Inserts for
EXPOSURE DRAFT

Tax and Superannuation Laws Amendment (2014 Measures No. 3) Bill 2014: in Australia special conditions

Commencement information	
Column 1	Column 2	Column 3	
Provision(s)	Commencement	Date/Details	
1.  Schedule ?—Restating and standardising the special conditions for tax concession entities	The day after this Act receives the Royal Assent.		
Schedule ?—Restating and standardising the special conditions for tax concession entities
Part 1—Deductible gift recipients
Income Tax Assessment Act 1997
1  Subsection 30‑15(2) (paragraph (a) of the cell at table item 1, column headed “Special conditions”)
Repeal the paragraph, substitute:
(a) the fund, authority or institution must satisfy the conditions in section 30‑18; and	
2  At the end of Subdivision 30‑A
Add:
30‑18  Fund, authority or institution must operate in Australia etc.
	(1)	Subject to subsections (5) and (6), a fund, authority or institution satisfies the conditions in this section if:
	(a)	it is established in Australia; and
	(b)	it operates solely in Australia; and
	(c)	it pursues its purposes solely in Australia.
	(2)	Despite subsection (1), a fund, authority or institution that operates or pursues its purposes outside Australia does not fail the conditions in paragraphs (1)(b) and (c) merely because:
	(a)	its activities outside Australia are merely incidental to its operations and pursuit of purposes in Australia; or
	(b)	its activities outside Australia are minor in extent and importance when considered with reference to its operations and pursuit of purposes in Australia.
	(3)	Subject to subsection (4), if a fund, authority or institution provides money, property or benefits to another entity that is not a *deductible gift recipient, take into account the use of the money, property or benefits by that other entity (or any other entity) when determining whether the fund, authority or institution satisfies the conditions in paragraphs (1)(b) and (c).
	(4)	For the purposes of applying subsection (3), take into account the use of the money, property or benefits by an entity outside Australia only to the extent that it would be reasonable to expect the fund, authority or institution to have knowledge of, or to obtain knowledge of, the use of the money, property or benefits outside Australia.
	(5)	A fund, authority or institution established and maintained solely for the purpose of providing money for scholarships, bursaries or prizes to which section 30‑37 applies satisfies the conditions in this section if it satisfies the condition in paragraph (1)(a).
	(6)	A fund, authority or institution covered by section 30‑80 (international affairs deductible gift recipients) satisfies the conditions in this section if it satisfies the condition in paragraph (1)(a).
	(7)	For the purposes of determining whether a fund, authority or institution (the parent entity) satisfies the conditions in paragraphs (1)(b) and (c), disregard the activities of any other fund, authority or institution covered by subsection (8) or section 30‑80 that is operated by the parent entity.
	(8)	A fund, or an organisation that maintains a fund, covered by item 6.1.1 of the table in subsection 30‑55(1) (register of environmental organisations) satisfies the conditions in this section if:
	(a)	it satisfies the condition in paragraph (1)(a) of this section; and
	(b)	the *Environment Minister makes a determination in relation to the fund or organisation under subsection 30‑19(1).
	(9)	A fund, or an organisation that maintains a fund, covered by item 12.1.1 of the table in subsection 30‑100(1) (register of cultural organisations) satisfies the conditions in this section if:
	(a)	it satisfies the condition in paragraph (1)(a); and
	(b)	the *Arts Minister makes a determination in relation to the fund or organisation under subsection 30‑19(2).
	(10)	Disregard the use of the following amounts in determining whether a fund, authority or institution satisfies the conditions in this section:
	(a)	a grant from a *government entity for the purpose of allowing the fund, authority or institution to carry on activities outside Australia;
	(b)	a payment under a contractual arrangement from a government entity for the purpose of allowing the fund, authority or institution to carry on activities outside Australia.
30‑19  Determination by Environment Minister or Arts Minister
	(1)	The *Environment Minister may make a determination in relation to a fund, or an organisation that maintains a fund, if the Environment Minister considers that the fund or organisation meets the requirements specified in the regulations for the purposes of this subsection.
	(2)	The *Arts Minister may make a determination in relation to a fund, or an organisation that maintains a fund, if:
	(a)	the fund or organisation is a *touring arts organisation; and
	(b)	the Arts Minister considers that the fund or organisation meets the requirements specified in the regulations for the purposes of this subsection.
Meaning of touring arts organisation
	(3)	A fund, or an organisation that maintains a fund, is a touring arts organisation if it:
	(a)	is a *cultural organisation that is entered on the register of cultural organisations; and
	(b)	has the principal purpose of promoting the performing arts; and
	(c)	meets the requirements specified in the regulations for the purposes of this subsection.
