Charity Regulator Unfazed by ACT’s Move on Charity Definition

The Australian charity regulator says it will continue its national harmonisation efforts in the Not for Profit sector despite the ACT Government’s move to introduce its own definition of charity.

“The ACNC believes harmonisation of the definition of charity across Australia is in the best interest of the sector,” a spokesperson for the Australian Charities and Not-for-profits Commission told Pro Bono Australia News.

“The ACNC will continue to work with the State and Territory Governments to reduce red tape and streamline reporting arrangements for charities.”

Last week Pro Bono Australia News reported that the ACT Government intended to close off charitable deductions for some peak bodies through new legislation which changed the Territory’s definition of charity.

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, ignored 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.

Debate on the legislation has been adjourned.