Proposal to change ‘in Australia’ condition for tax concessions

By Shoba Kanniappan and Joanne Dunne

The federal government has released exposure draft legislation that restates the ‘in Australia’ special condition. This special condition must be met by entities accessing tax concessions such as income tax exemption and by entities that have deductible gift recipient status. The proposed legislation needs to be considered by all such entities.

This alert summarises the draft legislation and the key issues for affected entities.

Under the proposed new rules for the ‘in Australia’ special condition applicable to income-tax-exempt entities (e.g. charities registered with the Australian Charities and Not-for-profits Commission), the entity must operate and pursue its purposes principally in Australia. ‘Principally’ will mean mainly or chiefly (i.e. more than 50 per cent), taking into account factors such as where the entity incurs its expenditure, where it undertakes its activities, where the entity’s property is located, where the entity is managed from, where the entity is resident or located, where its employees or volunteers are located and who directly and indirectly benefits from its activities…

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