Taxation Changes & Fact Sheet
5 July 2005 at 1:07 pm
A number of amendments to increase flexibility for charitable funds and prescribed private funds have been passed by the Senate in June and are now awaiting Royal Assent.
Tax Laws Amendment (2005 Measures No. 3) Bill 2005 amends the Income Tax Assessment Act (ITAA 1997) and also amends the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986) to correct an anomaly relating to FBT rebatable employer status.
The ATO has provided a comparison of key features on new law and current law as they relate to PPFs.
New Law
Relevant testamentary gifts do not have to be valued at greater than $5,000 in order to receive CGT exemptions.
Current Law
A testamentary gift of property receives a CGT exemption only if the gift is valued at more than $5,000
New Law
Charitable funds can claim income tax exemption whether they provide money, property and benefits solely to charities based in Australia, solely to charities that are also DGRs, or whether they provide money, property and benefits to a combination of these charities.
Current Law
Charitable funds can access an income tax exemption if they provide money, property or benefits either solely to charities that are located in Australia and pursue their purposes in Australia or solely to charities that are DGRs, but not both types of charities.
New Law
Non-charitable ancillary funds and prescribed private funds endorsed under this new measure will now be allowed to access income tax exemption where they provide money, property or benefits solely to DGRs that are tax exempt.
Current Law
Charitable ancillary funds and prescribed private funds that provide money, property, or benefits solely to charities that are also DGRs are entitled to income tax exemption status.
New Law
Non-charitable ancillary funds and prescribed private funds that provide money, property and benefits solely to income tax exempt DGRs when endorsed under this new measure will be able to claim a refund of franking credits.
Current Law
Allows DGRs (except prescribed private funds) and endorsed charities and charitable funds to claim a refund of franking credits on franked dividends.
These amendments apply to the first income year that starts after this Bill receives Royal Assent and to each later income year.
The ATO has also provided a comparison of key features on new law and current law as they relate to FBT rebatable status.
New Law
From 1 July 2005 government institutions of the Commonwealth, a state or territory that are charitable institutions at law will remain ineligible for FBT rebatable employer status.
Current Law
Government institutions of the Commonwealth, a state or a territory that are charitable institutions at law will become eligible for FBT rebatable employer status from 1 July 2005.
This amendment will apply from 1 July 2005.
The bill and explanatory memorandum can be viewed on the Parliament of Australia website at http://www.aph.gov.au Select BILLS, then select Current Bills (by Title), scroll through the list to the bill and select it.
The Australian Tax Office has also released a new fact sheet outlining the endorsement process to access charity tax concessions.
It outlines the endorsement arrangements that apply to charities from 1 July 2005, and replaces the fact sheet The endorsement process for income tax exempt charities (ITECs) that issued in August 2003.
From 1 July 2005, charities must be endorsed by the Tax Office in order to access income tax, fringe benefits tax (FBT) and goods and services tax (GST) charity tax concessions.
To be endorsed to access charity tax concessions, a charity must have an Australian business number (ABN). This must be the ABN of the entity itself. An ABN held for GST purposes by a Not for Profit sub-entity is not sufficient.
You can view the fact sheet click
http://www.ato.gov.au/print.asp?doc=/content/13267.htm
or order a paper copy by phoning 1300 720 092 and quoting NAT number 3192 .
The fact sheet will also be available in seven other languages (Arabic, Chinese, Croatian, Korean, Russian, Turkish and Vietnamese) from 1 July 2005.
Translated information and publications are available on the Tax Office website. Look under ‘Other Languages’ which can be found on the top right hand of the www.ato.gov.au homepage.
