Tax Concessions Granted to Charities – an International Comparison (1 April 2016)

Centre for Financial Regulation and Economic Development
Faculty of Law, The Chinese University of Hong Kong
Taxation Law Research Programme (TLRP)
Asian Institute of International Financial Law
Faculty of Law, The University of Hong Kong

Joint CFRED – TLRP Tax Seminar

Tax Concessions Granted to Charities –
an International Comparison

Dr Fiona Martin
School of Taxation and Business Law, UNSW, Sydney

Chaired by: Professor Xu Yan, Faculty of Law, CUHK

Friday, 1 April 2016, 12:30 -1:30 pm
CUHK Graduate Law Centre, LT1
2/F Bank of America Tower
12 Harcourt Road, Central, Hong Kong

Taxation concessions are commonly granted to non-profit organisations (NPOs), both in common law countries and those with civil law backgrounds. These concessions are a significant cost to the relevant government’s tax revenue, for example, the Australian Treasury estimates that the annual concession costs the revenue $1.3 billion. Dr Martin’s work investigates and compares the range of concessions granted in Australia, England, USA, Germany, Japan, Taiwan and Hong Kong. In order to understand how the concessions are granted, the legal concepts that define not-for-profit/non-profit; charity; public benefit and tax deductibility of donations needed to be understood in the context of each jurisdiction. It was found that although there are core areas of commonality there are some differences in the definitions and treatment of NPOs and charities. Critical findings include the significance and widespread use of the exemption from income tax of income of charities. In Australia, all income of charities is exempt, however in other countries eg the USA and Japan, the exemption only extends to income that is used for their public benefit purpose. Charitable income that arises from business activities is subject to income tax. Another significant area of difference is the treatment of donations. In Australia all donations to specified NPOs (and some government agencies) are deductible from income tax. In other jurisdictions there are limits to the tax deductibility of donations and in England there is a different approach involving a tax rebate granted to the charity.

Dr Fiona Martin is an Associate Professor in the School of Taxation and Business Law, UNSW, Australia. Her expertise and research are in the taxation law area and in particular how it relates to charities and interacts with issues relating to human rights and traditional land owners. Dr Martin has published many articles in highly regarded international and local refereed journals on such issues as whether or not Australia should have a charities commission and taxation of indigenous charities. Her doctoral research was awarded the International Fiscal Association research prize and the ATTA prize for doctoral research and was published as a book by Wolters Kluwer in 2014.