Legal

UPDATED – ATO Putting NFPs to the Test: Two Additional Tests for Income Tax Exemption

The Australian Taxation Office (“ATO”) released the final version of its Taxation Ruling on the two additional tests for income tax exemption for NFPs in TR 2015/1 on 25 February 2015. This article is an updated version of an article published in the Better Boards Newsletter of 9 February 2015, which deals with the predecessor Draft Ruling TR 2014/D5. Read the original article. In June 2013 the then Labor Federal Government amended the Income Tax Assessment Act 1997 (“the Tax Act”) to introduce two additional tests which NFPs need to satisfy for income tax exemption.

ATO Putting NFPs to the Test: Two Additional Tests for Income Tax Exemption

Please note: An updated version of this article that discusses the final version of the Ruling issued on 25 February 2015 as TR 2015/1 Income Tax: special conditions for various entities whose ordinary and statutory income is exempt is now available. Read the updated version. In June 2013 the then Labor Federal Government amended the Income Tax Assessment Act 1997 (“the Tax Act”) to introduce two additional tests which NFPs need to satisfy for income tax exemption.

The Importance of Getting Your Agendas and Minutes Right

At a board meeting on 15 February 2001, the directors of James Hardie approved an announcement to the ASX about a corporate restructure. The restructure included the establishment of a foundation which would handle all asbestos-related claims against James Hardie. The next day, the announcement was released and it stated that the foundation would be “fully funded” to meet the claims. However, it later became apparent that the foundation was not fully funded.

Non-Profits and Trademarks: The Power of the Brand

How significant is the good name, image and branding of your non-profit organisation? Can your organisation prevent others trading off of its reputation? For most not-for-profits (NFPs), their brand and associated reputation is their most important asset. As such, how can NFPs protect this valuable asset? The answer is simple: by registering a trademark_*. A Leading NFP NFPs, like other corporations, benefit from strong branding and trademark protection. For example, research by the Salvation Army reveals that their Red Shield logo is recognised by 92 per cent of the Australian public1.

Political Lobbying and Your Charitable Status

Almost a year to the day after the Word Investments case, the ATO has suffered another loss in the High Court of Australia. This time, in the case of Aid/Watch Incorporated v Commissioner of Taxation, the High Court found that Aid/Watch is a charitable institution despite the fact that its activities are mainly directed at influencing government decisions i.e., lobbying. The High Court’s decision is welcome news to the many not for profit organisations that lobby government as a means of achieving their charitable objectives.

NFP Crisis Management – Well Whadya Know

I was called in recently by a small not for profit CEO to help out with what we lawyers call some ‘crisis management’. The organization was being pursued by Fair Work Australia for some breaches of the new workplace laws. It was apparent to me that the problem arose not because they were trying to rip off their staff but its genesis lay in a simple malaise, ignorance – the CEO simply didn’t know about the particular law that they had breached.

Application of Federal Workplace Laws To Nonprofits

As a result of the referral of power by most States to the Commonwealth over industrial matters as of 1 January 2010, most not for profit organisations are now covered by Federal workplace laws. Until this referral took place, the assumption of many not for profit organisations is likely to have been that they were not covered by the Federal workplace laws because they were not “trading” or “constitutional” corporations.