An Australian government inquiry will consider the taxation of the non-profit sector and its recommendations may affect Church run business enterprises. The Australian reports 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 paper says.
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.
Many of the operations have little to do with charitable work but are exempt from various taxes including corporate tax and capital gains tax.
According to The Australian, 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.
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.
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.
The tax review, and a simultaneous inquiry into the accountability and transparency in its use of public and government funds in the sector, by the Senate standing committee on economics, will now put these activities under the spotlight.
The Senate inquiry is currently accepting submissions into the disclosure regime for charities and not-for-profit organisations. Submissions close on August 29 with a report to be released in November.
World Vision head Tim Costello described the non-profit sector as in dire need of reform. "We don't have a single regulatory system or uniform accounting standards and so it makes it confusing for the public to know who to trust, or who is efficient," he said.
"There are 700,000 not for profit organisations and the latest fad today is under 30's wanting to start their own not for profit equivalent of what in my day was starting a rock band.
"There are also a lot of celebrities and sports stars setting up charities in their own name or naming it after their child. These have a lot of overheads and it isn't fair on the ATO to have to regulate this.
"I would much prefer the Warren Buffett way, who decided to put his money in with Bill Gates. To me that is much more impressive than someone having their own name on a charity."
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