Cardinal Pell Outburst Creates Questions on Charity Regulation
12 August 2010 at 10:38 am
|Derek Mortimer, principal of DF Mortimer & Associates|
The recent stoush between Cardinal George Pell and the Australian Greens prompts the question “Where is the Australian Tax Office when you need them?” According to Derek Mortimer, principal of DF Mortimer & Associates, a boutique law firm working exclusively for Not for Profit organisations, if the ATO cannot effectively monitor and regulate charities, it fails them.
Currently the ATO serves as a de facto regulator of charities. Through its tax ruling system, churches and other charities are prohibited by the ATO from engaging in party political activities like encouraging the public to vote against a particular party. There is a good reason for this prohibition. Charities need to keep their independence. The values and policies of political parties and charities can align sometimes, but not always.
Charities that take political sides can find their values compromised. In my opinion, this has happened to Cardinal Pell and the church he represents. In apparent defiance of the ATO’s own tax rulings Cardinal Pell is reported as saying the Greens are “anti-Christian”. But as the Greens have pointed out, at least some of their values and policies align squarely with Christians.
There appears to be no immediate, public effort by the ATO to restrain Cardinal Pell from making party political statements. Perhaps it is unreasonable to expect the ATO to do so. Yet the ATO has been travelling through the court system against a self described “activist” organisation called “Aid/Watch Incorporated”. The ATO says this organisation has a political purpose and cannot be charitable. The High Court heard the case in June and judgment will be handed down later this year. The independence of the ATO becomes compromised where it acts against one charitable organisation but does not appear to act against another.
Nor does the ATO have a formal complaints process for the public to complain about a charity’s apparent breach of tax rulings.
In Britain a member of the public can lodge a complaint about a charity engaging in party political activities with the independent charity regulator, the Charity Commission. The Commission may send the charity a warning letter (in the nature of a gentle reminder of obligations) and can also commence a more formal regulatory case report and in worse cases, revoke charity registration and consequent fiscal privileges . The Commission has been publicly active in the lead up to the recent British general elections, to investigate and rule on complaints about charities engaging in party political activities.
In January this year the Productivity Commission restated what the Australian charity sector has for many years been calling for; some form of charity regulator independent from the ATO. The ATO provides many useful services to charities, but if the ATO cannot effectively monitor and regulate charities, it fails them.
Derek Mortimer can be contact at firstname.lastname@example.org or telephone 03 9370 9333
*This article first appeared in The National Times, and is reproduced here with the author's opinion.