Building Projects 2011

Cooranbong Harmony Centre Building Project

SHANTI MISSION HARMONY CENTRES BUILDING FUND INFORMATION SHEET

DGR ENDORSEMENT OF THE BUILDING FUND AND TAX DEDUCTIONS FOR DONATIONS 

 By Trust Deed dated 25 August 2010 Shanti Mission Harmony Centres Ltd ABN 76 116 997 392 (SMHC) established the Shanti Mission Harmony Centres Building Fund for the purpose of providing money for the acquisition, construction or maintenance of buildings used or to be used as a school or college for the classes, courses and seminars conducted by SMHC. The ATO gave the SHANTI MSSION HARMONY CENTRES BUILDING FUND endorsement as a deductible gift recipient with effect from 16 September 2010. The endorsement is recorded on the public register maintained by the Australian Business Registrar at www.abn.business.gov.au

The item in the Income Tax Assessment Act 1997 for which endorsement was provided is 2.1.10 school building fund which is the item allowing a gift fund to be established and maintained “exclusively for providing money for the acquisition, construction or maintenance of a building used, or to be used, as a school or college”.  DGR endorsement means that all donations over $2 made to the Building Fund are tax deductible provided there is continuous compliance by SMHC with the ATO requirements.

SMHC BUILDING PROGRAM 

The charitable activities, classes, seminars and courses provided by SMHC are continuing to expand and attract widespread interest in the community. As that interest increases and more people participate in these activities, the need for bigger, better and more buildings in more locations has become apparent. Accordingly, plans have been prepared by some of our amazing volunteers for the construction of additional much needed facilities and, in the case of Canyon Leigh, work has already commenced.   Regular updates of the plans and progress of our building program will be posted on the SMHC website.

ATO RULINGS AND REQUIREMENTS 

The rules and regulations for DGR endorsement and compliance are located in a number of different documents all of which can be found on the ATO website. The information in this memorandum refers to the most relevant ones; namely:-

-        Taxation ruling 96/8 Income tax : school and college building funds

-        School building funds Fact Sheet NAT 5393-01.2008

-        Taxation Ruling 95/27 Income tax : public funds

-        Tax facts – Gift fund requirements for deductible gift recipients NAT 3194-7.2000

-        DGR GiftPack

-        Guide for non-profit organisations

–     Fundraising NAT 13095-09.2008 Worksheet 2 in the “other conditions” section of the GiftPack is designed to allow organisations which have been endorsed for operation of a fund to undertake a self-review to check compliance with the ATO requirements. SMHC will use that worksheet to undertake a self-review each quarter in the 1^st year of operation of the Building Fund and 6 monthly thereafter. SMHC may undertake additional reviews according to the circumstances; for example, prior to and/or after a significant event.

MAIN COMPLIANCE REQUIREMENTS

All donations of money must be deposited in the Building Fund bank account which SMHC has established and the Building Fund must correctly issue receipts for donations it receives.  The gift fund must not be used to receive any other money or property. A receipt in the form provided by SMHC must be issued for every donation made to the Building Fund. The receipts have been prepared with regard to the ATO requirements (see Worksheet 2 in the GiftPack) and specify:-

-        The name of the fund and its ABN; ie Shanti Mission Harmony Centres Building Fund ABN 76 116 997 392

-        The fact it is a receipt for a donation

-        The amount of the donation If the gift is not money but is some form of property, special rules apply.

Accordingly, before any gift of property can be accepted it must first be reviewed by the directors of SMHC to ensure it can be properly received into the Building Fund and to ensure the receipt complies with the ATO requirements. Also, there are various ATO requirements which the donor may be required to undertake if the donor wishes to claim a tax deduction for the property gift. The money in the Building Fund may only be used for the purposes for which it was established and for which endorsement has been given; namely, “exclusively for providing money for the acquisition, construction or maintenance of a building used, or to be used, as a school or college”.  

To ensure that there is full compliance with the requirements of the ATO, payments will only be made from the Building Fund AFTER they have been approved and authorised in writing by a director of SMHC. As a guide, details of the categories of payment which can be made from the Building Fund are set out below.

HOW SMHC QUALIFIES AS A SCHOOL OR COLLEGE

On 4 November 2005 SMHC was registered in NSW by the Australian Securities and Investments Commission (ASIC) as a company limited by guarantee. It was initially known as Harmony Centre Foundation Limited and in 2010 it changed its name to SMHC. The change of name was registered by ASIC on 28 April 2010. Rule 4 in the Constitution of SMHC sets out the principal objects of the company. These objects include teaching techniques for personal transformation, meditation, life skills and energy based healing; teaching exercises from diverse healing traditions; assisting members of the public to achieve optimal physical, emotional, social, spiritual and mental health and also undertaking any activity which will promote general wellbeing in human life. 

