Charities, churches set to fill tax coffers

CHARITIES and other non-government organisations could lose billions of dollars' worth of tax perks as the Rudd Government's taxation review prepares to examine whether the concessions offered to the $80 billion non-profit sector are justified.

The investigation, by Treasury boss Ken Henry, is expected to meet with resistance from some of the sector's most powerful groups, The Australian reports.

Most of the country's religious groups, which make up about $25 billion of the sector, run commercial enterprises.

Among them is the Seventh Day Adventists' cereal giant Sanitarium, which generates more than $300 million a year.

Exemptions

Many of the operations have little to do with charitable work but are exempt from various taxes including corporate tax and capital gains tax.

The Catholic Church has long opposed reforms such as the creation of a national charities commission to regulate the sector, or charging tax on commercial enterprises.

While any changes eventually recommended by Dr Henry may offer the opportunity to bolster Treasury's coffers, it will create a significant political challenge for Kevin Rudd, a devout Christian who has courted the religious vote.

Australian Industry Group head Heather Ridout, a member of the Henry review's committee, said the non-profit sector was a huge part of the economy and so it made sense to look at it as part of the review.
"The agenda is broad and so all types of entities will be looked at in this review," she said. "The non-profit sector is a very big and important part of this, particularly since we have had a lot of changes in welfare benefits and their interface with tax."
Business enterprises run by religious groups range from pizza chains, insurance companies, wineries, farms, schools, hospitals and aged-care facilities. All are exempt from tax. Australia is one of the few countries in the world where religious groups are not forced to pay tax on business ventures.
Sport stars

In the past few years, sports stars such as cricketers Shane Warne and Ricky Ponting and Formula One driver Mark Webber have set up charities to raise money under their own names. They receive various tax deductions.
The sector accounts for 8 per cent of GDP and employs more than 600,000 people, but a lack of transparency and poor accounting standards and corporate governance in the financial arrangements of many organisations has long been a concern.
In an era of heavy corporate regulation, most parts of the non-profit sector remain unregulated.
There is no process for the registration of charities, no consistent collection of information about the activities or funding sources of charities and there is little or no monitoring of the activities of charities.