Tax Exemptions:
Charities get extra $500m to help poor
Michael Harvey
Herald Sun
May 7, 2011
Source
CHARITIES will have at least $500 million extra to help needy Australians under a plan to slash red tape in Tuesday's federal Budget.
It is expected the Gillard Government will provide $53.8 million over four years to establish an independent single regulator for the not-for-profit sector, something charity bosses have wanted for years.
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It could even be able to remove the tax-exempt status of organisations found not to be acting in the public interest.
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But the Budget will also tighten the tax concessions for charities that run unrelated profit-making businesses.
As of July 1, they will have to pay income tax on any earnings from any newly created businesses that are not ploughed back into their core charity work.
Sources said traditional small-scale fundraising, such as lamington drives and fetes, would be safe.
The current maze of complex regulation is estimated to cost the nation's 600,000 not-for-profit and community organisations more than $500 million every year.
In some cases, charities are required to pay lawyers to make individual contracts with 20 or more state and federal departments, as well as commissioning fully audited reports costing thousands of dollars each.
The Herald Sun believes a new Australian charities and not-for-profits commission will start in July next year.
It will be independent, but will draw on the expertise of the Australian Taxation Office.
The commission will report to Parliament via the Assistant Treasurer.
The new regulator is also expected to have powers to investigate the finances of individual organisations that claim tax-exempt status.
It could even be able to remove the tax-exempt status of organisations found not to be acting in the public interest.
Assistant Treasurer Bill Shorten and Social Inclusion Minister Tanya Plibersek said this year that charities and community groups needed relief from red tape to concentrate on their core business.
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