Call for Tax Threshold to Protect Small Charities

The Community Council for Australia has called for a $2 million threshold to be applied to a proposed new taxation regulation on Not for Profit organisations to help protect small charities.

The CCA has made the call in its submission to Treasury following regulations announced in the Federal Budget removing taxation concessions on any new ‘unrelated commercial activities’ of charities and Not for Profits.

CEO of the CCA David Crosbie says Not for Profits support the Australian Taxation Office preventing commercial organisations posing as NFP organisations to avoid taxation, but that does not mean the ATO should start questioning every income producing activity of every NFP organisation across Australia.

Crosbie says a $2 million threshold in unrelated commercial activities allows the vast majority of Not for Profit organisations to continue their fundraising activities – like cake stalls, sausage sizzles or weekend car washes – without having to question whether they are engaged in ‘related’ or ‘unrelated’ commercial activities.’

The CCA submission points out that the cut off threshold used by the ATO for determining eligibility for small business concessions is $2 million per annum turnover.

The eight other recommendations in the CCA submissions outline how the proposed new taxation regulations could be applied to avoid creating unnecessary concern, compliance and other costs for Australia’s Not for Profit sector.

David Crosbie says all governments want to see the $43 billion dollar Not for Profit sector supported in its efforts to diversify income and rely less on government funding but the Federal Government needs to be very careful not to suffocate social enterprise or innovation in the sector for the sake of preventing a very small minority of NFP organisations misusing their charitable status.

He says the sector does not need a massive sledge hammer to crack this nut.

CCA is encouraging Not for Profit organisations to make their own submission either in support of the nine CCA recommendations or to voice their own issues in response to the Treasury Paper (view it here), but organisations will need to act fast as submissions close this week (extensions may be available).

Full details of the CCA submission including the nine recommendations are available
here: http://www.communitycouncil.com.au/node/56