2008‑2009‑2010

The Parliament of the

Commonwealth of Australia

THE SENATE

Presented and read a first time

Tax Laws Amendment (Public Benefit Test) Bill 2010

No.      , 2010

(Senator Xenophon)

A Bill for an Act to amend the Income Tax Assessment Act 1997 to require that religious and charitable institutions meet a public benefit test to justify their exemption from taxation, and for related purposes

Contents

1............ Short title............................................................................................ 1

2............ Commencement.................................................................................. 1

3............ Schedule(s).......................................................................................... 2

Schedule 1—Public benefit test for religious and charitable institutions 3

Income Tax Assessment Act 1997                                                                              3

A Bill for an Act to amend the Income Tax Assessment Act 1997 to require that religious and charitable institutions meet a public benefit test to justify their exemption from taxation, and for related purposes

The Parliament of Australia enacts:

1  Short title

                   This Act may be cited as the Tax Laws Amendment (Public Benefit Test) Act 2010.

2  Commencement

                   This Act commences on the day after it receives the Royal Assent.

3  Schedule(s)

                   Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1—Public benefit test for religious and charitable institutions

Income Tax Assessment Act 1997

1  After section 50‑50

Insert:

50‑51  Public benefit test for items 1.1 and 1.2

Public benefit test

             (1)  The regulations must formulate a test (to be known as the public benefit test) against which the aims and activities of an entity may be assessed.

             (2)  The public benefit test must include the following key principles:

                     (a)  there must be an identifiable benefit arising from the aims and activities of an entity;

                     (b)  the benefit must be balanced against any detriment or harm;

                     (c)  the benefit must be to the public or a significant section of the public, and not merely to individuals with a material connection to the entity.

             (3)  The public benefit test may contain provisions relating to the manner in which the test is to be applied to the aims and activities of an entity, as well as ancillary and incidental provisions.

             (4)  The Minister must take all reasonable steps to ensure that regulations are made for the purposes of subsection (1) before 1 July 2010.

Entities must meet public benefit test

             (5)  An entity covered by item 1.1 or 1.2 is not exempt from income tax unless the entity meets the public benefit test.

2  Application provision

The amendment made by this Schedule applies in relation to income years that commence on or after 1 July 2010.