Budget 2013 announcements affecting the Charitable sector

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Budget 2013 changes affecting the Charity sector are discussed in this article.

UBIT

Better targeting of tax concessions — later start date and conclusion of transitional arrangements

Revenue ($m)

 

2012-13

2013-14

2014-15

2015-16

2016-17

Australian Taxation Office ‑8.0 ‑29.0 ‑8.0 74.0 75.0
Related expense ($m)
Department of the Treasury ‑1.0 ‑1.0 9.0 29.0 30.0

The Government has announced a later start date for the 2011‑12 Budget measure Not‑for‑profit sector reforms — better targeting of not‑for‑profit tax concessions, and set the conclusion date for transitional arrangements for activities which commenced prior to 7.30pm (AEST) on 10 May 2011. The forward estimates also incorporate a small‑scale threshold of $250,000 of annual accounting revenue. Unrelated commercial activities under this threshold would be exempt from income tax under the measure. The threshold was the subject of public consultation in a discussion paper released in May 2011, and will also be subject to further public consultation. The deferral of the start date, the size of the small‑scale threshold, and the conclusion of the transitional arrangements on 1 July 2015 are estimated to result in a gain to revenue of $104.0 million, and an increase in GST payments to the States and Territories of $66.0 million, over the forward estimates period.

In the case of unrelated commercial activities that commenced after 7.30pm (AEST) on 10 May 2011, the measure will apply to activities undertaken from 1 July 2014 onwards. The later start date will enable further consultation and engagement with the not‑for‑profit sector on this measure and ensure there is an opportunity for detailed stakeholder input to be provided.

In the case of unrelated commercial activities that commenced prior to 7.30pm (AEST) on 10 May 2011, transitional arrangements for these activities will no longer apply from 1 July 2015, and the measure will apply to activities undertaken from 1 July 2015 onwards. When the 2011‑12 Budget measure was announced, the Government stated that transitional arrangements and the timing of their conclusion would be subject to further consultation. As no date had previously been set for the conclusion of these transitional arrangements, the forward estimates had treated them as continuing indefinitely. As a result of the conclusion of the transitional arrangements, there is a positive impact on the forward estimates in 2015‑16 and 2016‑17.

Further information can be found in the joint press release of 31 January 2013 issued by the Assistant Treasurer and the Minister for Social Inclusion.

STATUTORY DEFINTION OF ‘CHARITY’

Not‑for‑profit sector reforms — introducing a statutory definition of ‘charity’ — later start date

Revenue ($m)

 

2012-13

2013-14

2014-15

2015-16

2016-17

Australian Taxation Office * * * *

The Government has announced a later start date for the 2011‑12 Budget measure Not‑for‑profit sector reforms — introducing a statutory definition of ‘charity’. This measure will take effect from 1 January 2014, rather than 1 July 2013 as originally announced. This measure is estimated to have a small but unquantifiable cost to revenue over the forward estimates period.

The new start date will provide time for the Australian Charities and Not‑for‑profits Commission to develop guidance for charities regarding the definition.

The proposed statutory definition of charity preserves common law principles and provides greater clarity and certainty about the meaning of ‘charity’ and ‘charitable purpose’.

DGR FOR ‘ETHICS CLASSES’

Philanthropy — extending deductible gift recipient status to organisations which provide ethics classes in government schools

Revenue ($m)
2012-13 2013-14 2014-15 2015-16 2016-17
Australian Taxation Office ‑0.2 ‑0.3 ‑0.3 ‑0.3

The Government will allow public funds that are established and maintained solely for the purpose of providing ethics classes in government schools in Australia to be endorsed as deductible gift recipients (DGRs), as a new general category. This expansion is for organisations that are authorised under State or Territory legislation and approved by State or Territory governments to conduct ethics classes in government schools as an alternative to special religious education classes. This measure is estimated to have a cost to revenue of $1.1 million over the forward estimates period.

Further information can be found in the press release of 8 April 2013 issued by the Assistant Treasurer.

 

Source: http://www.budget.gov.au/2013-14/content/bp2/html/bp2_revenue-10.htm