Victorian Nationals: Daniel Andrews’ 43rd new tax – a tax on charities

Through new laws late in 2021 and expanded interpretation, Daniel Andrews is imposing a new tax on charities, Labor’s 43^rd new or expanded tax since coming to office in 2014.

Quietly, in late 2021, with an introduction date of 1 January 2022, Labor has narrowed the Land Tax exemption for charitable institutions by harshly insisting that charitable institutions “exclusively” use their land for charitable purposes.

This sharp and rigid new interpretation means churches and other charities, potentially sporting clubs, who occasionally use their hall or other facilities for dance classes, calisthenics, choirs and other local groups are likely to be hit with a Land Tax on their entire premises.

Daniel Andrews’ scrooge like interpretation means that where a fee is paid it may well be regarded as a commercial transaction and Land Tax will therefore be levied under the new rules on the entire landholding.

Churches will be forced to reconsider the casual hire of their hall for local community functions, birthday parties and other celebrations.

The bill that went through Parliament late in 2021, the Windfall Gains Tax and State Taxation and Other Acts Further Amendment Bill 2021, was opposed by the Opposition but supported by key Labor voting independents including Fiona Patten, Samantha Ratnam, Andy Meddick and Clifford Hayes.

The State Revenue Office has issued LTA-009 – Land Tax – Charity Exemption that makes it clear that land is exempt from Land Tax under section 74 of the Land Tax Act 2005 if the Commissioner of State Revenue determines that, “a. Land is used and occupied by a charitable institution (charity) exclusively for charitable purposes (section 74(1)(a) of the Act – referred to as a current charity exemption in this ruling)”.  Exemptions are also available for land owned by a charity and vacant and land owned by a charity and leased for outdoor sporting and recreational activities.

But, under Labor’s new charities tax, exemptions do not apply if indoor spaces such as church halls are casually rented or leased by the hour to small local enterprises or other activities.  The charitable institution, under Daniel Andrews’ new rules, is then charged the full Land Tax.

Clearly, where a charity leases to a substantial and obviously commercial enterprise, some Land Tax may be appropriate.  But incidental or minor hiring to ballet schools, public speaking groups, choirs or scouts should not attract a massive Land Tax slug.

It is not clear how much Daniel Andrews will raise from his sneaky new tax on charities, but if full Land Tax is levied on charitable halls, church halls and casual leasings across the state, Andrews and Treasurer Tim Palls may scoop in tens of millions of dollars.

Shadow Treasurer, David Davis MP, said: “This is a nasty new tax that will hurt charities and make it harder for them to do their good works. 

“Daniel Andrews’ new charities tax will clobber and punish small scale groups such as dance classes, calisthenics, choirs and local debating societies just as they recover from the impact of COVID. 

“It is nasty, it is harsh and it is wrong and the Liberals and Nationals will reverse Labor’s sneaky new charities tax.

“Daniel Andrews is addicted to new taxes with the state tax take increasing by 80% since 2013-14.  He has squandered taxpayers’ money on more than $30 billion of cost overruns through his mismanagement of major projects.  No wonder Victorians are feeling the increasing costs of living and the new taxes.  Andrews is now so desperate for money he has resorted to imposing a new tax on charities.”