The Senate on Friday (May 24), passed a Bill making provisions for harmonising the treatment of charitable organisations for the purpose of taxation.
The legislation seeks to harmonise the various tax statutes, and provide standard definitions for the terms “approved charitable organisation” and “charitable purposes” for tax use.
It also amends the Customs Act, the General Consumption Act, the Income Tax Act, the Property Tax Act, the Stamp Duty Act, and the Transfer Tax Act.
Called the Charitable Organisation (Tax Harmonisation) (Miscellaneous Provisions) Act 2013, the Bill was piloted by Minister of Justice, Senator the Hon. Mark Golding.
The Bill is considered a structural benchmark within the Extended Fund Facility (EFF) programme between Jamaica and the International Monetary Fund (IMF).
In his comments, Senator Golding said the legislation is being introduced because a shared concern has emerged between the Government and the multilaterals in relation to the tax treatment of charitable organizations, which allows for significant revenue loss by way of tax expenditures.
“Tax expenditures are ways by which the Government gives up revenue it ought to be collecting or which it has decided not to collect,” Senator Golding said.
He noted that the tax treatment across tax types have been dogged by inconsistency in the definition of a Charity and of charitable purposes, leading to an over abundance of waivers.
“The result is that in the 2010/11 fiscal year the value of waivers granted to charities was in excess of $4 billion and in 2011/2012 it was in excess of $2 billion,” Mr Golding stated.
The legislation also eliminate the need for the exercise of Ministerial power to grant waivers of certain taxes to entities considered to be dedicated to charitable purposes. It insteadconfers that power to the appropriate tax authorities – Customs or Tax Administration Jamaica.
In his comments, Leader of Opposition Business in the Senate, Senator Arthur Williams, while supporting the legislation, said the appropriate regulations should be put in place to guide the systems and processes by which application for relief is to be granted.
For his part, Senator Lambert Brown supported the legislation, but expressed concern about the amendment that removes the power of the Minister to non-elected officials.
“I would have preferred to see us as a country growing our economy to the point where we don’t rely on others to tell us to remove the discretion from the elect of the people,” Senator Brown said.
In his comment, Senator K.D. Knight said the harmonisation of the various tax statutes was a “good thing” and was necessary.
The provisions in the Act will be incorporated into the proposed Charities Act, which will be brought to both Houses of Parliament in September.
The Charities Act is now with the Office of the Chief Parliamentary Counsel for drafting. This proposed Bill seeks to facilitate the proper supervision of entities carrying out charitable activities.
By Latonya Linton, JIS Reporter