In the Federal Budget delivered on 10 May 2011, several
announcements were made that will affect the aged care sector
particularly those operating as not-for-profit organisations. These
tighter controls on tax concessions for charities operating
business activities unrelated to their charitable activities
'additional community places'
Tighter controls on tax concessions
Possibly the most important Budget announcement for the aged
care sector relates to reforms to tax concessions to ensure that
income tax concessions for not-for-profit organisations will only
apply to profits generated by commercial activities that are
directed back to the not-for-profit entity's charitable
This will have an impact on not-for-profit entities who
undertake commercial activities, although transitional arrangements
are likely. The Budget has indicated that commercial activities
that further the entity's altruistic purposes, and small-scale
and low-risk unrelated commercial activities will not be
Defining these concepts and limiting their impact will be a
difficult legislative task in light of the subjective nature of the
Gadens Lawyers will be closely monitoring these reforms to
determine the precise mechanisms of reform that are proposed.
'Additional Community Places'
The Budget announced an adjustment to the balance between
high-level community aged care and high-level residential aged
The Government claims that this reflects the current preference
of many older people to stay in their own home for as long as
possible while accessing care services, and pointed to lower costs
associated with delivering care at home.
The announcement tends to pick up elements of the Productivity
Commission in April 2011, considering long term funding for
community and residential care as part of the reforms to the aged
These reforms coupled with the tighter controls on tax
concessions are likely to require aged cared providers,
particularly in the not-for-profit sphere, to consider their
current activities and future plans. Gadens
Lawyers is able to advise and assist aged care providers
to plan for the future
The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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