Doorstop Interview: GST & Charities

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Reappointment of Taxation Commissioner
December 8, 1999
Doorstop – Liberal Party Federal Secretariat
December 10, 1999
Reappointment of Taxation Commissioner
December 8, 1999
Doorstop – Liberal Party Federal Secretariat
December 10, 1999

Doorstop Interview: GST & Charities

Transcript No. 99/95


The Hon Peter Costello MP



Parliament House

Thursday, 9 December 1999

3.55 pm

SUBJECT: GST & Charities


Well, can I say, that the Government has received a report from the Charities

Consultative Committee, which was set up as a result of the agreement with the Australian

Democrats to help work through rulings for charities. And that Committee has been able to

resolve nearly all of the issues. And some of the issues that it wasn’t able to

resolve, the Government has now resolved directly with the Australian Democrats. And I pay

tribute to the work of Senator Woodley and Senator Lees and her colleagues in enabling us

to resolve a number of those issues. I now believe that nearly all of the issues have been

resolved with the charitable sector to its satisfaction. And as part of the agreement with

the Australian Democrats this committee will run on and it will continue to progress work

that comes up from time to time. Some of the significant changes that have come out of the

work of the Committee is the ability to recognise units as separate, and if they are

separate branches, or whatever they be, that aren’t turning over $100,000 they can

stay completely out of the system. That means any fundraising that is below $100,000 can

stay out of the system. In relation to newspapers and journals and the like, those

newspapers and journals which are produced by charities and non-profits, and aren’t

sold on a commercial basis, they’ll be outside of the system, GST-free. And in

relation to assistance to the charitable and non-profit sector that there’ll be

financial accommodation to them. There’ll be $40 million directly to the sector and

about $25 million delivered through organisations. And that’s about $65 million

direct to the charitable sector, which will help them with compliance and the like. And

I’ll stop there to try and beat the rain.


Treasurer, can you guarantee charities that they won’t be any worse off now under

the new tax system than they were beforehand? A lot of them are saying, they’re in

the tax net like this for the first time.


Many of them will be much better off. Let me explain how and why. First of all, in

respect of their charitable activities where they register they charge no GST on any of

their charitable services and they get back all of their input tax credits. So they get

back embedded costs for the first time. Second area where they’ll be significantly

better is, in relation to Government grants. When they’re able to claim back

wholesale sales taxes, and that means the cost of many of their purchases is lower, it was

thought that if the Government were applying the rules that it’s going to apply to

the government sector the Government would reduce grants, but it won’t be. It’ll

be grossing grants up for the full effect of the GST. So the savings will be totally

captured by the charities. Now this rule isn’t the rule the Government’s

applying to itself, by the way. The Government is going to be reducing grants to its own

agencies to capture the benefit of those embedded wholesale sales taxes. In relation to

fundraising and the like, only where they go into the commercial activity would they be

subject to GST and only if the commercial activity, one type of activity, exceeds

$100,000. So in respect of non-commercial activities, in respect of charitable activities,

they’ll be significantly better off.


Treasurer, apart from the $65 million, do you anticipate any further cost to revenue?


The $65 million is going to be taken out of the $500 million that the Government set

aside for GST Start-up. So that’s direct to the charitable sector, but it’s all

already in the Budget. So, that $65 million will be delivered directly to the charitable

sector, of benefit to them. And I think that’ll be very welcome actually.


. . . that’s the total cost . . .


Well, that’s, the total cost to revenue for the assistance is $500 million,

that’s already in the Budget. And out of that $500 million, $65 million goes to the

charitable sector.


Is there any unforeseen fiscal impact something that wasn’t allowed for in the



No, there’s been full budgeting for the $500 million. The $65 million comes out of

that. Can I wish you all a very happy Christmas.