On 12 March 2014 the Treasury published the exposure draft legislation, draft regulations and explanatory materials for restating and centralising the special conditions for tax concession entities.

The Treasury has stated that these measures would:

  • re-state 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 (with some exceptions);
  • centralise and simplify the other special conditions entities must meet to be income tax exempt, such as complying with all the substantive requirements in their governing rules; and
  • codify the ‘in Australia’ special conditions for deductible gift recipients ensuring that they must generally operate solely in Australia, and pursue their purposes solely in Australia (with some exceptions, such as overseas aid funds, some environmental organisations, some touring arts organisations and medical research institutes).

The previous Government announced in its 2009-10 budget that it would make changes to the special conditions for tax concession entities. It later introduced the Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill 2012, however the Bill did not proceed. In Dec 2013, the current Government announced that it would go forward with the measures and incorporate changes to address concerns raised by the not-for-profit sector about the 2012 Bill.

The consultation materials are available on the Treasury website. The closing date for submissions on the Exposure Draft is Monday, 7 April 2014.