exempt entities can direct funds to overseas projects outside current restrictions.
Apparently the proposed changes will be subject to public consultation in coming months.
Paul Paxton-Hall
No comments2007 Year in review
Introduction
2007 has seen some important developments in the law concerning not-for-profit organisations including:
- the commencement of the first round of changes to the Associations Incorporation Act in Queensland on 20 March 2007;
- the release of the federal government discussion paper on financial reporting requirements for companies limited by guarantee;
- various changes to the Tax Act; and
- a number of important cases including the recent Commissioner of Taxation -v- Word Investments Limited.
Associations Incorporation and other legislation Amendment Act 2007
Background
After more than 4 years of review, long anticipated changes to the Associations Incorporation Act (AIA) were finally passed on 20 March 2007 with passage of the Associations Incorporation and Other Legislation Amendment Act 2007.
Due to this article’s length, please click here to download as PDF.
No commentsWord Investments Full Court appeal decision handed down
The Full Court of the Federal court in Melbourne recently handed down its decision in Commissioner of Taxation -v- Word Investments Limited. This is a landmark charity case decision - perhaps the most significant charity case we have seen in Australia in the last 30 years.
The decision was concerned with the central issue of whether a company which operates a normal commercial business for profit, but which is not charitable in its own right, can be regarded as a charitable institution if, as a matter of purpose and practice, its profits are wholly distributed to other bodies which are charitable.
In a nutshell, the Court has held that a company in this situation will be charitable institution and therefore entitled to the various tax concessions afforded to charitable institutions.
The ATO’s view
The ATO has long held the view that, in working out whether a company is exempt form income tax in circumstances where it has a relationship with another entity which is itself exempt, the company itself must be able to stand on its own 2 feet in terms of satisfying the tax exemption requirements of division 50 of the Tax Act. In other words, the ATO takes the view that it is not possible to merely attribute the characteristics and purposes of an exempt entity to a different company or to simply “look through” the company to the exempt entity.
Due to this article’s length, please click here to download as PDF.
No commentsChanges to Gift Fund Requirements for “Deductible Gift Receipient”
Important changes have been made to the Tax Act impacting on the requirements for Deductible Gift Recipient’s (DGR) to maintain a gift fund.
Background
A fundamental aspect of the requirements for a deductible gift recipient endorsed under Division 30 of the Tax Act has been the obligation applied to the situation where the DGR was endorsed as a whole and also where an organisation was endorsed for a fund, authority or institution which it owned and operated.
Due to this article’s length, please click here to download as PDF.
No commentsGovernment Discussion Paper on Financial reporting requirements for Companies Limited by Guarantee.
The Federal Department of Treasury has recently released a discussion paper concerning the financial reporting obligations of unlisted public company’s which includes companies limited by guarantee (CLGs). Part of the driver behind the discussion paper which may lead to Corporations Act changes has been developments at a State level with reform to legislation governing incorporated associations. In particular, recent amendments to the Queensland Associations Incorporation Act (AIA) have, amongst other things, reformed the rules surrounding audit requirements for incorporated associations (these were dealt with in an earlier Fox and Thomas Not for Profit Bulletin).
No commentsTax Act changes
The effect of the amendment is to allow a tax deduction for donations of listed shares to deductible gift recipients (DGRs) from 1 July 2007. From this date a tax deduction is available for donations of listed shares valued at $5,000.00 or less and acquired at least 12 months before the gift was made. Read more
No commentsIs Your Organisation Covered by Work Choices?
In an earlier bulletin I profiled a decision of the Queensland Industrial Court last year concerning Educang Ltd which was a joint venture company between the Anglican and Uniting Churches. The QIC held that Educang was a “trading corporation” for the purposes of the Federal Workplace Relations Amendment (Work Choices) Act (Work Choices) which came into effect on 27 March 2006 on the basis that some 50% of its income was derived from trading activities. which included: Read more
No commentsAssociations Incorporation Act Reform at Last
After more than four years of review, long anticipated changes to the Associations Incorporation Act (”AIA”) were finally passed on 20 March 2007 with passage of the Associations Incorporation and Other Legislation Amendment Act 2006. Read more
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