Not-for-profits spared tax changes

The Government has promised to do no “harm” to charities following the release of the Henry Review.

Not-for-profit aged care providers have expressed relief at the government’s decision to rule out major changes to tax concessions for charities.

The highly anticipated Henry Review of the tax system recommended that the fringe benefits tax concessions for charities should be replaced by a series of government grants.

But Treasurer, Wayne Swan assured the not-for-profit groups that the government would not introduce any changes to the tax system that would “harm” the sector.

“I think it’s good that the government hasn’t removed the fringe benefit tax concessions,” said the CEO of Aged and Community Services Australia (ACSA), Greg Mundy.

“It may be slightly messy to administer but I would favour a tax concession, which charities control the use of, over grants, which governments would control the use of.”

However Mr Mundy said the $30,000 cap for fringe benefit tax concessions needed to be raised as it had not been indexed since its introduction in 2000.

The government also ruled out the recommendation for the establishment of a charities commission.

The proposed commission would have been responsible for regulating charities and “streamlining” not-for-profit tax concessions.

Allan Mortel, a Tax Director with accounting firm Moore Stephens, said the government’s decision was a missed opportunity for the not-for-profit sector.

“It would have been good to look at and consider further,” he said.

“I thought it was a positive step and a good recommendation but the government knocked it out on the basis that it could be harmful for not-for-profits. I’m still trying to understand the rationale of that.”

The Henry Review also endorsed recent reform proposals for the aged care industry, calling for an ‘unbundling’ of care and accommodation charges to allow providers to charge the true cost of care.

It suggested that the Productivity Commission should consider “user-directed” funding options in its upcoming inquiry on the sector.

The review also flagged the idea of a long-term care insurance scheme to help fund aged care services as the population ages.

“We saw that as an appropriate and welcome boost to the work of the Productivity Commission,” said Mr Mundy.

“It’s not a gratuitous reference to the inquiry. It’s actually very relevant because the ageing population is one of the important features of the landscape that has to be dealt with.”

Tags: charity, henry-review, not-for-profit, tax,

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