Taxation for Not for Profits – Full Steam Ahead!

In the previous 2011 Federal Budget, the Government announced some significant changes that will impact the not-for-profit sector. These included the creation of the Australian Charities and Not-for-Profits Commission (ACNC), taxation of certain commercial activities and a new statutory definition of 'charity'.  In this year's 2012 Federal Budget, there have been no new significant changes in these areas.  This means that there has been nothing to slow the reforms which will continue to push ahead in during the 2013 year.  All charities will be affected by these reforms and it is critical to have your organisation's tax affairs reviewed by Saward Dawson to ensure they are in order.

We continue to remind you of the key updates as follows:

ACNC establishment

The Australian Charities and Not-for-profits Commission (ACNC) will be established as the new national regulator for Not-for-profit (NFP) entities effective 1 October 2012. The Commission will also be responsible for many financial reporting obligations and registration of charities and NFP entities. Despite moving back the date for the commencement of the ACNC, the Government has not moved the date the proposed legislation will apply to NFP entities i.e. 1 July 2013.
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Commercial activities

The Government intends to tax the commercial activities of charities. It is inevitable that any changes will mean higher compliance costs for NFP entities and greater reporting to the ATO. Many organisations will need to significantly adjust their accounting processes in order to deal with the new regime and restructuring may be required. The key application date has been moved to 1 July 2012 although we are yet to see draft legislation.
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Ongoing ATO compliance activity

The ATO runs an ongoing compliance program to ensure that charities and other not-for-profit entities are complying with the requirements of the tax concessions they are claiming and preparing supporting documentation. Tax concessions that may come under ATO scrutiny include deductible gift recipient (DGR) status, income tax exemption and GST and FBT concessions.
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Where to from here?

It is critical that all not-for-profit entities, especially charities, review their tax status (including income tax, DGR, GST and FBT) prior to 1 July 2013. Saward Dawson can assist with reviewing your tax status and analysing the impact of these reforms on your organisation. 
Read more about the reforms... 

Published : 9 May 2012