CHARITABLE TAX TREATMENT: IMPACTS

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CHARITABLE TAX TREATMENT-IMPACTS OPTIONS

• Mike Myers
• Queensland Community Housing Coalition

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Introduction

• Wider tax reform is a preferred option
• Within current system Charitable Tax treatment
  can make a difference in the margins of social
  and affordable housing supply
• The existing Charitable supply system might be
  the basis for realistic reform

3
The Presentation will cover-

• The CHFA Project - Community Housing New
  Partnerships The Tax System
• Charitable Tax Status
• An example of the Benefits
• Models
• Recommendations

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The CHFA Project

• Aims
• Reviewed current law rulings
• Developed 12 Models
• ATO General Advice
• Funded by the Australian Government State
  Governments
• Reported November 2004

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Charitable Tax Status

• ITEC
• GST Concessions
• Non commercial accommodation supply
• FBT Rebates or exemptions
• Gift deductability
• Flow on State Local Government concessions

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An Example Of Benefits

• On a 15 million investment delivering 91
  apartments 50 year life
• GST Concessions
• ITC on construction 1.365m
• ITC on maintenance 1.242m
• ITC on other costs 0.364m
• FBT for 1 Employee 0.305m
• Rate Relief at 50 2.275m
• Stamp Duty Land Tax ?

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Main Models

• Joint ownership operation
• Joint ownership Headlease
• Headlease of land
• Headlease of improvements
• Sale shared equity
• Management model

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Main Recommendations

• Make headlease to Charities GST free
• In collaborative development arrangements provide
  ITC equal to the underlying interest of the
  Charity
• Make ITCs available to owners of residential
  properties provided under compliant management
  arrangements with Charities
• FACS to approve compliant collaborative
  arrangements
• Simplify adjustment rules

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Main Recs Continued

• Public ruling to confirm Charity Status
  regardless to level of ancillary commercial
  activities
• Extend definition of Charitable Purpose to the
  provision of affordable housing
• Establish a Charities Commission

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Conclusion

• Charity Tax Concessions can help
• All levels of Government can contribute to making
  it work
• There are barriers to community / business
  partnerships
• The Charitable Tax System could be reformed to
  provide a stronger platform for new partnerships