28th July 2011

Manager
Philanthropy and Exemptions Unit
Personal and Retirement Income Division
The Treasury
Langton Crescent
PARKES ACT 2600

Response to Exposure Draft-‘In Australia’ Special Conditions for Tax Concession Entities

Dear Madam/Sir, 

Request for income tax exemption to be maintained

OMF international Australia is a company endorsed as a charitable institution. It has not sought DGR status. Money that is donated to OMF International is principally used for the payment of salaries of Australians who work overseas, but partly for the payment of salaries of Australians working in Australia and the costs of the Australian infrastructure of the company.

The work of OMF international Australia is carried out by 140 professionals working in Asia and Australia.   They are employees of OMF International Australia, but are part of an umbrella organisation, OMF International. In most Asian nations where OMF International is represented, the members of OMF International work as professionals by supporting the development of the country where they live. This emphasis is consistent with the goals of AusAID. The latter has, in recent years in Papua New Guinea, employed missionaries, as well as church leaders who were the products of missionary work, to train nationals in community development. 

A significant minority of OMF members, in the few Asian nations where missionary visas are issued, work as trainers of national church planters, pastors and evangelists, or in some places, as church planters. Most OMF members are also involved, by default, in the elimination of poverty and injustice among the people groups where they work. This is another of the Australian government’s goals.

There are thousands of donors who donate to OMF International Australia support 140 Australian members in their work in Australia and overseas. They are very aware of the role and activity of the workers they support. As there has been no DGR status sought for OMF International, the donors cannot claim tax reductions for their support. Also, they are giving from incomes that have already been taxed. To deny tax exempt income for the charity they support is a form of double taxation for the donor.

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If this inequity is an unintended effect of the proposed amendments to legislation, I request that the status be maintained of an Australian charitable institution which is not a DGR, if the charity is a prescribed institution under Sec 50-50(d) and is an exempt institution for the purposes of Regulation 50-50-02 of ITAA 1967.

While one commends any efforts by government to frustrate money laundering and to facilitate counter  terrorism, the method suggested in the exposure draft will create difficulties for those who legitimately wish to send money overseas for both humanitarian and religious reasons.

There are also broad implications for churches who send money overseas for humanitarian reasons, or for churches who raise funds through trading enterprises in order to offer community services in Australia, as many churches do not have DGR status. In fact, the distribution of financial support for the disadvantaged by semi-government institutions and local government is often made through such charities, as they provide the scrutiny which allows equitable use of public monies.

I have received pro bono legal opinion that the new bill can protect Australian resident prescribed institutions by an addition to Section 50-51. Sub-section 3 (c) could maintain the status of these institutions. This would require an amendment to 114(2) to include a reference to 3(c).
The previous suggestions maintain the policy intent of Section 23(g) which already recognises the value of prescribed institutions which are Australian residents.

Please clarify whether compliance with the changes proposed in the “In Australia” exposure draft will affect adversely the effectiveness of OMF International Australia in supporting, through its thousands of donors, its Australian employees working in many countries in Asia and in this country.

Yours sincerely,

Johan Linder
Executive Director