Review of determination
	(4)	A fund, or an organisation that maintains a fund, may apply to the *AAT for review of a decision (as defined in the Administrative Appeals Tribunal Act 1975):
	(a)	to make a determination under subsections 30‑19(1) or (2) in relation to the fund or organisation; or
	(b)	to not make a determination under that subsection in relation to the fund or organisation.
3  Subsection 30‑25(2) (table items 2.2.28, 2.2.33 and 2.2.39)
Repeal the items.
4  Subsection 30‑40(2) (table item 3.2.13)
Repeal the item.
5  Subsection 30‑45(2) (table items 4.2.1 and 4.2.28)
Repeal the items.
6  Subsection 30‑55(2) (table item 6.2.22)
Repeal the item.
7  Subsection 30‑80(1) (at the end of the table)
Add:
9.1.3	an authority or institution that:
(a) is engaged solely in research into the causes, prevention or cure of disease in human beings; and
(b) undertakes its research in collaboration with other institutions or authorities outside Australia	none	
8  Subsection 30‑80(2) (at the end of the table)
Add:
9.2.26	Australian‑American Educational Foundation	the gift must be made after 30 April 2003	
9.2.27	International Specialised Skills Institute Incorporated	the gift must be made after 11 August 2005	
9.2.28	The Charlie Perkins Scholarship Trust	the gift must be made after 1 August 2010	
9.2.29	United States Studies Centre	the gift must be made after 26 July 2009	
9.2.30	Amnesty International Australia	none	
9.2.31	International Social Service Australia	the gift must be made after 17 March 2004	
9.2.32	the World Wide Fund for Nature Australia		
9  Subsection 30‑280(1)
Repeal the subsection, substitute:
	(1)	The *Environment Secretary must enter on the register:
	(a)	each *environmental organisation, and the public fund that it maintains, that he or she has been directed to enter by the Treasurer and the *Environment Minister; and
	(b)	each environmental organisation for which a determination has been made under subsection 30‑19(1).
10  Subsection 30‑305(1)
Repeal the subsection, substitute:
	(1)	The *Arts Secretary must enter on the register:
	(a)	each *cultural organisation, and the public fund it maintains, that he or she has been directed to enter by the Treasurer and the *Arts Minister; and
	(b)	each cultural organisation for which a determination has been made under subsection 30‑19(2).
11  Section 30‑315 (cell at table item 3, column headed “Provision”)
Repeal the cell, substitute:
item 9.2.30	
12  Section 30‑315 (after table item 12)
Insert:
12A	Australian‑American Educational Foundation	item 9.2.26	
13  Section 30‑315 (table item 30A)
Repeal the table item, substitute:
30A	Charlie Perkins Scholarship Trust	item 9.2.28	
14  Section 30‑315 (cell at table item 63A, column headed “Provision”)
Repeal the cell, substitute:
item 9.2.31	
15  Section 30‑315 (cell at table item 63B, column headed “Provision”)
Repeal the cell, substitute:
item 9.2.27	
16  Section 30‑315 (cell at table item 118B, column headed “Provision”)
Repeal the cell, substitute:
item 9.2.29	
17  Section 30‑315 (cell at table item 127, column headed “Provision”)
Repeal the cell, substitute:
item 9.2.32	
18  Paragraph 31‑10(2)(a)
Repeal the paragraph, substitute:
	(a)	satisfy the requirements in section 30‑18; and
19  Subsection 995‑1(1)
Insert:
touring arts organisation has the meaning given by subsection 30‑19(3).
Part 2—Tax exempt entities
Income Tax Assessment Act 1936
20  Paragraph 23AG(1AA)(c)
Omit “paragraph 50‑50(1)(c) or (d)”, substitute “paragraph 50‑51(2)(c) or (d)”.
Income Tax Assessment Act 1997
21  Before Subdivision 50‑A
Insert:
Guide to Division 50
50‑1  What this Division is about
Certain entities that satisfy the conditions in this Division may be endorsed as exempt from income tax.
An entity will not generally be exempt from income tax unless it satisfies all of the following conditions:
•	it operates principally in Australia;
•	it pursues its purposes principally in Australia;
•	it complies with all of the substantive requirements in its governing rules;
•	it applies its income and assets solely to pursue the purposes for which it is established;
•	it is a non‑profit entity.
Certain entities are not required to satisfy all of these conditions.
22  Section 50‑1
Renumber as section 50‑3.
