Page 3812 - Week 12 - Thursday, 29 October 2015

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professional organisations. Due to the widening scope of charitable activities, these bodies have gained the ability to access lucrative tax exemptions that did not previously apply to them. This is in spite of their primary focus on business, political and industrial activities, as opposed to genuine charitable services.

These legal developments raise significant revenue concerns for our community and if the meaning of “charity” continues to expand in this way it could put at risk the ability of states and territories to maintain a sustainable tax exemption for all charities. The ACT is in a particularly vulnerable position. As the nation’s capital, a large number of peak bodies and professional societies are headquartered in Canberra. These bodies employ hundreds of employees Australia wide and should be expected to contribute to the territory’s revenue base, as other businesses do.

The uncontrolled extension of charitable exemptions to professional and commercial lobby groups poses a serious revenue risk. To address this risk and to ensure a sustainable system for all other charities, this bill defines four categories of excluded organisation that cannot obtain tax exemptions regardless of their status as a charity under the common law.

The first and second types of excluded organisations are political parties and unions. These types of bodies are not considered charitable under the current law, but this legislation prevents them from obtaining tax-exempt status in the future, should the common law definition expand to cover them. The third and fourth types are professional associations and organisations promoting trade, industry and commerce. These organisations are generally made up of members, such as individual professionals or fee-paying businesses.

In practice, these organisations engage in significant public advocacy, including government lobbying, to secure policy outcomes that will benefit their particular industry or profession. This narrow focus is incompatible with community views about acceptable charitable activities. This is not to say that these organisations never engage in beneficial community activities. Rather, the government considers that they exist mainly to serve their members’ interests and not the broader community’s.

Whilst this bill clearly excludes certain categories of body from obtaining charitable exemptions, it contains three important safeguards to protect more traditional charities.

First, the bill is targeted only at entities with a purpose incompatible with the legislation. This means that the status quo is maintained for most charities in the ACT. For example, the following types of charities will not be affected: animal welfare bodies; anti-discrimination bodies; aged care organisations; charities relieving poverty; churches and other religious organisations; cultural institutions; early childhood and primary schools; environmental organisations; and hospitals.

Second, if a professional, industry, trade or commerce organisation with strong charitable motives still loses its exemption under the amendments, the Commissioner for ACT Revenue will be able to make a beneficial organisation determination that will reinstate its tax exempt status. The commissioner can only make a determination if satisfied the organisation has a predominantly charitable purpose, has excluding features that are not significant, and provides benefits to the community generally, not just a narrow group.

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