The Assistant Treasurer has recently released an exposure draft
updating the current 'in Australia' special conditions for
tax concession entities.
These are some of the key features of the proposed new law:
- The 'in Australia' special conditions are to be standardised and will apply consistently across the different categories of income tax exempt entities;
- Entities that pursue their purposes by conducting activities that directly advance those purposes and/or through the donation of monies to income tax exempt entities are entitled to be income tax exempt only if they principally operate in Australia; and
- Deductible gift recipients generally must be operated in Australia.
The draft legislation seeks to support the anti-avoidance tax
provisions to limit income tax exempt entities from expending money
offshore. Consequently, tax supported funds are retained in
Australia for the broad benefit of the Australian Community.
Additional measures have also been introduced to ensure the proper
operation of non-for-profit entities by addressing issues such as
their abuse for the purposes of money laundering and terrorist
financing activities.
These changes may affect existing income tax exempt entities such
as:
- Australian overseas aid organisations;
- NFPs carrying out activities overseas;
- NFPs who donate funds to overseas entities (either directly or indirectly).
However exemptions from the 'in Australia' special
conditions are available to Government and most Government related
entities.
Submission commenting on the Exposure Draft close on the 12th of
August 2011 and can be made via this website:
http://www.treasury.gov.au/contentitem.asp?NavId=002&ContentID=2053
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