Changes to Queensland tax concession eligibility (Duty, Land Tax, Payroll Tax)

Queensland charitable institutions must now ensure that certain provisions are expressly stated in their governing documents in order to be eligible for exemptions from state taxes and duties.

The Taxation Administration Act 2001 (Qld) (TAA) was amended on 30 October 2018 by the Revenue and Other Legislation Authority Amendment Bill Act (Qld), and the transition period for the legislated changes will end on 8 November 2020 (for charities who were registered charitable institutions with the OSR as at 9 November 2018).

What are the changes?

Part 11A of the Taxation Administration Act 2001 (the Act) provides for the registration of charitable institutions. Registration as a charitable institution is a pre-condition to certain exemptions under the Duties Act 2001Land Tax Act 2010 and the Payroll Tax Act 1971.

Under s.149C of the Act, there are several restrictions on registration. Section 149C(1) of the Act provides that an institution may only be registered if any of the following applies:

  1. it is one of the types of institutions mentioned in s.149C(2)

  2. its principal object or pursuit is fulfilling a charitable object or promoting the public good and is not a leisure, recreational, social or sporting object or pursuit

  3. it is the trustee of an institution mentioned in (a) or (b), other than a university or university college.

Additionally, s.149C(5) of the Act provides that an institution generally must not be registered unless its constitution, however described, expressly provides that:

  1. its income and property are used solely for promoting its objects

  2. no part of its income or property is to be distributed, paid or transferred by way of bonus, dividend or other similar payment to its members

  3. on its dissolution, the assets remaining after satisfying all debts and liabilities must be transferred:

    1. to an institution that, under s.149C, may be registered

    2. to an institution the Commissioner is satisfied has a principal object or pursuit mentioned in s.149C(3)(a)

    3. for a purpose the Commissioner is satisfied is charitable or for the promotion of the public good.

Section 149C(6) of the Act states that a constitution includes a law, deed or other instrument that constitutes the institution and governs the activities of the institution or its members.

OSR explanation

On 9 November 2018 the OSR released a public ruling to clarify when a constitution will satisfy the requirements of s.149C(5).

To qualify for registration as a charitable institution, an institution’s constitution need not contain the exact words in s.149C(5)(a) to (c) of the Act. It is sufficient for an institution’s constitution to contain similar words that have the same effect.

Institutions that have adopted template rules may qualify for registration as a charitable institution, if the template rules satisfy s.149C(5) of the Act and the institution meets the other requirements in s.149C.

What do you need to do?

If your NFP is registered with the OSR as a charitable institution:

Check your governing documents to ensure compliance with the changes
Where changes to your governing documents are needed, hold a general meeting for the members to pass a special resolution amending the governing documents
If your NFP is a company notify the ACNC of the changes to the governing documents
If your NFP is an incorporated association lodge an application for rules amendment with the OFT, then notify the ACNC of the changes to the governing documents
If you NFP holds an authority or licence to fundraise, notify the relevant regulatory of the amendment to the governing documents

If you NFP is unsure if it is a registered charitable institution contact the OSR for verification.

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The material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.