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Tax laws to recognise the international role of Australia’s major performing arts companies

Tax laws are being amended to recognise the international role of Australia’s major performing arts companies, with the introduction into Parliament of the new Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill 2012.

The new Bill sets out the special conditions that apply to not-for-profit entities that do some work overseas—the ‘in Australia’ provisions—amending previous legislation.

Bethwyn Serow, AMPAG’s Executive Director, today welcomed the new Bill.

‘It’s encouraging news for our members,’ she said.

‘AMPAG has advocated over the past couple of years that the MPAs’ need to engage overseas in touring and training is taken into account in how this provision of the tax law applies.

‘It is therefore very pleasing to note the two ministers’ willingness to address our concerns.’

The ‘in Australia’ provisions apply at two levels:

  • re-states the ‘in Australia’ special conditions for income tax exempt entities, ensuring that they generally must be operated principally in Australia and for the broad benefit of the Australian community
  • codifies the ‘in Australia’ special conditions for DGRs (deductible gift recipients) ensuring that they must generally operate solely in Australia, and pursue their purposes solely in Australia.

Most performing arts companies are charities—that is, income tax exempt entities—but many operate separate trusts and foundations to accept donations, which are DGRs. Therefore, this means both thresholds apply to the companies.

To explain how these two thresholds apply to performing arts companies, the Explanatory Memorandum has provided several examples.

The examples indicate that if an orchestra undertakes a short overseas tour, the tour would be considered merely incidental to the pursuit of the purposes of the orchestra in Australia, and would still meet the ‘in Australia’ special conditions.

And if a company undertakes a longer tour overseas one year, but hasn’t toured overseas for the previous three years, the tour would be considered minor and incidental.

Two companies have been exempted from the provisions under the new Bill—the Australian Chamber Orchestra and Sydney Dance Company.

Timothy Calnin, ACO’s General Manager, said: ‘On the eve of our departure for the Edinburgh Festival, the ACO is extremely grateful to Arts Minister Simon Crean and Assistant Treasurer David Bradbury who have seen the drastic negative impact which the original draft would have had on our international touring programs and those of our fellow performing arts companies.’

AMPAG is preparing a response to the Bill, before it is passed in the Parliament.

‘We want to drill down into the fine details of the legislation, so that we fully understand its implications for our companies,’ Ms Serow said.

‘We are also trying to establish why just two of our member companies have been singled out for exemption, when several others such as Circus Oz, Bangarra and The Australian Ballet also access DGR funds to support their overseas activities.’

Linda Mickleborough, Circus Oz General Manager, agreed. ‘Our international work is a key part of our program and one of the components that allows us to engage a full-time ensemble of performing artists.’

AMPAG will continue to liaise with member companies and the Office for the Arts to achieve the best possible outcome for performing arts.