On 9 March 2015 the Taxation Legislation Amendment Bill 2014 (WA) (the Bill) received Royal Assent.
The Bill makes changes to the definition of charitable body or organisation for Western Australia (WA) state tax purposes by narrowing the scope of the existing payroll tax, transfer duty and land tax exemptions as they apply to ‘fourth limb’ charities. This change limits the eligibility of some charities to claim state tax exemptions in WA by removing the state tax exemptions for ‘relevant bodies’.
Relevant bodies include:
- a political party
- an industrial association
- a professional association
- a body that promotes trade, industry or commerce unless the main purpose of the body are for the relief of poverty, advancement of education and advancement of religion as identified in Commissioner for Special Purpose of Income Tax V Pemsel
- a body that is a member of a group of which a body that referred to in one of the above is also a member, or
- a body that is a related body corporate of a body referred to in one of the above, or
- a body that has a sole or dominant purpose or object the conferral of a benefit (either financial or non-financial) on a body referred to in one of the above.
Where a body is notified by the WA Commissioner of State Revenue that it is a relevant body, it will have any WA payroll tax, land tax and stamp duty exemptions revoked.
Since the passage of the Bill, a number of charities have now been notified that they are relevant bodies and will have all WA state tax exemptions revoked.
Once notified, a charity may apply to the WA Minister of Finance to request a determination as a beneficial body, meaning state tax exemptions may be reinstated.
Amendments have also been made to limit the ability for a charitable body or organisations to receive payroll tax refunds where it applied for exemption retrospectively.
While relevant only for Western Australian operated charities at this stage, this may be something that could be rolled out in other state jurisdictions.