ARTICLE · 16 AUGUST 2011

Exposure Draft "In Australia" special condition for NFPs includes additional harsh restrictions on all NFP entities

Moore Australia

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Moore Stephens have written a submission responding to the draft legislation on Not-for-Profits.

AustraliaTax

Stephen O'Flynn

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Moore Stephens have written a submission responding to the draft legislation regarding the "In Australia" requirement for Not-for-Profits (NFPs). The submission was lodged with Treasury on 12 August 2011.

One of our principle issues with the draft legislation is that the definition of a NFP does not allow distributions to be made to "particular entities" including owners and members. This potential change overrides the High Court decision in the Word Investments case and may result in loss of NFP status for some NFP's should the legislation be passed.

The strict requirement for a NFP to comply with all requirements of its governing rules is our second concern with the draft legislation. This change would mean that even a minor breach of the governing rules would pose a risk to the entity's tax exempt status.

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