Bid to close tax loophole

Rueben HaleThe West Australian

The conservative parties are headed for a clash over tax reform legislation.

In June, the WA State Government introduced a controversial Taxation Legislation Amendment Bill to close a tax loophole to exclude charity, otherwise known as fourth leg organisations, which has been established for the promotion of trade and industry from claiming an exemption for payroll and land tax.

Co-operative grain giant CBH currently qualifies under the existing legislation as a fourth leg organisation and last year accrued $38 million in tax savings as a result of the loophole.

Furthermore, it is also understood the co-operative stands to gain $10 million next year from the savings and then around $6 million each year after that, under the current legislation.

In September, a Senate Standing committee was set up to inquire into the controversial Bill, which had been drafted to amend the legislation loophole.

But _Countryman _understands the cash-strapped State Government has already allocated the expected $48 million it will save by closing the loophole to forward estimates, before the Bill has been passed in the Upper House.

In Parliament last month, Nationals MP Colin Holt said it has been stated that the Bill may have an effect on agricultural associations, growers' and co-operatives, which may not have been foreseen and the current ambiguity over who will be impacted is a troubling factor for the party.

"It will be useful to send the Bill to the Standing Committee on Legislation to address that," he said.

"Some of the confidentiality provisions in the Taxation Administration Act 2003 restricted our ability to get information, so it will be useful for the committee to look at whether the Bill will have an unintended impact."

WA Labor Member for the Agricultural Region Darren West said he was concerned the legislation had been drawn up by the Government to target fourth leg organisations.

"It's a good sign that the Nationals' language so far is that they're prepared to stand up for the people in the bush on this issue," he said

"We would certainly appreciate the Nationals' support to amend the Bill to ensure CBH and thereby its growers retain these exemptions."

Meanwhile a CBH spokeswoman said the tax savings made by the co-operative were either passed back to its growers or used for community programs.

"Some of the funds received through the tax refund contributed towards a rebate from CBH Operations in 2013," she said.

"Additional funds were put towards the CBH community investment program and sponsorships. These projects include an air strip maintenance program for the Royal Flying Doctors service and the sponsorship of a unit at Ronald McDonald House, among others.

"The community fund has gone from $350,000 annually to $1.5 million a year, funded and this increase was possible through the tax rebate."

The spokeswoman said CBH received an exemption from taxes primarily on the basis of its objects and activities. That includes promoting and fostering the development of the Australian agriculture industry.

"CBH's co-operative structure also ensured that all of these funds as a result of the exemptions are retained for its objects and activities, and ultimately benefit the WA grain growers," she said.

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