1. It defines what charities will continue to receive tax-free status and tax deductibility for donations. The Australian Tax Office will decide whether a charity will keep or lose tax and tax deductibility benefits, depending on its interpretation of the definition of charity set out in this legislation.
2. In general, a charity is a not-for-profit body with a charitable purpose for the public benefit which ‘DOES NOT HAVE A DISQUALIFYING PURPOSE’. If a charity does have a disqualifying purpose it is not a charity, and will be denied charitable tax benefits. (section 4)
3. Section 8 sets out two disqualifying purposes:
(1) engaging in ‘activities that are unlawful'”.
This test means the Tax Office could strip Greenpeace of its charitable status, as Greenpeace does engage in trespass and other breaches of the law in furtherance of its aim to help create a cleaner, safer planet. Animal welfare groups which raid battery chicken farms or otherwise trespass on private property to uncover animal cruelty could also be stripped of their charitable status.
Greenpeace and other proactive charities may even be excluded altogether from the definition of charities BEFORE the “disqualifying purpose” test even comes into play. Section 2 of the Act says a body is NOT a charity if it “has engaged in conduct…that constitutes a serious offence”. Once Costello’s plan becomes law, Greenpeace could be stripped of charitable status immediately by the Tax Office citing its incursion into the Sydney nuclear reactor to prove that security was lax. A Greenpeace spokesperson said today: “We are concerned that this does smack of censorship of those who criticise the governmment or provide an alternative policy framwork. We are seeking legal advice on our position.”
(2) It is also a disqualifying purpose to advocate “a political party or cause”, to support a political candidate, or “attempting to change the law or government.
This test potentially disqualifies a vast number of charities which see it as one of their core duties to advocate for policy changes. In particular church groups, charities and medical research groups which actively lobby in public, and produce reports for public consumption to further their cause, could be under threat.
Treasurer Peter Costello today denied that he intended to strip existing charities of their tax-free status or to ban free speech by charities. But he has so far not promised to change the wording of his planned law to ensure charities are not at risk.
Here is today’s press release from the Jesuits:
JESUIT SOCIAL SERVICES
11 AM Wednesday, 30 July 2003
GAG ON CHARITIES NOT ON SAY JESUITS
The threat to charities and church groups that criticise government policy of losing their tax-free status is simply “not on” according to Jesuit Social Services Policy Director, Father Peter Norden.
This draft legislation is contained in the Charities Bill 2003 and is part of the Government’s response to the Report of the Inquiry into the Definition of Charities and Related Organisations.
Federal Treasurer, Peter Costello, who has introduced draft legislation that suggests that “attempting to change the law or government policy” is a “disqualifying purpose” or an unlawful activity for a charity will need to think again according to the Jesuit’s social policy centre in Melbourne.
“This attempt to silence the churches and the non-government sector was tried on by the Kennett Government here in Victoria during the 1990’s”, according to Peter Norden, “but they soon found out that it simply could not be implemented”.
“On that occasion, the gag was concealed in confidentiality clauses and intellectual property clauses in government contracts and we simply refused to sign. When Jesuit Social Services moved to engage our peak bodies of Catholic Social Services and VCOSS, the Kennett advisers backed right off”, Father Norden explained.
“Government policy advisers simply have to learn that it is a central mission of charities such as ours not only to do good but to ensure that harmful legislation and regulations are changed to protect the vulnerable members of our community,” he said.
“The Jesuits have been around for more than 450 years, and I think we will be around after the Howard Government, and even after an Abbott or Costello Government,” he insisted.
“Moral issues are our bread and butter and we will not be starved out of this activity by such misguided and poorly grounded legislation,” said Father Norden.
“A responsible and mature government encourages open and independent public debate and does not try to gag its critics as part of the democratic process,” insisted Father Norden
“The church and the non-government welfare sector makes a serious attempt to understand the complex role of government, and, in turn, we expect government to do its homework in understanding the essential role of our sector as well,” he concluded.
“If the Treasurer attempts to proceed with this legislation, without amendment, the Government will be in for a big surprise!”, he added.
FOR FURTHER COMMENT, CONTACT: Father Peter Norden, S.J., 03 9427 7388 (office), 0409 0409 94 (mobile)
Key Charity Act clauses
(1) In this Act, unless the contrary intention appears:
advancement includes the meaning given by subsection 10(2).
advancement of social or community welfare includes the meaning given by section 11.
disqualifying purpose has the meaning given by section 8.
dominant purpose has the meaning given by section 6.
entity has the meaning given by section 960-100 of the Income Tax Assessment Act 1997.
government body means:
(a) the Commonwealth, a State or a Territory; or
(b) a body controlled by the Commonwealth, a State or a Territory; or
(c) the government of a foreign country; or
(d) a body controlled by the government of a foreign country.
not-for-profit entity has the meaning given by section 5.
open and non-discriminatory self-help group has the meaning given by section 9.
public benefit has the meaning given by section 7.
serious offence means an offence against a law of the Commonwealth, of a State or of a Territory, that may be dealt with as an indictable offence (even if it may, in some circumstances, be dealt with as a summary offence).
Part 2 – Charities
4. Core definition
(1) A reference in any Act to a charity, to a charitable institution or to any other kind of charitable body, is a reference to an entity that:
(a) is a not-for-profit entity; and
(b) has a dominant purpose that:
(i) is charitable; and
(ii) unless subsection (2) applies, is for the public benefit; and
(c) does not engage in activities that do not further, or are not in aid of, its dominant purpose; and
(d) does not have a disqualifying purpose; and
(e) does not engage in, and has not engaged in, conduct (or an omission to engage in conduct) that constitutes a serious offence; and
(f) is not an individual, a partnership, a political party, a superannuation fund or a government body.
(2) The entity’s dominant purpose need not be for the public benefit if the entity is:
(a) an open and non-discriminatory self-help group; or
(b) a closed or contemplative religious order that regularly undertakes prayerful intervention at the request of members of the public.
8. Disqualifying purposes
(1) The purpose of engaging in activities that are unlawful is a disqualifying purpose.
(2) Any of these purposes is a disqualifying purpose:
(a) the purpose of advocating a political party or cause;
(b) the purpose of supporting a candidate for political office;
(c) the purpose of attempting to change the law or government policy;
if it is, either on its own or when taken together with one or both of the other of these purposes, more than ancillary or incidental to the other purposes of the entity concerned.
Part 3 Charitable purpose
10 References to charitable purpose
(1) A reference in any Act to a charitable purpose is a reference to any of the following purposes:
(a) the advancement of health;
(b) the advancement of education;
(c) the advancement of social or community welfare;
(d) the advancement of religion;
(e) the advancement of culture;
(f) the advancement of the natural environment;
(g) any other purpose that is beneficial to the community.
(2) Advancement includes protection, maintenance, support, research and improvement.