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What is a Charity for Taxation Purposes?
&
Companies Controlled by Exempt Entities
Monday 11 July 2005 - 1:30pm to 4:30pm
Owen J Wordsworth Room, Level 12, S Block, QUT, Gardens Point Campus,
2 George Street, Brisbane
Suggested Parking: Kings, corner Margaret and Albert Streets, or QUT short term under freeway
(limited). We regret free parking is not available.
1:30pm Coffee, Registration & Welcome 3:00pm Afternoon Tea
Professor Myles McGregor-Lowndes, Director,
Centre of Philanthropy and Nonprofit Studies 3:15pm ATO — Companies Controlled by
Exempt Entities
1:35pm ATO — What is a Charity? The ATO has released Draft Taxation Ruling
The ATO has released Draft Taxation Ruling “Income tax: Companies controlled by exempt
“Income tax and fringe benefits tax: charities” entities” (TR 2005/D7) for discussion. Bernie
(TR 2005/D6) for discussion. Bernie McKinnon McKinnon will outline the ATO’s views on the
will outline the ATO’s views on the definition of a ruling. Bernie MacKinnon, ATO
charitable institution or fund.
Bernie MacKinnon, ATO 3:30pm Panel Discussion on TR 2005/D7
A short presentation from:
2:00pm Some Critical Areas Paul Paxton-Hall, Deacons
Determining the “purpose” of a particular Anne Robinson, Prolegis
charitable institution or fund (Para. 26 & 27) - Murray Baird, Moores Legal
Dr Gino Dal Pont, University of Tasmania
John Emerson AM, Freehills (by video) and Discussion from the floor
Government charity boundary - Myles McGregor- 4:30pm Conclude with drinks
Lowndes
Discussion from the floor
REGISTRATION FORM
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Mail: CPNS, QUT, GPO Box 2434, Brisbane Qld 4001 Email: <a.greenkellett@qut.edu.au>
Fax: 3864 9131. For further information, please call 3864 1020.
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ATO Releases Draft Charity Ruling
The ATO has released a long awaited draft ruling on its interpretation of the definition of a “charity” for taxation
purposes. The ruling has been in preparation for several years and is now available on the ATO web site
(http://www.ato.gov.au) TR 200/D6 and TR 2005/D7.
Mr Bernie MacKinnon of the ATO who was involved in the preparation of the draft rulings will address the key is-
sues. He will be joined by legal experts to examine the ruling. There will be time for questions and comments.
This seminar will be of interest to fundraisers, accountants, lawyers and nonprofit consultants.
TR 2005/D6
This draft ruling replaces the previous draft ruling TR 1999/D21 which was held in abeyance pending the Charity
Definition Inquiry and report <http:www.cdi.gov.au> and the consultation on the draft Charities Definition Bill.
The new draft ruling:
• Is extended from 47 pages to 71 pages;
• Covers the implications of the Extension of Charitable Purpose Act 2005 which includes:
1. Child care purposes;
2. Closed or contemplative religious orders;
3. Self-help groups.
• In determining the purpose of a particular charitable institution the change is:
From
• TR 1999/D21 Para.23—”An institution is accepted as charitable if its dominant purpose is charitable.
Any non-charitable purposes of the institution must be no more than incidental or ancillary to this
dominant purpose.”
To
• TR 2005/D6 Para.27—”An institution is accepted as charitable if its purpose is charitable. A charita-
ble institution’s purposes are wholly, solely and exclusively charitable. To the extent that any of a
charitable institution’s objects, activities and other features would (when viewed in isolation) be non-
charitable, they must be no more than incidental or ancillary to the charitable purpose.”
• Contains a new section on when ‘the purpose is commercial’ rather than charitable (Paras. 125-130).
• The old rulings paragraph (Para.142) setting out a model nonprofit clause and dissolution clause has been
removed from the new ruling.
• A new section on determining the purpose of a particular fund or institution has been added to the new ruling
(Paras.147-176) including the specific example of peak bodies.
TR 2005/D7
The draft ruling applies to the situation where a company “A” has a close relationship or a connection with another
entity, “B” that is exempt from taxation. The ruling clearly states that company “B” must itself meet the requirements
for exemption and it is insufficient to only rely on control of entity “A” by entity “B” for tax exemption.
The draft ruling indicates the role of an entity’s relationship or connection with an existing tax exempt entity in deter-
mining whether the first entity is itself tax exempt. This draft will be of importance to organisations which consist of
a group of entities or have subsidiary organisations.
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