For release: Monday May 9, 2011
The Australian Christian Lobby is calling for the federal government to clarify its position on taxing the commercial revenue of charities after ambiguous media reports.
The ACL’s Chief of Staff Lyle Shelton said the ACL was very concerned the budget measure would stifle fundraising efforts for charities and complicate administration.
“We can’t think of a charity which has a commercial operation that doesn’t plough profits back into its charitable purpose. It is unclear what the loophole is that the Government wants to close and there is a real worry that this might result in a tax on charities.
“It’s good to know businesses such as op shops won’t be taxed, but it’s just one business model charities use to generate income,” he said.
Mr Shelton said a 2008 High Court decision had made it clear that charities could raise funds by commercial means for charitable purposes.
“The reasoning of that case makes it clear it’s almost impossible to separate business from other activities when pursuing charitable purposes,” Mr Shelton said.
“The Henry Tax review stated not-for-profit organisations should be permitted to apply their income tax concessions to their commercial activities,” he said.
The Treasurer has previously said this would not change and Mr Shelton said it was important that charities not be discouraged from generating incomes streams which ease its reliance on donors.
“The charitable sector is already burdened with ‘giving fatigue’ as a result of this year’s natural disasters and cost of living pressures meant families are relying on charities more and more.
“This year Australians have witnessed and responded compassionately to natural disasters including floods, tsunamis and earthquakes.
“Overseas experience shows that there is little revenue to be gained from pursuing charities in this way and simply complicates its administration.
“This raises concerns about why this is a budget measure and clarification is urgently needed so there are no unintended consequences,” he said.