23  Section 50‑5 (cells at table items 1.3 and 1.4, column headed “Special conditions”)
Repeal the cells, substitute:
see section 50‑50	
24  Section 50‑5 (cells at table items 1.6 and 1.7, column headed “Special conditions”)
Repeal the cells, substitute:
see section 50‑50	
25  Section 50‑10 (cell at table item 2.1, column headed “Special conditions”)
Repeal the cell, substitute:
see section 50‑50	
26  Section 50‑15 (cell at table item 3.1, column headed “Special conditions”)
Repeal the cell, substitute:
the association:
(a)	is registered or recognised under the Fair Work (Registered Organisations) Act 2009 or an *Australian law relating to the settlement of industrial disputes; and
(b) satisfies the conditions in section 50‑50.	
27  Section 50‑15 (cell at table item 3.2, column headed “Special conditions”)
Repeal the cell, substitute:
see section 50‑50	
28  Section 50‑30 (cell at table item 6.1, column headed “Special conditions”)
Repeal the cell, substitute:
see section 50‑50	
29  Section 50‑30 (cell at table item 6.2, column headed “Special conditions”)
Omit “section 50‑55”, substitute “section 50‑50”.
30  Section 50‑45 (cells at table items 9.1 and 9.2, column headed “Special conditions”)
Repeal the cells, substitute:
see section 50‑50	
31  Section 50‑50
Repeal the section, substitute:
50‑50  Special conditions for certain items
General
	(1)	An entity covered by item 1.1, 1.3, 1.4, 1.6, 1.7, 2.1, 3.1, 3.2, 6.1, 6.2, 9.1 or 9.2 is not exempt from income tax unless it:
	(a)	is a non‑profit entity; and
	(b)	satisfies the conditions in subsection (2) (about operating and pursuing its purposes in Australia); and
	(c)	satisfies the conditions in subsection (3).
Operating and pursuing purposes in Australia
	(2)	The entity must:
	(a)	operate principally in Australia; and
	(b)	pursue its purposes principally in Australia.
Other conditions
	(3)	The entity must:
	(a)	comply with all the substantive requirements in its governing rules; and
	(b)	apply its income and assets solely for the purpose for which the entity is established.
	(4)	Subject to subsections (4A) and (5), if an entity provides money, property or benefits to another entity that is not an *exempt entity, the use of the money, property or benefits by the recipient (or any other entity) must be taken into account when determining whether the first mentioned entity satisfies the requirements in paragraphs (2)(a) and (b).
	(4A)	For the purposes of applying subsection (4), take into account the use of the money, property or benefits by an entity outside Australia only to the extent that it would be reasonable to expect the first‑mentioned entity to have knowledge of, or to obtain knowledge of, the use of the money, property or benefits outside Australia.
	(5)	If the entity complies with the conditions (if any) prescribed in the regulations for the purposes of this subsection, disregard the use of the following amounts in determining (for the purposes of this Subdivision) whether an entity operates and pursues its purposes in Australia:
	(a)	an amount received by the entity as a grant from a *government entity;
	(b)	an amount received by the entity as a gift or contribution (whether of money or other property) in circumstances where the provider:
	(i)	was not entitled to a deduction under Division 30 in respect of the gift or contribution; and
	(ii)	is not an *exempt entity.
50‑51  Exemption from conditions about non‑profit entities and entities pursuing their purposes in Australia
	(1)	The condition in paragraph 50‑50(1)(a) does not apply to the following entities:
	(a)	an entity covered by section 50‑15 (about employers and employees);
	(b)	a *government entity covered by item 1.4 in the table in section 50‑5 (about public educational institutions);
	(c)	a government entity covered by item 6.1 in the table in section 50‑30 (about public hospitals).
	(2)	The conditions in subsection 50‑50(2) do not apply to any of the following:
	(a)	an entity endorsed as a *deductible gift recipient (other than in respect of operating a fund, authority or institution);
	(b)	an entity endorsed as a deductible gift recipient for the operation of a fund, authority or institution, to the extent that it operates that fund, authority or institution;
	(c)	an entity that:
	(i)	is a foreign resident that is exempt from *foreign income tax in the country in which it is resident; and
	(ii)	is prescribed in the regulations for the purposes of this subsection; and
	(iii)	satisfies the conditions (if any) prescribed in the regulations for the purposes of this subsection;
	(d)	an entity that:
	(i)	is an Australian resident; and
	(ii)	operates and pursues its purposes principally outside Australia; and
	(iii)	is prescribed in the regulations for the purposes of this subsection; and
	(iv)	satisfies the conditions (if any) prescribed in the regulations for the purposes of this subsection;
	(e)	an entity described by name in Subdivision 30‑B.
