Government Announcements
2009-10 Budget: Word Investments case
12.05.2009
The Government has announced in the 2009-10 Budget its interim response to the High Court’s decision in FCT v Word Investments Ltd.
The “in Australia” requirements in Div 50 ITAA 1997 are to be amended to ensure that Parliament retains the ability to fully scrutinise those organisations seeking to pass money to overseas charities and other entities. This measure will have effect from the date of Royal Assent of the amending legislation. The media release states that this measure will reverse the decision that charities and other income tax exempt entities can direct funds to overseas projects outside the current restrictions and will reinstate the principles underlying the current integrity rules.
The media release also notes the competitive neutrality issues that the High Court’s decision may raise and the differing approaches of other countries in dealing with those issues. The Government intends to await the outcome of the Henry Review into Australia’s future tax system and the Productivity Commission’s inquiry into the contribution of the not‑for‑profit sector before further responding to this aspect of the High Court’s decision.
Whilst the Government awaits the reports of the reviews, it has asked Treasury and the Tax Office to monitor the sector and advise it immediately should any adverse implications arise. The Government is prepared to act sooner should any adverse implications arise.
For the text of the media release, click here.
