Religious institutions continue to receive tax-exempt status, despite the establishment of the Australian Charities and Not for Profit Commission (1) (ACNC) on 1st November 2012. The commission, at this point in time, regulates charities, but will eventually manage all organisations within the not-for-profit sector.
The ACNC is expected to introduce a statutory definition of charity in 2013. It is likely, (2) however, that the commission will not substantially vary the current definition as delivered (3) by the ATO in October 2011.
One of the ATO’s (Australian Tax Office) definitions of ‘charity’ is the ‘advancement of religion’ (4). It is highly likely that this definition will be retained, despite public submissions (5) demonstrating that further incursions of religion into society are not of public benefit.
Consequently, any trust fund or institution whose sole purpose is to sell religion can enjoy multiple tax exemptions. These include fringe benefits tax (FBT), GST, stamp duty, land tax, company and capital gains tax, car registration fees and municipal rates.
The taxation reform package includes the new Unrelated Business Income Tax (UBIT), intended to target commercial enterprises owned by NFPs (Not For Profit). However, this only applies to businesses commenced from May 2011. The transition period for businesses operating before that date could take years. Businesses already operating do so free of company tax and also enjoy FBT and GST concessions. This includes businesses such as Sanitarium, owned by the Seventh Day Adventists, a music publishing and recording business owned by Hillsong, and rental properties owned by mainstream churches.
Obviously, church-owned businesses will operate at an unfair advantage to their competitors. Another disadvantage is that the public must make up those amounts that religious institutions do not pay; for example, residents in one council pay 10% more (6) in property rates since church-owned property is exempt.
Of greatest concern, however, is the significant loss of revenue, diverted from public works such as education and health. This revenue has been estimated at $31B per annum (7).
Notes: This is an abridged version of the submission by the Secular Party of Australia, author: Moira Clarke.
(1) ACNC
(2) Pro Bono News
(3) Australian Financial Review
(4) Australian Tax Office
(5) SPA Submission on Defining Charities
(6) NZ Listener
(7) SPA Submission to Treasury on the Taxation Review