Update on NFP Sector Reform Workshop Australian Charity Law Association 23 March 2012

The year ahead... TypeReformKey dates RegulationAustralian Charities and Not-for- Profits Commission Recruitment: last vacancies 29 March Legislation: 18 June Establishment: 1 October Governance principlesLegislation: 18 June Definition of charity Statutory definition of charityExposure Draft: June/July TaxationUnrelated business income taxExposure Draft: May? ‘In Australia’2 nd Exposure Draft: June? Tax Reform Working GroupReport end December FundraisingNational fundraising regimeSubmissions close 5 April

ACNC’s Mud Map...

Statutory definition of charity Treasury consultation paper: A Definition of Charity: October 2011 Exposure draft: July 2012 Commencement for purposes of Commonwealth law: July 2013

Statutory definition of charity A new approach to general descriptions of charitable purposes New purposes More specific descriptions The ‘catch-all’ category

Statutory definition of charity A new approach to public benefit Confusion over the current law presumptions The suggested new approach ‘aimed at achieving a universal or common good’ ‘has practical utility’ ‘is directed to the benefit of the general community or to a sufficient section of the general community’ presumptions

Statutory definition of charity Purposes and activities Political purposes Illegal or immoral purposes The distinction between charity and government

Taxation of NFPs – recent developments Proposal to tax unrelated business income (‘UBIT’) Restating the ‘in Australia’ condition NFP Sector Tax Concessions Working Group

Current concessions ITEC (Div 50) DGR status (Div 30) Refunds of imputation credits (Div 207 and Div 67) FBT exemption and rebate GST Other

NFP Working Group NFP Sector Tax Concession Working Group announced 12 February 2012 Consider the rationale for providing support, including the arguments against Consider whether alternative ways of providing support to sector Policy analysis re eligibility for each concession tiered approach rather than one-size-fits-all? Equity, efficiency and simplicity should be key drivers of reform 10

Other tax matters Mutuality principle Special tax rates for non-profit companies: s 23(6) Income Tax Rates Act 1986 Interaction with other NFP reforms State and territory taxes 11

ACNC Bill submission Key issues of: clarifying scope re-balancing emphasis of Bill scope of regulatory powers procedural fairness Other issues registration reporting ACNC & Advisory Board information sharing ‘responsible individual’

Governance submission Key issues of: timing absence of federal co- operation detail and scope of proposals Questioned need for governance provisions consistency developed specifically for NFPs

Not-for-Profit Project Work Visit: Working Paper on Regulation Submissions Public Benefit Bill Scoping Study on Regulation Better Targeting of Tax Concessions Restating ‘in Australia’ conditions Literature Reviews on Definition and Taxation Aid/Watch Forum papers Resources page

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