The Assistant Treasurer, the Hon Bill Shorten MP, has released a consultation paper with further details of the Federal Government's 2011-12 Budget announcement to reform the use of not-for-profit (NFP) tax concessions for unrelated commercial activities from 1 July 2011.
This consultation paper progresses one of several 2011-12 Budget announcements for the NFP sector. The other reforms were the establishment of the Australian Charities and Not-for-profits Commission (ACNC) from 1 July 2012 and the introduction of a statutory definition of 'charity' across all Commonwealth agencies from 1 July 2013.
Other countries have adopted various models for ensuring that tax concessions are appropriately intended for altruistic activities and, based on these overseas models, one of the risks for Australian NFP organisations is that if an organisation conducts "unrelated commercial activities", it may result in the loss of its tax-exempt status.
The Government has commenced its consultation process on these reforms. Moore Stephens will make a submission, as the consultation paper raises a number of key commercial, structural and taxation issues for NFP organisations to consider. We are seeking client input for our submission and request that you provide your comments and / or answers to some of the key questions listed below to NFP@moorestephens.com.au by Friday 17 June 2011:
- Do you support this proposal?
- How will this proposal affect your organisation?
- How should this proposal be implemented?
- How will this proposal affect the funding of your organisation's services and activities?
- Are there any unintended consequences arising from this proposal?
Alternatively, you may wish to take advantage of this opportunity to provide your own views on these proposed changes and how they may impact your organisation by making your own submission. The closing date for submissions is Friday 8 July 2011. The consultation paper is available on the Treasury website.
For further information, please contact one of our not-for-profit tax experts - Kate Daly (Sydney West), Stephen O'Flynn (Melbourne) or Allan Mortel (Sydney) - or your Moore Stephens relationship partner.
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