Treasury has announced that implementation of the unrelated commercial activities tax will be further delayed to 1 July 2014.  The tax remains retrospective for those unrelated commercial activities that commenced after 7:30 PM on 10 May 2011, subject to passing the enabling legislation.  This leaves charities with uncertainty regarding the tax status of their commercial activities.

Essentially, business activities that are not related to a charitable purpose or the not-for-profit object of an entity that otherwise enjoys tax concessions will be subject to tax:

• if commenced after 7:30 PM on 10 May 2011 –     from 1 July 2014;
• if commenced prior to 7:30 PM on 10 May 2011 –  from 1 July 2015;

In both cases only on income earned after the respective date.

Business activities that are related to a charitable purpose or the not-for-profit objects are not affected.  Naturally those entities that enjoy tax concessions are concerned as to the manner in which they can ensure that their business activities are not affected by the tax.  It seems that there is still some way to go in getting clarity on this.

It is likely that Treasury will continue to consult with the sector on the imposition of the tax.