FBT Solutions

Interested in Salary Packaging?

Yes, I'm an employer  Yes, I'm an employee

Call: 02 8079 2924

From AFR 17 April 2013: Flying Doctors concerned about tax concessions

Flying Doctors concerned about tax concessions

PUBLISHED: 17 Apr 2013 09:20:28 | UPDATED: 17 Apr 2013 11:51:29PRINT EDITION: 17 Apr 2013

Royal Flying Doctor Service of Australia boss Greg Rochford is one of many leaders in the charities sector waiting to see what will come of a Treasury consultation on proposals to overhaul some of sectors’s tax breaks. A consultation paper by Treasury’s not-for-profit sector tax concession working has suggested some of the existing tax concessions available to charities could be replaced with direct relief measures. Charities are awaiting the government’s response to their submissions to the consultation which closed four months ago. “A survey of 180 non-profits in March found over 90 per cent of respondents lacked confidence in the government to properly target discretionary support if the tax concessions were watered down,” said Paul Lyon a tax partner at BDO Australia which commissioned the research. Perhaps the most controversial idea canvassed was to raise the threshold for tax-deductible gifts from $2 to as high as $50, this met pushback from charities which are reliant on donations. One rationale for the proposition is that the overheads associated with raising small donations may outweigh the benefits for organisations. But for the Royal Flying Doctor Service of Australia many of the overheads associated with raising small donations are integrated with their general activities in the community. Supporting people who want to help but can only afford to make a small donation is important, said RFDS national chief executive officer Greg Rochford. “In a really tight health system, every cent helps.” Another area of concern to many of the charities that made submissions to the consultation were proposals to reduce some of the fringe benefits tax concessions available to individuals employed by charities. “As a big organisation that is not able to pay top dollar but needs to attract outstanding staff to remote locations it would be detrimental to the RFDS is it was to lose access to the full range of FBT benefits,” said Rochford. However he recognised there was a potential problem with some of the benefits, such as meal, entertainment and leisure cards, which do not currently have set limits. “While most employees in the charitable sector use these responsibly, there are cases where they have been abused and we accept it would be appropriate to have tighter controls in place,” said Rochhford. Of particular concern to Rochford though was another proposal to limit the ability of charities to get franking credits on their investments. After the major commercial players Qantas, Virgin, Jetstar and Tiger, the RFDS is the fifth biggest airline in Australia. Maintaining and replenishing its fleet of planes requires an enormous amount of capital infrastructure for a non-profit organisation to carry. “I’d be very happy to support a simplifying of the franking credits process, but would be very concerned if that led to a reduction in return on investments,” he said. STATUTORY DEFINITION OF A CHARITY Draft legislation for a statutory definition of a charity was released last week. “The meaning of charity and charitable purpose has not been previously comprehensively defined for the purposes of Commonwealth law,” said Assistant Treasurer David Bradbury. Eligibility for tax concessions is currently administered on the basis of principles derived from the common law, dating back to the Statute of Elizabeth of 1601. The government has said formalising the definition of a charity will result in no change to the charitable status or tax treatment of existing charities. Last week Treasury reversed an earlier decision not to give deductible gift recipient status to Primary Ethics, an organisation that provides ethics classes as an alternative to scripture classes for children in NSW schools. The proposed start date for the new statutory definition of a charity is January 1, 2014. Submissions close May 3. The Australian Financial Review