Submission to the Inquiry into the Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill 2012

This submission to the parliamentary inquiry into the Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill 2012 addresses the ‘in Australia’ special conditions for tax concessions and their effect on not-for-profit health and medical research organisations that rely on government funding and donations. Research Australia maintains that health and medical research is an international enterprise: researchers collaborate with overseas colleagues, work on diseases affecting developing countries and spend some funds abroad on conferences, temporary placements and specialist laboratory analysis. It welcomes Treasury’s drafting of section 30-18 of the Income Tax (Transitional Provisions) Act 1997, which allows prescribed medical research institutions that were deductible gift recipients (DGRs) before commencement to be exempted, but raises two concerns. First, the undefined term ‘medical research institution’ should be applied broadly in regulations to cover independent medical research institutes, university-affiliated institutes, university departments and major hospitals, noting that the Assistant Treasurer’s second reading speech referred only to ‘institutes’. Second, the exemption covers only organisations that were DGRs before the legislation commenced, so new and merged organisations would need to be named in legislation. Research Australia recommends that the Income Tax Assessment Act 1997 be amended so that both existing and new medical research organisations can be prescribed by regulation, with appropriate integrity controls.