Nonprofit Newswire | Nonprofit Tax Review in Australia

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May 3, 2010; Source: Pro Bono Australia | Other nations have thoughtful, deliberative processes for thinking about the content and future of their nonprofit sectors. In Australia, the Henry Tax Commission came into being to conduct a complete overhaul of the Australian tax system, something that we need here in the States.

Nonprofits were none too happy to be in the Commission’s purview, though there was good reason to have the Commission examine charities. Apparently, there is no formal nationwide registration of charities (compared to the tax exempt registration of groups with the IRS here). Unlike the U.S., religious groups in Australia that run business affiliates are free—both them and the affiliates—from having to pay taxes on their business activities. Australian nonprofits also get a tax break on their fringe benefit packages, a particular target of the Treasury Secretary.

The Commission went along with the Treasury Secretary, recommending abolishing various tax concessions and replacing them with direct government grants. Within moments of the release of the Commission report, the government of Prime Minister Kevin Rudd decided to make no changes that would “harm the non-profit sector.” In addition to the changes in fringe benefits that Rudd rejected, the Commission report also recommended raising the charitable tax deductibility threshold, instituting a tax on bequests, changing the charitable status of clubs, and creating a National Charities Commission, all rejected by the government.

There’s something like 1,500 pages in the Commission report for the government and charities to plow through to find recommendations that might be worth reviving because of their intended benefit to charities, volunteers, and donors. Australian nonprofits apparently number around 700,000 and account for as much as 8 percent of the nation’s Gross Domestic Product. Whether the recommendations are accepted or rejected, the U.S. nonprofit system could benefit from an in depth analysis like the Henry Commission.—Rick Cohen