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Charities & Not-For-Profits Law in Australia

The Unrelated Business Income Tax is (finally!) dead

Posted in Compliance, General, Governance

UBIT is deadJust weeks before the intended commencement of the “Better Targeting of NFP Tax Concessions” measure, the Acting Assistant Treasurer has issued a press release stating “the Government has considered alternatives to the previous government’s better targeting of not-for-profit tax concessions measure. We have concluded that they are not required at this time”. This news will be welcomed by many charities and not for profit organisations.

The Better Targeting of NFP Tax Concessions, commonly known as the unrelated business income tax (or UBIT), was introduced as part of the 2011-2012 budget and had been delayed for a number of years.

The purpose of the legislation was to ensure that tax concessions provided to NFP entities were targeted only at those activities that directly further the NFP’s altruistic purposes. Any activity pursued by a NFP entity that was deemed to be “unrelated” business would not be eligible for the tax concessions that the entity was registered for (including FBT, GST and DGR).  Importantly, any surplus from “unrelated” business activities that is not applied for the altruistic purposes of the entity would be subject to income tax.

For more information on UBIT please take a look at our earlier blog.

As part of the above mentioned press release the Government has stated “The Government has not made a decision on a targeted anti-avoidance provision to address certain conduit arrangements and is still seeking advice on this matter”. No further information is provided and it will be interesting to see how wide ranging any proposed arrangements might be.

Should you have any questions in relation to UBIT or any other matters please do not hesitate to contact Bill d’Apice or Anna Lewis of our office.