Miscellaneous 2012

Taxing charities: Reform without reason?

Source: Taxation In Australia Journal Article

Published Date: 1 Aug 2012


The federal government is currently proposing to introduce what amounts to a new, unrelated business income tax on the income of not-for-profit entities. Broadly, the proposal, at least initially, is that NFP entities pay tax on any retained earnings not annually remitted and applied to the purposes of the tax concession entity, and that existing input tax concessions would not be available for unrelated commercial activities. Consultation on the details of the tax is continuing, but uncertainty is mounting. Meanwhile, external events have overtaken the proposal. In the authors’ view, three factors in particular have undermined the justification for the government’s proposals. These are an apparent retreat from the government’s position on recommendations made by three government-initiated inquiries, the forthcoming Australian Charities and Not-For-Profits Commission, and the impact of a recent High Court decision.

This article examines these factors in turn, and questions whether the reasons given for introducing the new tax remain.

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Miscellaneous 2012

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