NFP Anger Over ACT Govt Change to Charity Definition

The Community Council for Australia has expressed dismay following the ACT Government’s decision to close off charitable deductions for some peak bodies through new legislation, which changes the Territory’s definition of charities.

The Community Council for Australia’s (CCA) CEO David Crosbie said the move, which saw the introduction of the Revenue (Charitable Organisations) Legislation Amendment Bill 2015 into parliament today, ignores all legal and other conventions and overrides existing legislation and regulations.

Under the legislation peak bodies and professional groups will no longer be able to claim charitable status unless they can qualify for an exemption.

The ACT Government said the move to amend legislation was intended to safeguard the status of Canberra charities.

“The move will close a loophole that currently allows non-charitable organisations to access tax exemptions which exist to support true charities,” Chief Minister, Andrew Barr said.

“Introducing this legislation will provide certainty and protection for true charities by tightening the definition of charity across ACT Government taxation legislation, bringing the legal definition into line with the common sense test of what makes an organisation a charity.

“The financial impact of this tax loophole on the ACT Government is estimated at about $2 million per year – which could increase significantly.”

Barr said the legislation only affects professional organisations, peak industry bodies, political parties, industrial organisations, and organisations that promote trade, industry or commerce.

“I want to reassure genuine charities that they will not be affected in any way by this legislative change and urge them to continue with their good work,” he said.

Barr said in the first reading speech to parliament that the ACT was in a particularly vulnerable position.

“As the nation’s capital, a large number of peak bodies and professional societies are headquartered in Canberra. These bodies employ hundreds of employees Australia-wide and should be expected to contribute to the Territory’s revenue base, as other businesses do,” he said.

However CCA CEO, David Crosbie, said the ACT Government would alienate the whole charity sector if it proceeded with steps to make up its own definition of charity.

“We already have a nationally regulated definition of charity, the Australian Charities and Not-for-profits Commission, the rulings of the Australian Taxation Office, and well established guidelines that have evolved from High Court decisions,” Crosbie said.  

“We do not need new ACT specific regulations imposed on all charities.  We have enough red tape and compliance costs.”

Crosbie said that the ACT Government had been one of the first governments to support the work of the Australian Charities and Not-for-profits Commission (ACNC) and agree to harmonize its legislation with the national regulator.

‘This proposal is nonsense,” he said.

“Will ACT charities have to satisfy all the national requirements as well as a set of new ones the ACT government are going to impose?  Does the ACT Government believe its own separate definition of charity is better than the nationally regulated definition which took years to develop and implement, and was based on recommendations of the Productivity Commission and more than five major national inquiries? Is the ACT Government seeking to drive peak bodies out of the ACT by making it more difficult for them to operate here?”

Crosbie likened the proposal as a step back into the days prior to Federation.

“The next thing they will be wanting (is) to have an ACT specific rail gauge or tax any business seeking to operate outside the borders of the ACT,” he said.  

“The charities sector in the ACT employs thousands of staff and makes a real economic and social contribution to the ACT community.  Why strangle it?”

Debate on the legislation has been adjourned.