The Government has released draft legislation that will change
the requirements for international charities and not-for profits to
qualify for income tax exemptions in Australia. The changes refer
to the special conditions found in Division 50 of the Income
Tax Assessment Act 1997 that require charities and not for
profits to operate principally in Australia.
The draft was released as a result of recent court decisions
that have led to some ambiguity as to the extent of the "in
Australia" requirement and the way in which it should be
The current requirement provides that entities cannot obtain
income tax exemption unless they are:
operated principally in Australia (the 'in
are prescribed as exempt;
deductible gift recipients; or
fall under the category of "international
Will my organisation be affected?
The proposed changes will affect:
international aid and development organisations seeking to
establish local Australian branches;
overseas mission agencies and local Australian branches;
local Australian branches of overseas charities and
The changes will not affect organisations that operate under the
category of 'international affairs'. These organisations
include organisations already approved under the overseas aid gift
Summary of changes
The main changes it proposes are in relation to the criteria to
be met for organisations to be income tax exempt, namely:
entities must be operated principally in Australia and
for the broad benefit of the Australian community; and
deductible gift recipients must be operated solely in Australia
and for the broad benefit of the Australian community.
It is important for affected organisations to consider the
implications of the exposure draft together with the recent
consultation for reforms to not-for-profit tax concessions (see our
Charities and not-for-profits are invited to comment on the
exposure draft bill and explanatory materials. The closing date for
submissions is Friday 12 August 2011.
Gadens Lawyers is able to assist organisations making
submissions or to understand how the changes will affect
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