New QLD Tax Public Ruling supports community housing charities

Government support for Community Housing Charities

 

In Queensland, one of the primary ways that the Government supports charities is by providing them with access to exemptions from certain state-based taxes (most notably transfer duty, land tax, and payroll tax). The pre-condition to accessing these exemptions is registration as a ‘charitable institution’ by the Queensland Revenue Office (QRO).

Another way that the Government supports charities is by providing them with funding and grants. For community housing charities, access to funding and grants is generally conditional upon being a registered housing provider with the Housing Registrar pursuant to the National Regulatory System for Community Housing (NRSCH).

Access to both tax exemptions and funding/grants is critical to the viability of many community housing charities as they allow them to do more for our community with less. You can read more about Queensland charity tax exemptions here, and federal charity tax exemptions here.

 

The Impossible Choice

 

Recently, an issue has arisen whereby an incompatibility between the Housing Act 2003 (Qld) and the Tax Administration Act Qld (2001) has meant that Queensland housing charities have had to choose between being a registered charitable institutions or a housing provider with the NRSCH.

Put another way, Queensland housing charities have had to make the impossible choice between access to:

1. state tax exemptions from transfer duty, land tax and payroll tax; or
2. grants and funding available for NRSCH housing providers.

The technical incompatibility has been that compliance with the winding up / cancellation of registration requirements of one regime has technically meant non-compliance with the winding up / cancellation of registration requirements of the other.

This technical incompatibility has existed for years but has only recently presented as a problem when housing charities have sought registration as a charitable institution with QRO. This means that during the period of incompatibility, many community housing charities would have unknowingly been at risk of having their existing registrations cancelled.

 

The Solution

 

In order to address the impossible choice faced by Queensland community housing charities, the QRO has issued the following new Public Ruling TAA149C.4.1: Registration of community housing providers as charitable institutions—administrative arrangement (Public Ruling). The Public Ruling is accessible here.

The effect of the Public Ruling is that:

1. An administrative arrangement is established whereby the QRO recognises that a charity will not be refused registration solely because its constitution provides for the requirements in accordance with the NRSCH or equivalent regulatory framework. This opens the door for more community housing providers to register as charitable institutions. This will enable them to do more for less with their resources;

 

2. The Commissioner will not cancel existing registrations solely because its constitution provides for the requirements in accordance with the NRSCH or equivalent regulatory framework. This effectively regularises existing technical non-compliance;

 

3. Previously refused applications solely due to this issue may now be registered with their registration back-dated to when they would otherwise have been entitled to registration. This recognises that the incompatibility was unintentional and opens the door for reassessment on tax paid; and

 

4. The Commissioner will now consider applications for tax reassessments up to a period of 5 years (the legislative maximum) for community housing charities that would have otherwise been entitled to exemption during this period. For example, a community housing charity that paid transfer duty on the acquisition of community housing assets may now seek a reassessment and refund a of duty paid.

 

Observations

 

The Public Ruling is an important signal from the Government that it supports community housing charities in Queensland, especially in the midst of a housing and costs of living crisis.

Although the Public Ruling provides community housing charities with an immediate solution, the growing number of Public Rulings issued with respect to section 149C of the Tax Administration Act Qld (2001) indicates that it is time for a wholesale overhaul of the provision.

 

How can we help?

 

Vocare Law is proud to have been involved in making submissions to the QRO and the Queensland Treasurer’s office about this issue. The outcome is good for the sector and the community as a whole.

If your charity requires assistance navigating the implications of this Public Ruling, including access to charitable institution registration and associated tax reassessments, please contact our office.

 

Vocare Law is well equipped to assist our charity and not-for-profit clients with a wealth of collective knowledge and over two decades experience providing insight and advice in this area. Please don’t hesitate to contact our office if you have any questions on ensuring your charity is maximising its tax concessions. Contact us on 1300-VOC-LAW / 1300-862-529 or email: enquiry@vocarelaw.com.au

 

This article was written by Paul Neville, Senior Associate.

 

**The information contained herein does not, and is not intended to, constitute legal advice and is for general informational purposes only.