AMPAG made its submission on 3 April 2014 on behalf of its member companies responding to the government’s proposed legislation dealing with ‘in Australia’ special conditions for income tax exempt entities.
Of course AMPAG agrees with the overall purpose of the ‘in Australia’ special conditions to address international tax avoidance arrangements and to minimise the risk of income tax exempt entities being used for terrorist financing and money laundering.
And we also welcome the introduction of 'reasonableness' in relation to an entity’s role and responsibility in how funds are expended by third parties.
However, we are concerned that the current draft would result in the government instituting a full assessment system to consider if organisations’ non-Australian activities or expenditure can be determined as ‘in Australia’ on a case-by-case basis.
The proposed legislation contains no option for self-assessment and no exemptions for any major performing arts company.
Instead, it requires the minister to make individual determinations on any and all income tax exempt performing arts companies and any overseas activities to which they direct DGR (deductible gift recipient) funds.
However, we are pleased that under the current draft legislation, the Minister for the Arts will be making the determinations, as opposed to the previous version where the Australian Taxation Office was posed as the final arbiter.
Nevertheless, the imposition of extra red tape on the MPAs is unnecessary.
It achieves no greater integrity in addressing the mischief that this legislation is targeting but does create uncertainty for the MPAs in the interim period before determination, as well as generate additional layers of red tape.
Read AMPAG’s full submission and recommendations here.