Newsable: Why Sanitarium doesn't have to pay income tax

Supplied

The Warehouse has cried foul at Sanitarium’s decision to no longer supply it with Weet-Bix.

It was the saga one would assume no one had on their 2023 bingo card - Sanitarium saying it would no longer stock Weet-Bix in Warehouse stores, citing supply reasons, only to then backtrack on that days later due to public outcry and say they’d instead alter their exports.

Now that the Weet-Bix crumbs have settled, Newsable asks an expert why the big breakfast brand doesn’t have to pay income tax like other commercial outfits.

Dr Michael Gousmett, an academic who has worked extensively in this area, joins the podcast this morning to discuss why.

Below is an edited transcript of the interview, which you can listen to in full here.

Why doesn’t Sanitarium have to pay income tax?

It’s because it’s registered as what we call a ‘tax charity’, so it comes under the Charities Act 2005.

The whole reason for the Charities Act 2005 was to improve the accountability and transparency of the charity sector.

What does it do that makes it a charity?

In the case of Sanitarium, it’s a church. It’s a religious organisation. If we jump to 1891, a famous judge in the House of Lords laid down what we now know as the four principal divisions of charitable purpose. We have trusts for the relief of poverty, trusts for the advancement of education, trusts for the advancement of religion, and trusts for the benefit of the community.

So, coming back to Sanitarium - it would fall under the heading of advancing religion [and] the Charities Act captures them as tax exempt.

Millions of dollars every year pour into that church, and there’s a whole raft of products that are produced by different entities, under the guise of the Seventh Day Adventist church as a commercial trading operation, that pay no income tax.

What, if anything, do you think need to change?

Since 1967 we’ve had numerous tax reviews and most of those reviews have said, one way or the other, that the commercial activities of charities should be taxed.

No government has ever put that as an amendment to the Income Tax Act [so that we can] sit down, take it to Select Committee, and put our cases from all points of view forward and ask is this equitable?

Listen to the full interview here.

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