Note:	Different requirements apply to deductible gift recipients: see section 30‑18.
32  Sections 50‑55, 50‑65, 50‑70, 50‑72 and 50‑75
Repeal the sections.
33  Subparagraphs 320‑37(1)(d)(i) and (iii)
Omit “under section 50‑1”, substitute “under former section 50‑1”.
Part 3—Miscellaneous amendments
Income Tax Assessment Act 1936
34  Section 24AT (paragraphs (c) and (d) of the definition of excluded STB)
Omit “to which any of paragraphs 50‑55(1)(a) to (c) of the Income Tax Assessment Act 1997 applies”, substitute “that meets the conditions in sections 50‑50 and 50‑51 of the Income Tax Assessment Act 1997”.
35  Section 121C (paragraph (a) of the definition of overseas charitable institution)
Omit “if the institution had a physical presence in Australia and incurred its expenditure and pursued its objectives principally in Australia”, substitute “if it satisfied the conditions in subsection 50‑50(2) of that Act”.
Income Tax Assessment Act 1997
36  Section 207‑117
Repeal the section, substitute:
207‑117  Residency requirement
		An entity satisfies the residency requirement for the purposes of determining whether, at the time a *franked distribution is made, the entity is an *exempt institution that is eligible for a refund, if it satisfies the conditions in section 50‑50 at all times during which the entity existed during the income year in which the distribution is made.
Taxation Administration Act 1953
37  At the end of Division 353 in Schedule 1
Add:
353‑30  Checking status of tax exempt entities
	(1)	The Commissioner may require an entity that is a prescribed entity mentioned in paragraph 50‑51(2)(c) or (d) of the Income Tax Assessment Act 1997 to give the Commissioner information or a document that is relevant to its status as a prescribed entity. The entity must comply with the requirement.
Note:	Failure to comply with this subsection is an offence against section 8C of this Act.
	(2)	If the Commissioner is satisfied of any of the matters set out in subsection (4) in relation to an entity that is a prescribed entity mentioned in paragraph 50‑51(2)(c) or (d) of the Income Tax Assessment Act 1997, the Commissioner must, within 28 days, give written notice to the Minister about that fact.
	(3)	The Minister may only disclose information provided under subsection (2) for a purpose relating to the entity’s status as a prescribed entity mentioned in paragraph 50‑51(2)(c) or (d) of the Income Tax Assessment Act 1997.
	(4)	The matters are as follows:
	(a)	there is a change in the principal purpose of the entity;
	(b)	the entity fails or ceases to comply with any rules or conditions made by the Prime Minister or any other Minister relating to the recipient being a prescribed entity mentioned in paragraph 50‑51(2)(c) or (d) of the Income Tax Assessment Act 1997.
	(5)	The requirement in subsection (1):
	(a)	is to be made by notice in writing to the entity; and
	(b)	may ask the entity to give the information in writing; and
	(c)	must specify:
	(i)	the information or document the entity is to give; and
	(ii)	the period within which the entity is to give the information or document.
The period specified under subparagraph (c)(ii) must end at least 28 days after the notice is given.
	(6)	In a prosecution of a person for an offence against section 8C of this Act because of this section as it applies because of Division 444 in this Schedule (about obligations of entities on behalf of other entities), it is a defence if the person proves that the person:
	(a)	did not aid, abet, counsel or procure the act or omission because of which the offence is taken to have been committed; and
	(b)	was not in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the act or omission because of which the offence is taken to have been committed.
Part 4—Application and transitional provisions
38  Application of amendments
(1)	Subject to subitem (2), the amendments made by Part 1 of this Schedule apply to a fund, authority or institution from the day this item commences.
(2)	Despite subitem (1), the amendments made by Part 1 of this Schedule apply to a fund, authority or institution from the day that is 12 months after the day that this item commences if:
	(a)	the fund, authority or institution is a deductible gift recipient just before the day the Bill for this Act was introduced into the House of Representatives; and
	(b)	does not satisfy the conditions in new subsection 30‑18(1) of the Income Tax Assessment Act 1997 at the time this item commences.
(3)	The amendments made by Parts 2 and 3 of this Schedule apply to income years starting on or after the commencement of this item.
39  Transitional provisions
	Regulations:
	(a)	made for the purposes of section 50‑50, 50‑55 or 50‑70 of the Income Tax Assessment Act 1997; and
	(b)	in force just before the commencement of this item;
have effect from that commencement as if they had been made for the purposes of subsection 50‑51(2) of that Act as inserted by this Schedule.