RSM Australia

WA state tax exemption for charitable bodies or organisations

How will the changes affect your organisation?

The Taxation Legislation Amendment Act (No. 2) 2015 (WA) introduced amendments to the charitable exemptions available under the Duties Act 2008, the Land Tax Assessment Act 2002 and the Pay-roll Tax Assessment Act 2002. The changes will operate prospectively from 10 March 2015. 

An organisation that is currently exempt from state taxes (payroll tax, land tax and duty) may receive a notice from the commissioner advising that the commissioner has formed a preliminary view that it is a 'relevant body' and as such the organisation’s exemption may be revoked. The commissioner must then decide whether to revoke the organisation’s exemption.

Broadly, the amendments seek to narrow the scope of the existing payroll tax, transfer duty and land tax exemptions as they apply to ‘fourth limb’ charities.

They do this by excluding any ‘fourth limb’ charity that has been established and carried on for the promotion of trade, industry or commerce, unless the sole or dominant purpose of that charity is the relief of poverty, the advancement of education or the advancement of religion. The amendments also exclude professional associations.

Organisations that may be impacted by the changes under the act should immediately review their governing documents, whether in the form of rules, a constitution or trust deed to ensure that they accurately reflect the organisation’s objects and purposes. 

For example, an organisation that promotes trade, industry or commerce may well have as its dominant purpose the advancement of education. If this is the case, the organisation should ensure that this is reflected in the written documentation for the body and not simply generally understood to be the case by group members and the broader community.

If you receive a notice from the commissioner, there are a number of avenues that can be considered to challenge the commissioner’s view. 

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