The Federal Government has been working on the reform of the Charities and Not-For-Profit sector arduously before the Christmas break.

The Government has recently released 4 discussion papers and drafts for comment and passed legislation on issues affecting Not-For-Profit organisations and Charities.

In particular, the Government has released:

There was a flurry of activity in relation to tax provisions in the first half of 2011.  As a result the Government appears to be fully occupied digesting the numerous comments provided by charities and NFPs, their advisors and the broader community. The following tax related issues have received attention:

For a new tax that has not received much NFP support the UBIT certainly has NFPs concerned
  • The Unrelated Business Income Tax (UBIT). UBIT seeks to tax the non‑core income of charities which is not applied for their altruistic purposes.  Even though the UBIT tax was announced by the treasurer as being effective in some cases on 1 July 2011, the rules are still unknown!  We understand there were a significant number of submissions lodged and they overwhelmingly rejected the tax.  In fact, we have not been able to identify a submission supporting the proposed tax.

View our submission (pdf).

In our view:

    • the UBIT is unlikely to raise significant revenue.
    • there have also been no examples of significant abuse of the existing system.
    • furthermore, the existence of a UBIT will undoubtedly result in significant additional administrative expenses to charities and NFPs distracting them from their principal altruistic purposes.
    • this is an unnecessary and bad tax.
      Continue Reading Tax Reform for Charities: UBIT is Coming