As part of its plan to overhaul the system that determines which charities can receive tax deductible donations, the Productivity Commission has announced it will seek to strip Queensland Sugar Limited's charity status after an inquiry into philanthropy.
QSL is one of two Queensland organisations mentioned in Productivity Commission's draft report Future foundations for giving released last month, which said, "activities that have the charitable purpose of 'advancing industry' should also be excluded".
This charity status which allows QSL, a registered not-for-profit, eligible for payroll tax and other tax concessions, including GST, in the last financial year reported a gross income of in excess of $1,2 billion.
The proposed overhaul is part of a package of reforms proposed in the draft report of their philanthropy inquiry.
In the draft report, the commission said it "has previously been critical of granting charity status (and the associated tax concessions) to agricultural trading companies such as Co-operative Bulk Handling Limited and Queensland Sugar Limited, and recommended that the Australian Government should legislate to exclude agricultural commodity trading companies from being granted charity status and receiving the associated tax concessions".
There is no suggestion that either company receiving tax concessions have committed any impropriety.
But QSL's CEO and managing director Greg Beashel, said not all agricultural commodity traders are the same.
"QSL is a not-for-profit, industry-owned service organisation whose purpose is to promote the long-term prosperity of the Queensland sugar industry rather than to maximise profits for shareholders," Mr Beashel said.
"We do this by providing sugar marketing and bulk sugar terminal operations services to Queensland sugar producers on a cost-recovery basis, with net profits generated by our activities returned to the thousands of Queensland cane farmers and sugar millers who choose to use our services.
"As such, the Australian Charities and Not-for-profits Commission has determined that we meet their requirements for charity status (and) removing this status will impose additional costs on the farmers and millers we represent for no material change to the federal government's tax position."
When asked if QSL felt the decision was fair, Mr Beashel replied, "the Productivity Commission is entitled to its opinion".
However, Mr Beashel confirmed it would seek to retain its charity status.
"QSL always seeks to minimise its operating costs in order to maximise the returns we pass back to industry," he said.
"As such, we intend to continue to retain our charity status as long as the ACNC deems we meet their requirements."
Agforce CEO Micheal Guerin said the draft report was "a complex document".
"There are a significant number of impacts for agriculture in the draft report, and Agforce will be making a long and strong formal submission," he said.
"In regard to QSL, their charity status has been there for a long time and was set up initially to provide support to producers."
According to the federal government's ACNC, QSL's charity status, which is categorised as large, was registered on December 23, 1999.
The summary of its activities is listed as, "continued to promote the development of the Australian sugar industry through providing services to all of Queensland's growers and millers. QSL's role continues to support the long term prosperity and sustainability of the Queensland sugar industry".
"All of the proceeds from QSL's activities are reinvested into the Queensland sugar industry to reduce costs for all participants of the Queensland sugar's industry," the listing said.
"This supports Queensland's regional areas where sugar is produced."
Productivity Commission Associate commissioner Krystian Seibert said the report proposes a simpler, fairer and more transparent process for determining which charities can receive tax-deductible donations.
He said the draft report finds that the 'deductible gift recipient' (DGR) system, which determines the charities that are eligible for tax-deductible donations, is not fit for purpose.
"Tax incentives influence giving - but the DGR system is poorly designed, overly complex and excludes many causes without a coherent policy rationale," Mr Seibert said.
Given a lack of accurate and comparable information on corporate giving in Australia, the draft report also proposes that listed companies be required to publicly report information on their donations of money, goods and time to charities with DGR status.
Final submissions to the draft report close on February 9, 2024 and public hearings start three days later.
Know more about this issue? Contact Alison Paterson on 0437 861 082.
