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2008-2009-2010
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
TAX LAWS AMENDMENT (PUBLIC BENEFIT TEST) BILL 2010
EXPLANATORY MEMORANDUM
(Circulated by authority of Senator N Xenophon)
Tax Laws Amendment (Public Benefit Test) Bill 2010
Background
The purpose of this Bill is to insert a public benefit test into the Income
Tax Assessment Act 1997 which will require religious and charitable
institutions seeking tax exemption to demonstrate public benefit through
its aims and activities.
This Bill follows allegations from former members of the Church of
Scientology about coerced abortions, false imprisonment, breaches of
Occupational Health and Safety laws, stalking, harassment and extortion, to
name but a few.
Given this, the tax exempt status of the Church of Scientology should be
subject to a Public Benefit Test as to whether or not it is appropriate
that it is afforded taxpayer support.
Similarly, any and all organisations which receive tax exempt status should
be subject to this test.
This will ensure that all organisations claiming charitable status under
the Income Tax Assessment Act are indeed charitable.
Indeed, the application of a Public Benefit Test is not a new approach to
organisations seeking tax exemptions.
In the United Kingdom, a Charity Commission has been in place since 2006
and has as one of its roles the responsibility to administer the Public
Benefit Test.
Under this Bill, a Public Benefit Test would include the following key
principles:
. There must be an identifiable benefit arising from the aims and
activities of an entity;
. The benefit must be balanced against any detriment or harm; and,
. The benefit must be to the public or a significant section of the
public, and not merely to individuals with a material connection to
the entity.
Importantly, any public benefit the charity provides must outweigh any harm
it causes.
Broadly, charitable purposes can be considered to be the prevention or
relief of poverty, the advancement of health or the saving of lives, the
advancement of citizenship or community development, the advancement of
human rights, conflict resolution or reconciliation or the promotion of
religious or racial harmony or equality and diversity, etc., while examples
of things that might be evidenced to be detrimental or harmful might
include something that is damaging to the environment, something that is
dangerous or damaging to mental or physical health, something that
encourages or promotes violence or hatred towards others, or unlawfully
restricting a person's freedom.
Charities are granted tax exempt status on the assumption that their aims
and activities are in the interest of the community and to the benefit of
the public, however it has become apparent that some organisations may be
abusing this privilege.
A Public Benefit Test would significantly mitigate the risk of this
occurring.