To achieve these objectives SMHC runs classes, courses and seminars to teach and train students, therapists and teachers.  A number of the SMHC courses include examinations and competency assessment for the students and are recognised or accredited by various professional associations and institutions. Paragraph 10 of TR 96/8 defines a “school or college” as a place having the dominant function of providing organised or systematised instruction or training, usually in class form, which is given on a regular and continuing basis. If the buildings are used in connection with the curriculum and in the case of multipurpose buildings, for more than 50% of the time, they qualify as a school or college (paragraphs 13 and 14). The instruction which is given may include religious as well as secular instruction (paragraph 49), adult religious or theological education (paragraph 50). As the activities of SMHC are conducted in the manner summarised above and more fully referred to in the case law and the Taxation Rulings relevant to this part of the Income Tax Assessment Act, SMHC qualifies “as a school or college”.  

In addition, as part of the process of applying for DGR endorsement of the Building Fund, SMHC gave full written disclosure to the ATO of the nature and extent of the classes, courses and seminars offered and conducted at and by the centres at Cooranbong, Camperdown and Bundanoon, including the daily usage of the centre buildings, and submitted a draft trust deed for comment by the ATO as per paragraphs 25-27 of TR 96/8.   In a letter dated 18 August 2010 the ATO confirmed that the appeal for buildings to be used as a school qualifies as a school building fund for the purpose of the Act and it subsequently issued a notice giving DGR endorsement to the Shanti Mission Harmony Centres Building Fund with effect from 16 September 2010.

WHAT CAN BE PAID FROM THE BUILDING FUND

The guiding rule in TR 96/8 is that only expenses essentially related to the "acquisition, construction or maintenance” of a building used, or to be used, as a school or college can be paid from the Fund (paragraph 15). The following is a summary of the categories of payments which TR 96/8 says can be paid from the Building Fund:-

-        Reasonable costs of establishing , promoting and managing the Building Fund including bank charges, stationery, accounting and audit fees, professional advice (paragraphs 65-67)

-        Expenditure for the acquisition of a building or land on which a building is to be constructed, including all incidental costs and interest charges on the purchase (paragraphs 68-70)

-        Costs to construct a school building (paragraph 15)

-        Expenditure for the installation and maintenance of fixtures to a building to be used a school or college (paragraph 16)

-        Maintenance costs to keep the building and fixtures in proper or good condition, which may extend to cleaning costs (including the salaries of janitors and cleaners), insurance premiums (excluding contents), purchase of necessary maintenance equipment (eg a vacuum cleaner), repairs, painting and plumbing on the building and fixtures (paragraphs 71 & 72)

-        Costs of installing and maintaining fixed security systems, including grills (paragraph 74) The Building Fund may NOT be used to pay for:-

-        The general upkeep or acquisition of furnishings (paragraph 71)

-        The general running or operational expenses of SMHC such as water, gas, electricity, contents insurance, teaching staff salaries or teaching aids or equipment (paragraph 72)

-        Furniture and materials for use in the school or for general maintenance of land used for ancillary purposes

PURPOSE OF THIS MEMORANDUM

This memorandum has been prepared by the Directors of SMHC for the information and guidance of members of the public who may wish to make a tax deductible gift (donation) to the Building Fund and also to provide information to the office staff, teachers, therapist and volunteers who provide such inspiration and assistance to everyone who attends our Centres. SMHC values and appreciates the support which it receives and has established this Building Fund to help fund the cost of providing better facilities in which our many programs can be conducted and taught. It also provides guidance on the manner in which SMHC will administer and manage the Building Fund to ensure it continues to comply with the requirements of the Australian Tax Office. Regular updates in relation to our building program will be posted on our website.

FURTHER INQUIRIES

General inquiries should be directed in the first instance to our Centre managers. If they are unable to provide appropriate answers they will refer the question or issue to the directors of SMHC.

Accounts

So that you can be sure your donation is being used wisely and in accordance with legal and statutory provisions, attached below is our last set of audited accounts prepared by our auditors Cutcher and Neale. Thank you for your support and for your kind donations. Donations towards the running of our centres and our charitable works are not tax deductible but are essential for the continuation of this incredibly valuable work. Should you wish to donate in a manner that is tax deductible, you can donate to our building fund. We aim to build two residential schools within the next year so that our work can spread with ease and grace. Please see our building fund information above about the establishment of our special trust fund and for a link to donate.