philanthropyOz Blog

Test case - definition of charity

Today’s Australian Financial Review reports that the Australian Taxation Office has lost a test case on the definition of charity, a decision which has the potential to significantly widen the range of organisations which might qualify for endorsement as a tax concession charity. The Victorian Women Lawyers’ Association has succeeded in being classified as a tax exempt charity despite its being a membership organisation and engaging in some advocacy activities, both of which are often barriers to endorsement as a charity.

Federal Court judge Robert French stated that “The political purposes limitation is not well defined and is more difficult of application today having regard to the change in social conditions since 1917 and the involvement of legislatures in areas unthought of at that time”.

You can read the full judgement in Victorian Women Lawyers’ Association Inc v. Commissioner of Taxation [2008] FCA 983 (27 June 2008) online at the Austlii website.

Inquiry into the Disclosure regimes for charities and not-for-profit organisations

A Senate inquiry is now underway into the disclosure regimes and models of regulation for charities and not-for-profit organisations.

On 18 June 2008, the Senate referred the Disclosure regimes for Charities and not-for-profit organisations to the Senate Standing Committee on Economics for report by the last sitting day of November 2008. The inquiry will examine:

1. the relevance and appropriateness of current disclosure regimes for charities and all other not-for-profit organisations;

2. models of regulation and legal forms that would improve governance and management of charities and not-for-profit organisations and cater for emerging social enterprises, and;

3. other measures that can be taken by government and the not-for-profit sector to assist the sector to improve governance, standards, accountability and transparency in its use of public and government funds.

Submissions that reflect the issues and solutions that best meet the needs of the sector are encouraged. Submissions will close on 29 August 2008.

To find out more about the Inquiry into the Disclosure regimes for Charities and not-for-profit organisations, and how you can make a submission, visit the Parliament of Australia Senate website.

Media Release: Improving the Integrity of Prescribed Private Funds

The following media release is from the Federal Treasurer, The Hon Wayne Swan MP. You can also find it on the Treasurer’s website.

The Government will introduce legislation to improve the integrity of prescribed private funds (PPFs), with effect from 1 July 2009.

A PPF is a trust to which businesses, families and individuals can make tax deductible donations, for the purposes of disbursing funds to a range of deductible gift recipients.

The Government will improve transparency and provide the trustees of PPFs with greater certainty of their philanthropic obligations by amending and legislating the PPF guidelines. The changes will, among other things, ensure regular valuation of assets at market rates, increase the size of compulsory distributions, and give the Australian Taxation Office greater regulatory powers.

The details of the changes will be finalised following consultation with relevant stakeholders.

This change will not impact on the ability of taxpayers to give tax deductible donations directly to a deductible gift recipient.

You can find more information both for and about PPFs on the PhilanthropyWiki and the Philanthropy Australia website.

Stronger Community Organisations Project

The Victorian Government’s Stronger Community Organisations Project Review, chaired by Professor Allan Fels, will provide strategic advice on the trends, influences and challenges facing the community sector in Victoria, including factors affecting the capacity of the sector. A number of Members joined Philanthropy Australia and the SCOP Review team in a philanthropy roundtable; as a result of the roundtable, Philanthropy Australia made a submission to the SCOP project.

Download the submission in PDF format.

Tax Law Amendments

The Tax Laws Amendment (2007 Measures No. 2) Act 2007 received Royal Assent on 21 June 2007.

This Act has made technical amendments and corrections to the way the income tax law applies to exempt entities. The ATO has stated that the Act “will ensure that Public Ancillary Funds or Prescribed Private Funds do not lose their income tax exempt status if they distribute money to Commonwealth, State or Territory bodies which are exempt from tax and also deductible gift recipients”. It is important for members not to act on this legislative change at this stage, as there are a number of steps that will need to be undertaken first and the details have not yet been finalised. Philanthropy Australia is currently seeking further details on how the Act will apply to grants made by our members and on guidelines for members wishing to take advantage of the new provisions.

The Act also includes provisions to allow a tax deduction for donations of listed shares to deductible gift recipients; from 1 July 2007, a tax deduction is available for donations of listed shares valued at $5,000 or less and acquired at least 12 months before the gift was made. This provides another potential avenue for DGRs to raise funds.

Finally, the Act extends the thresholds for deductible contributions to fundraising events, applicable to contributions made on or after 1 January 2007.

Refer to http://www.ato.gov.au/nonprofit/content.asp?doc=/content/00102662.htm for more information. The Bill and its explanatory memorandum can also be viewed on the Parliament of Australia website at http://www.aph.gov.au/bills/index.htm. Select Current Bills (by Title), scroll through the list to Tax Laws Amendment (2007 Measures No. 2) Bill 2007 and select it.

Consultations for the Review of Not-for-Profit Regulation

The Premier and the Treasurer have requested the State Services Authority (SSA) review the impact of Victorian Government regulation and other reporting requirements on the Not-for-Profit Sector (NFP). In addition, the Authority is to identify opportunities to improve these arrangements.

A final report with detailed findings and recommendations is due by 30 September 2007.

The SSA is conducting a series of roundtable consultations for the Review.

The consultations provide an opportunity for not-for-profit organisations to contribute directly to the Review. The consultation topics include financial reporting and standards, service agreements, grant application procedures and specific issues for small to medium sized not-for-profits.

Individuals and organisations are invited to register their interest in participating in one or more of the consultation sessions by emailing nfpreview@ssa.vic.gov.au or phoning (03) 9651-2021.

To find out the schedule, topics and venues for upcoming consultation sessions, visit the SSA website.