Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Act 2024 (52 of 2024)

Schedule 3   New class of deductible gift recipients

Part 2   Amendment of the Taxation Administration Act 1953

Taxation Administration Act 1953

34   At the end of Part 5-35 in Schedule 1

Add:

Subdivision 426-E - Community charity corporations

Guide to Subdivision 426-E

426-175 What this Subdivision is about

This Subdivision deals with philanthropic companies known as community charity corporations .

The Minister must make guidelines determining when community charity corporations are entitled to be endorsed as deductible gift recipients.

This Subdivision also provides for penalties for failures to comply with the guidelines.

Table of sections

Community charity corporations

426-180 Community charity corporations

426-185 Community charity corporation guidelines

426-190 Australian Business Register must show community charity corporation status

Administrative penalties

426-195 Administrative penalties for community charity corporations

Limitation on certain transfers

426-200 Limitation on community charity corporations making certain transfers

Community charity corporations

426-180 Community charity corporations

(1) A company is a community charity corporation if:

(a) the company is:

(i) a *constitutional corporation; or

(ii) a body corporate that is not a constitutional corporation; and

(b) the company is specified in a declaration in force under subsection (3); and

(c) each director of the company has agreed, in the *approved form given to the Commissioner, to comply with the rules in the *community charity corporation guidelines, as in force from time to time; and

(d) none of the directors of the company has revoked that agreement in accordance with subsection (2).

(2) A director may revoke an agreement mentioned in paragraph (1)(c) only by giving the revocation to the Commissioner in the *approved form.

(3) The Minister may, by legislative instrument, declare one or more companies for the purposes of paragraph (1)(b).

426-185 Community charity corporation guidelines

The Minister must, by legislative instrument, formulate guidelines (the community charity corporation guidelines ) setting out:

(a) rules that *community charity corporations and their directors must comply with if the corporations are to be, or are to remain, endorsed as *deductible gift recipients; and

(b) the amount of the administrative penalty, or how to work out the amount of the administrative penalty, under subsection 426-195(1) in relation to community charity corporations.

426-190 Australian Business Register must show community charity corporation status

(1) If a *community charity corporation has an *ABN, the *Australian Business Registrar must enter in the *Australian Business Register in relation to the corporation a statement that it is a community charity corporation.

Note 1: An entry (or lack of entry) of a statement required by this section does not affect whether a company is a community charity corporation.

Note 2: The Australian Business Register will also show if a community charity corporation is endorsed as a deductible gift recipient: see section 30-229 of the Income Tax Assessment Act 1997.

(2) The *Australian Business Registrar must take reasonable steps to ensure that a statement appearing in the *Australian Business Register under this section is true. For this purpose, the Registrar may:

(a) change the statement; or

(b) remove the statement from the Register if the statement is not true.

Administrative penalties

426-195 Administrative penalties for community charity corporations

Administrative penalty

(1) All of the directors of a *community charity corporation are jointly and severally liable to an administrative penalty if:

(a) the corporation, or a director of the corporation, holds out that the corporation is endorsed as a *deductible gift recipient and the corporation is not so endorsed; or

(b) the corporation, or a director of the corporation, holds out that the corporation is entitled to remain endorsed as a deductible gift recipient and the corporation is not so entitled; or

(c) the corporation, or a director of the corporation, holds out that the corporation will be endorsed, as a deductible gift recipient, at a particular time and the corporation is not so endorsed at that time.

Note: The Commissioner is required to give written notice of the penalty (see section 298-10).

(2) The amount of the penalty is:

(a) the amount specified in the *community charity corporation guidelines for the purposes of subsection (1); or

(b) the amount worked out in accordance with the method specified in the community charity corporation guidelines for the purposes of subsection (1).

The guidelines may specify different penalties or methods for different circumstances.

(3) A director who is liable to the penalty must not be reimbursed the penalty from the corporation.

Note: Division 298 in this Schedule contains machinery provisions for administrative penalties.

Defences for directors

(4) Subsection (1) does not apply to a director if:

(a) the director was not aware of the holding out mentioned in paragraph (1)(a), (b) or (c) (whichever applicable) and it would not have been reasonable to expect the director to have been aware of that holding out; or

(b) the director took all reasonable steps to ensure that the holding out mentioned in that paragraph did not occur; or

(c) there were no such steps that the director could have taken.

(5) In determining what is reasonable for the purposes of paragraph (4)(a), (b) or (c), have regard to all relevant circumstances.

(6) A person who wishes to rely on subsection (4) bears an evidential burden in relation to the matters in that subsection.

Power of courts to grant relief

(7) Section 1318 of the Corporations Act 2001 (power of Court to grant relief in case of breach of director's duty) does not apply to a liability of a director under this section.

Limitation on certain transfers

426-200 Limitation on community charity corporations making certain transfers

A *community charity corporation must not provide money, property or benefits to:

(a) another community charity corporation; or

(b) an *ancillary fund; or

(c) a *community charity trust;

unless permitted to do so by the *community charity corporation guidelines.