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Some progress on GST treatment of welfare services, but major tax package changes still needed

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ant By: Media M o n i to r s A u s t r a l i a ;

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Media Release Medle Contact:

Ian Wilson Mob 0419 626155.

Australian Council of Social Service

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619 Elizabeth St Redfern

Locked Bag 4777 Strawberry Hills NSW 2012

Ph [02] 9310 4844 F a x (02)9310 4822

Some progress on GST treatment of welfare services, but major tax package changes still needed

ACOSS President Michael Raper commented today on the release of the GST legislation and the Vos Report on the tax treatment of health, education, soda! welfare and child care services.

T h e fine print of the GST legislation does not alter our deep concern that the living standards of pensioners, unemployed people and low income families will be Jeopardised unless food is removed from the GST", Mr Raper said.

"ACOSS will submit to the Senate that the tax reform package must be modified substantially to make food GST-free. This can be paid for by adjusting the income tax cuts and dosing off more income tax loopholes. The compensation and family assistance arrangements must also be improved."

‘The legislation flags some progress on the GST treatment of community welfare services arising from the Vos Report It appears that the Government Is using a broad definition of the 'charitable Institutions’ which wHI benefit from

GST free status. Also, community welfare sendees will receive some financial assistance with the cost of Implementing the GST."

"However, there are many issues still to be resolved before we can be confident that the essential services needed by low income and disadvantaged people will not be cut back as a result of the tax reform package."

O n e major outstanding concern Is that the provision of many community welfare services will be defined as ‘commercial activities' and taxed accordingly. This would be contrary to the spirit of the Prime Minister’s recant statement that ’It was never the intention at any stage to apply the GST to

the charitable activities of not-for-profit organisations'. The problem arises because governments increasingly require community welfare organisations in areas as diverse as child care, aged care, and employment services to compete for public funding with private sector organisations."

"ACOSS has had a constructive dialogue to data with the Government on toe tax treatment of toe community welfare sector. However, more discussion between the Government and the sector must take place to ensure that the Government’s commitment that services will not be adversely effected is

realised," concluded Michael Raper.

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