Proposed Not-For-Profit Reforms

From our September 2011 issue

The government has recently announced a spate of reforms in the not-for-profit (NFP) sector. These reforms are likely to affect anyone operating in this sector significantly once implemented.

Specifically, the announced changes are as follows:

  •  The government has recently released exposure draft legislation on restating the “in Australia” special conditions for tax concession entities. These rules are intended to ensure that parliament retains the ability to fully scrutinise those organisations seeking to pass money to overseas charities and other entities.

 

  •  Treasury has received submissions on its consultation paper to implement an announced measure to “better target not-for-profit concessions”. These proposed reforms are intended to tax the profits from unrelated commercial activities of NFPs where those profits are not directed back to the NFP’s charitable purpose. This change applies as of 1 July 2011 in relation to “new” activities undertaken by NFPs as from Budget night (10 May 2011).

 

  • The government will introduce an “Australian Charities and Not-for-profits Commission” that will determine which entities are charities for the purposes of a spate of government concessions and exemptions. This Commission will be established by 1 July 2012.

 

  •  The government has announced that the definition of charity will be legislated with effect from 1 July 2013. This legislated definition will then apply to determine access to a spate of government concessions and exemptions.

 

If you are an NFP, your work will likely be affected by these proposed reforms. You should speak to your tax adviser about the potential impact of these reforms on your entity, as well as to plan for the changes.

 

This information is for guidance only and is not intended as specific advice to any reader. Professional advice should be obtained before acting on any information contained herein. The publisher accepts no responsibility for loss occasioned to any person or organisation as a result of action or the refrain of action as a consequence of the contents of this publication.