ACOSS Submission on Charities Bill

The ACOSS submission to the Board of Taxation on the draft Charities Bill claims the legislation contains unreasonable and unnecessary restrictions on the advocacy role of Australian charities.

And while ACOSS welcomes the broad direction of the Bill, the submission recommends removing the those restrictions, modernising the definition of Public Benevolent Institutions and establishing a Charities Commission.

Last month the Federal Government released the draft Charities Bill 2003 to define ‘charity’ for taxation purposes and asked the Board of taxation to consult over its wording.

ACOSS says the Bill does modernise the definition of charity in a number of ways however, it seeks to impose outdated and counter-productive restrictions on the advocacy and lobbying activities of charities.

The submission says that Clause 8 of the draft Bill would exclude from charitable status organisations that have among their purposes:
“changing the law or Government policy”, or “advocating a cause”;
unless these purposes are no more than “ancillary or incidental” to
the other purposes of the organisation.

ACOSS says this ambiguous and confusing formulation is a shaky foundation for 21st century charity law in Australia. “Ancillary or incidental”
could be interpreted in at least two different ways.

On a liberal interpretation, this is consistent with the Charity
Definition Inquiry’s recommendation that the advocacy work of
charities should not be restricted, provided that it:

– furthers or aids the organisation’s dominant charitable purpose;
– does not promote a political party or candidate for political office.

ACOSS says there is no need to single out “non-partisan” advocacy for
special treatment because all the activities of a charity should
further or aid a charitable purpose.

At the very least it says Clause 8 would require intrusive and time-consuming
regulation of the advocacy work of charities, and the resources
devoted to it. Charities, could, for example, be required to catalogue their advocacy activity and its cost, in case their advocacy activities are audited by the Australian Taxation Office.

At worst, a significant number of charities could lose their
charitable status. Whether or not the draft Bill “codifies” existing
common law on advocacy by charities as the Government states; the
reality on the ground is that the Australian Taxation Office (ATO)
has not up until now attempted to regulate these activities in any
systematic way. This would change if it interpreted the provisions of
Clause 8 narrowly.

ACOSS says a better approach, that is less intrusive and burdensome for
charities, is to recognise that charities may engage in non-partisan
advocacy that is an integral part of a strategy to promote an
underlying dominant charitable purpose, such as relieving poverty or
protecting the environment. This is the same basic test that applies to the other purposes and activities of charities.

The submission says that given the potential for confusion over the legal status of advocacy by charities, and the need to limit partisan political activities, it is best to clarify these issues in the Bill rather than simply
relying on the general rules in Clause 4.

To clarify and resolve this matter, ACOSS says it strongly recommends that Clause 8 of the draft Bill is re-drafted. It says if this crucial change is made, ACOSS broadly supports the Bill’s basic thrust.

If you would like an electronic copy of the full ACOSS submission just send an e-mail to probono@probonoaustralia.com.au.