Treasury on Wed 12.3.2014, released for comment draft legislation and draft regulations to implement the 2009-10 Budget proposal to re-state and centralise the special conditions for tax concession entities. In December 2013, the Government had announced that it would proceed with the proposal.

The changes propose to:

  • re-state the “in Australia” special conditions for income tax exempt entities, ensuring that they generally must be operated principally in Australia and for the broad benefit of the Australian community (with some exceptions);
  • centralise the other special conditions entities must meet to be income tax exempt, such as complying with all the substantive requirements in their governing rules; and
  • codify the “in Australia” special conditions for deductible gift recipients ensuring that they must generally operate solely in Australia, and pursue their purposes solely in Australia (with some exceptions, such as overseas aid funds, some environmental organisations, some touring arts organisations and medical research institutes).

Treasury noted the Government has made “improvements” to the exposure draft to address concerns raised by the not-for-profit sector with the former Government’s Bill (the Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill 2012 that lapsed when the 2013 Federal election was called).

The changes are proposed to commence on the day after the Bill receives Royal Assent. Funds, authorities and institutions that are endorsed as deductible gifts recipients prior to introduction of the Bill, and are not meeting the “in Australia” special conditions, have a transitional period of 12 months in which to comply with the proposed new rules.

COMMENTS are due by 7 April 2014.

[LTN 48, 12/3/14]