Tax White Paper Submission

The main focus of our submission relates to the taxation arrangements in the not-for-profit (NFP) sector. A large proportion of our members serve on the boards of NFP organisations. To assist NFP directors we have chosen to focus our comments predominantly on the issues raised by Chapter 7 of the Discussion Paper. However, we also make some comments about other aspects of Australia’s tax regime that are of keen interest or concern to directors.

In summary, the key comments of the AICD are as follows:

• A simple, efficient and understandable tax regime will support good governance in the NFP sector
• The current taxation arrangements, while they support the NFP sector, could be improved
• Tax concession arrangements could be simplified for charities by removing the existing Fringe Benefits Tax (FBT) concessions and ensuring that there is an alternative benefit immediately in place, supported by appropriate transition arrangements
• As an alternative to the complex FBT regime, the income tax exempt thresholds could be increased for employees who work for, and gain their main source of income from, an employer that is a charity registered with the Australian Charities and Not-for-profits Commission (ACNC)
• As Deductible Gift Recipient (DGR) status encourages giving it should be retained, however the system could benefit from simplification
• We do not suggest any changes be made to income tax exemption for NFPs
• In addition to the simplification of tax concessions, we support the simplification of the regulatory regime for NFPs at a State and Federal level
• We recommend the Government focus on encouraging competition within the NFP sector, rather than debating whether NFPs have a competitive advantage over for-profit businesses
• We strongly support the changes proposed to the taxation laws that apply to employee share schemes
• Section 8Y of the Taxation Administration Act 1953 should be amended to restore the presumption of innocence for directors.