NFP Update: U.K. Budget Announcements and Reinventing the ATO Blueprint

Matthew Turnour

Dr Matthew Turnour (19 March 2015)

Announcements in the U.K. Budget handed down overnight

The Chancellor of the Exchequer of Great Britain, George Osborne, handed down the 2015 Budget overnight. In it were a number of announcements likely to fuel discussion in Australia. They include:

  • The investment in Joint Venture Capital Trusts (Social VCTs) or Capital Gains Tax on disposal of shares in Social VCTs will be income tax exempt (2.78);
  • Government subsidised fundraising training (2.105);
  • A new “Charity Authorised Investment Fund” structure intended to ‘bring new investment funds established for charitable purposes within a regulatory framework comparable to that provided for retail investors’ (2.108); and
  • A doubling of funding from £2,000,000 to £4,000,000 to help pay for child care costs for parents of children with disabilities (2.114).

The Budget is available here.

Commentary on the U.K. Budget Announcements

The U.K. is providing international leadership in identifying ways to support private funding for charitable pursuits. The idea that social investments should receive favourable tax treatment is eminently sensible particularly in a context where government funding to the sector is declining (£30bn in cuts over the next year were also announced by the Chancellor, including £13bn from departmental budgets and £12bn from welfare spending).

The UK government support of fundraiser training shows just how far Australia is falling behind the rest of the world in facilitating philanthropy. Australia’s fundraising sector cannot even get commitment from governments to uniform national legislation. The international philanthropic community is receiving mixed messages as to Australia’s willingness to facilitate (and receive for redistribution) charitable contributions based here, whilst other ASEAN countries reposition to receive Chinese philanthropic funds.

In relation to the “Charity Authorised Investment Fund” structure, there will be a balance to be struck between private risk and public regulation. The contemporary announcement of a regulatory framework similar to that for retail investors is an obvious step. Whether this would be a desirable step remains to be seen. Charities that have had to navigate the regulation of Australia’s managed investment scheme may welcome such a development here, and others that have secured exemptions may find such a regulatory approach stultifying.

Australian charities are frequently international leaders in their field. Like their U.K. counterparts, some are experiencing considerable funding challenges. The difference from a government perspective is that the U.K. government seems to be endeavouring to do all it can to enable fundraising and explore alternative funding options These developments, if taken constructively will fuel debate and discussion in this context.

Reinventing the ATO Blueprint

The Australian taxation office has released its Reinventing the ATO Blueprint.

One page of the blueprint is devoted to the NFP sector. The rhetoric is warm but we found it difficult to discern what has or will actually change. The document seems to be seeking community feedback and seems to be subject to ongoing development of government policy.

There is one reference to the ACNC. It is in the context of a single entry point to government. There is an increasingly likelihood the ACNC is here to stay and this Blueprint seems to concur. This document seemed to suggest the ACNC is to be the portal for ATO access as is presently the case or perhaps it is to be read as the other way around.

Either way the Blueprint seems to suggest that there is a place for the ACNC in the future although we are not aware of any formal announcements to that effect by the Federal government. On what the Blueprint really means in practice; this will possibly be a matter for each charity to establish from the “fine print” and practice over time.

DISCLAIMER: This update contains general information only. The information is not all inclusive and should not be considered to be legal advice. You should always obtain legal advice for your specific circumstances before relying on general information.