02 May 2010

Henry tax report is now available; not-for-profit veterans organisations could be affected

This afternoon the Australian Government made the Henry Report available to the public. The report can be found here. It does not appear that Australian Defence Force personnel will be adversely affected by the recommendations on the report. Additionally, it does not appear that veterans on Government pensions will be adversely affected.

Section B3 of the report titled "Tax concessions for not-for-profit organisations" could have an affect on tax exempt veterans organistation, like the Returned & Services League of Australia. These recommendations include:
  • Recommendation 41: Consistent with the recommendations of previous inquiries, a national charities commission should be established to monitor, regulate and provide advice to all not-for-profit (NFP) organisations (including private ancillary funds). The charities commission should be tasked with streamlining the NFP tax concessions (including the application process for gift deductibility), and modernising and codifying the definition of a charity.
  • Recommendation 42: Categories of NFP organisations that currently receive income tax or GST concessions should retain these concessions. NFP organisations should be permitted to apply their income tax concessions to their commercial activities.
  • Recommendation 43: NFP FBT concessions should be reconfigured.
  • The capped concessions should be phased out over ten years. In the transition period, the value of the caps would gradually be reduced. Reportable fringe benefits for affected employees (that is, those benefits that are easily valued and attributed) would be exempt from tax up to the relevant cap, and taxed at the employee's marginal tax rate above the cap. The market value of these benefits would be taken into account for transfer payment purposes. Non-reportable fringe benefits would be taxable for NFP employers.
  • The FBT concessions should be replaced with direct government funding, to be administered by relevant Australian government portfolio agencies or the charities commission. All NFP organisations eligible for tax concessions should be able to apply to the relevant body for funding for specific projects or for assistance with the costs of recruiting specialist staff.
  • Recommendation 44: Simple and efficient tax arrangements should be established for clubs with large trading activities in the fields of gaming, catering, entertainment and hospitality. One option is to apply a concessional rate of tax to total net income from these activities above a high threshold. For clubs below the threshold, no tax would be applied to income from these activities.

Nick, Sean and I will study the report more closely this week and will update this post with any relevant information and/or analysis.

[Disclaimer: The author of this post is a member of the RSL NSW Branch at North Bondi RSL sub-Branch.]

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