Enviro NGO Tax Inquiry Calls for Advocacy Limitations and Sanctions

The federal government’s controversial inquiry into the tax status of environmental organisations has recommended limiting the amount of advocacy work organisations can do, along with the introduction of sanctions and fines for engaging in any “illegal” activities.

The committee report has recommended that administrative sanctions be introduced for environmental deductible gift recipients (DGR) that “encourage, support, promote, or endorse illegal or unlawful activity undertaken by employees, members, or volunteers of the organisation or by others without formal connections to the organisation”. It also recommended fines for those found in breach of the legislation.

The report also recommended limiting the amount of time environmental groups can carry out advocacy work and included an arbitrary requirement to spend a quarter of donor funds on “environmental remediation” work.

The committee recommended that “legislative and administrative changes be pursued by the Australian Taxation Office to require that the value of each environmental deductible gift recipient’s annual expenditure on environmental remediation work be no less than 25 per cent of the organisation’s annual expenditure from its public fund”.

The inquiry by the House of Representatives Standing Committee into the register of environmental organisations has attracted controversy since the day it was requested by Federal Environment Minister Greg Hunt in 2015.

There were more than 680 submissions made to the inquiry, the majority of them objecting to the government’s plans.

The committee report said its recommendations were intended “to ensure that tax deductible donations, which are a generous concession from the taxpayer, are used for the purpose intended and expected by the community”.

However, key Australian environmental groups have called on Greg Hunt to reject the recommendations.

The CEOs of WWF, The Australian Conservation Society, The Wilderness Society, Greenpeace Australia Pacific, Friends of the Earth and the Nature Conservation Council of NSW issued a statement in response to the reports recommendations.

“The report contains a number of deeply flawed and dangerous recommendations, including an arbitrary requirement to spend a quarter of donor funds on ‘environmental remediation’ and a draconian attempt to clamp down on the type of work organisations conduct,” the CEO statement said.

“This flawed inquiry, initiated by the Abbott government and driven by a small handful of conservative MPs with the support of the mining industry, failed to uncover any evidence to justify removing the charitable status of any environment group.

“We welcome the dissenting statements made by Liberal MP and committee member Jason Wood, raising significant concerns about the two most dangerous recommendations.”

The committee report said it took into account “stakeholders’ concerns about the activity of a small number of environmental DGRs, ranging from providing false and misleading information to serious instances of criminal activity”.

“The committee considers that such activity undermines public trust and confidence in environmental DGRs and in the Not for Profit sector more broadly,” the report said.

It also recommended that charitable status be a prerequisite for environmental organisations seeking DGR status, and all environmental DGRs should be required to comply with Australian Charities and Not-for-profits Commission (ACNC) governance standards and be prohibited from having an illegal or political purpose.

It recommended that the current Register of Environmental Organisations be abolished and that the administration process for endorsement as a deductible gift recipient for environmental organisations be transferred wholly to the ATO.

The report also recommended that registration as an environmental charity through the ACNC be a prerequisite for environmental organisations to obtain endorsement as a deductible gift recipient by the ATO.

The committee said that in preparing the report it had identified measures to strengthen the integrity of tax-concessional arrangements for environmental organisations.

“The committee has also identified scope to streamline the administration of the system. The recommendations outlined in the report are intended to make the system clearer for donors, environmental organisations, and the wider community,” it said.

Download the report here.