The Government has started to "clear the backlog of
legislative matters and restore integrity to the Australian
taxation system" by announcing the outcome of the review of 92
unlegislated tax programs.
On 6 November 2013, the Government
identified 92 announced but unlegislated tax and superannuation
measures and stated:
"Of the 92 unlegislated and
unresolved tax and superannuation changes, the Government will
proceed with 18 initiatives. A further three initiatives will be
significantly amended. The Government will not proceed with seven
initiatives. Assistant Treasurer Arthur Sinodinos, with assistance
from the Board of Taxation will undertake consultation with tax
experts, including a number drawn from the Board's advisory
panel over the next two weeks with a disposition not to proceed
with the remaining 64 measures.
It will be an expedited and thorough
review with industry, focusing on whether there are any unintended
consequences from not proceeding with the measures or whether there
are compelling reasons why the measure should proceed. We are
advised that the fiscal impact of the vast bulk of the remaining 64
initiatives is expected to be minimal."
The charity related measures requiring "further
Better targeting of not-for-profit tax concessions;
Reforming the 'in Australia' requirements; and
Defining 'not-for-profit' in the tax laws.
Better Targeting of Not-For-Profit Tax Concessions
(also known as UBIT)
The Unrelated Business Income Tax (UBIT) will not be
press release stated "The Government will also not proceed
with the measure to 'better target' not-for-profit tax
concessions at this stage, but will explore simpler alternatives to
address the risks to revenue."
The purpose of the proposed legislation was to ensure that tax
concessions provided to NFP entities were targeted only at those
activities that directly furthered the NFP's altruistic
purposes. Any activity pursued by a NFP entity that was deemed to
be "unrelated" business would not be eligible for the tax
concessions that the entity is registered for (including FBT, GST
Importantly, any surplus from "unrelated" business
activities that was not applied for the altruistic purposes of the
entity would have been subject to income tax. This proposed tax has
commonly been referred to as "UBIT".
This definition intended to standardise the term
"Not-For-Profit" across Commonwealth legislation
replacing previous "non-profit" expressions. However,
this definition will be removed from the "in Australia"
legislation and will not be proceeding. No further
information is provided as to why the definition will not be
included with the "in Australia" legislation.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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