The bill – introduced to Federal Parliament by the previous Labor Government – would have seen a review of tax concessions for charities involved in income-producing activities. It contended that the government was foregoing significant amounts of tax revenue because some not-for-profits’ activities were not being directed to charitable purposes.

The legislation would have:

• Introduced a standard definition of “not‐for‐profit” for the purposes of Commonwealth tax laws.
• Seen not-for-profits only receive tax concessions if their income producing activities were targeted at activities that directly further the purpose they were established for.
• Reinstated the requirement that an organisation with income tax exemption and/or DGR operated or pursued its purposes in Australia (unless an exception was available – for example, for overseas aid organisations).

The bill was mooted as far back as 2011, with the-then Labor Government calling for public submissions on the planned changes.

Unsurprisingly, many groups in the not-for-profit and charitable sectors expressed concerns that such changes could limit the ways they could generate income to help fund their charitable works.

Following the overwhelmingly negative response from the sector, the Labor Government deferred any moves on the changes until the middle of 2014 to allow for greater consultation with not-for-profit groups and peak sector bodies.

However, Assistant Federal Treasurer Arthur Sinodinos has now confirmed the Coalition Government will drop the bill entirely.

Mr Sinodinos said the bill was one of more than 90 tax and superannuation measures left unlegislated by the former Labor Federal Government.

“The Government will not proceed with the measure to 'better target' not-for-profit tax concessions at this stage,” he said.

“But will explore simpler alternatives to address the risks to revenue.”

A range of groups quickly applauded the decision – among them relief and welfare agencies, animal protection groups, churches and arts groups.

Community Council of Australia (CCA) CEO David Crosbie said the planned legislation had left charities worried that their income-producing activities may jeopardise their charitable status and the concessions they receive.

“Like most of the charitable sector, CCA support the Australian Charities and Not-for-profits Commission (ACNC) ensuring that all Australian charities operate to pursue their charitable purposes,” he said.

“Where organisations are pretending to be charities, but actually operating for profit businesses, the ACNC should remove their charitable status and the Australian Taxation Office should not provide any tax concessions.”

Mr Sinodinos announcement, including confirmation the “Better Targeting of Tax Concessions” Bill will not proceed, can be found here.