Legislation was passed through Parliament on 26 June 2008 that will protect charitable sector employees from the former Government’s Child Support Reforms of 2006, which had major unintended consequences for the community sector, threatening the future of salary sacrificing.
The Government moved urgent amendments to the Families, Housing, Community Services and Indigenous Affairs and other Legislation Amendment (2008 Budget and Other Measures) Bill 2008 to protect not-for-profit employees as its adverse impact on the sector became clear.
The new legislation reversed the changes to the treatment of Fringe Benefits Tax for the purposes of assessing Family Tax Benefit, which were introduced in 2006 and were to come into effect on 1 July 2008.
Charities and other non-government organisations have traditionally used salary packaging to compensate workers for low wages. Changes to income calculations under the 2006 legislation (due to come into effect on 1 July this year) would have raised the employee’s salary for the purpose of assessing relevant amounts of family benefits, effectively resulting in a cut in income for what is already a poorly remunerated group.
The passage of the legislation comes after Australian Greens Senator Siewert referred the issue to a Senate committee for inquiry. UnitingCare Australia’s National Director, Lin Hatfield Dodds, and Chair, Peter Bicknell, presented evidence at the inquiry, alongside ACOSS, Catholic Social Services Australia, the Salvation Army, the Charities Tax Advisory Service and the ASU.
UnitingCare Australia and other groups called on the Government to overturn the 2006 changes to stop the immediate impact on not-for-profit organisations, and after three days of intense activity, the Government responded swiftly by moving their urgent and very welcome amendment.
The Inquiry last Friday highlighted a raft of broader sector capacity and viability issues. Leading the Greens to propose an amendment to lift the tax-free threshold on fringe benefits for charities and other not-for-profit organisations from $30 000 to $40 000. The amendment was rejected, but we remain hopeful that viability issues are now on the national radar. UnitingCare Australia met with Senator Ursula Stephens, Parliamentary Secretary for the Voluntary Sector, yesterday who
assured us that the ongoing viability of the community sector is a serious concern for government and will be a key element in dialogue as we move to develop a compact between government and our sector.
For more information see http://www.jennymacklin.fahcsia.gov.au/internet/jennymacklin.nsf/content/charitable_sector_26jun