Trading Income Of Charities
Annabel Young MP
National Party Spokesperson on Revenue
In the Government's discussion document, "Tax & Charities", the government proposes to tax the trading income of charities to the extent that it is not distributed to charity in the current year. This has a huge impact on the ability of charities to build up capital funds. A question hangs over whether "trading income" will include the income from performing charitable activities under contracts with Government departments.
At a hearing of the Social Services Select Committee today, Steve Maharey fudged this issue. Clearly charities have good reason to be concerned. In addition, he indicated that no work had been done to establish what the costs of the taxation proposals would be or what effect they would have on the quality or volume of the provision of services by charities. No work has been done to determine how much extra money would be absorbed by making charities pay tax and then reimbursing them, if indeed, they propose to top charities up to cover the cost of the taxes.