The Federal Government released for comment draft legislation, draft regulations and explanatory material that it would proceed with its measure to restate and centralise the special conditions for tax concession charities. The effect of the reforms will be to clearly define and limit the execution of charitable activities ‘in Australia’.

This measure comes off the back of the Federal Government’s 14 December 2013 announcement that it would enforce wide sweeping reform to all tax laws to restore simplicity and fairness to the Australian tax system.

If successful, the measure will amend the tax law for tax concession charities by:

  • Restating the ‘in Australia’ special conditions for income tax exempt entities, ensuring that they must be operated principally in Australia and for the broad benefit of the Australian community (with some exceptions);
  • Centralising and simplifying in one place 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
  • Codifying 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 aids funds, some environmental organisations, some touring arts organisations and medical research institutes).

In summary, the ‘in Australia’ requirements will affect the scope of the philanthropic activities of tax concession charities.  Should the measure receive royal asset, tax concession charities may need to assess some of their activities should they wish to retain their charitable tax concessions.

The Federal Government is inviting submissions from all interested individuals and organisations until Monday 7 April 2014.