With great anticipation, the Australian Federal Budget for 2011 was passed down a couple of days ago. Whilst the majority of the media attention is focused on the impact of the budget on low income families and the recent disaster relief policies, 1DC would light to shed light on an important aspect that has been overlooked.
A new independent statutory agency called the Australian Charities and Not-for-profits Commission will be introduced by July 2012 as part of a $53 million crackdown on charities. But what does this really mean?
Basically, the government has finally come to the realization that many Not-for-profit organizations, including charities, have been taking advantage of the system originally put in place to support the sector in addressing social needs of the less fortunate for many years.
As many organisations have been using the current system to minimise or avoid their organisations tax obligations, this commission will:
- Be responsible for determining the legal status of all groups wanting to be classed as charitable organisations.
- Crackdown on the receiving of tax benefits for activities of an NFP outside the assistance of disadvantaged people.
- Introduce a statutory definition of a charity in consultation with the states and territories.
This means that NFP entities will now pay income tax on profits from their unrelated commercial activities that are not directed back towards helping disadvantaged people. Furthermore, NFPs will not be able to use FBT and GST concessions for those commercial activities.
1DC would like to express our overwhelming joy and support of the introduction of this commission, albeit long overdue. This will mean tighter governance of the charity/NFP sector, to ensure organisations are acting with good social intentions, and not just reducing their tax bill. 1DC hopes this will lead to greater good being achieved for the millions of people who need our help and extend our helping hand to the commission in any way possible.
…1DC says better late than never Labour Government!
Joyful Regards,
Alen, 1DC :)
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