Government Confirms New Resources for ACNC to Police DGR

It has been revealed the Australian Charities and Not-for-profits Commission (ACNC) will be given expanded resources to police the deductible gift recipient (DGR) framework from July 2019.

Treasurer Scott Morrison delivered his Mid-Year Economic and Fiscal Outlook (MYEFO) on Monday, which included a $5.7 million funding boost for the charity regulator to “boost integrity” of the framework surrounding DGR.

“The government will provide $5.7 million for the Australian Charities and Not-for-profits Commission (ACNC) and the Australian Taxation Office (ATO) to improve governance, reduce complexity and boost integrity of the deductible gift recipient (DGR) framework,” the report said.

“From 1 July 2019, non-government entities with DGR tax status will be automatically registered as charities with the ACNC, providing consistent oversight of DGRs by the national charity regulator. Transitional arrangements will minimise the registration burden and provide more time for DGRs to provide basic registration information.”

These DGR reforms were proposed earlier this month by the Minister for Revenue and Financial Service Kelly O’Dwyer.

The MYEFO confirmed that other registers will be integrated into the ACNC Charity Register, with the ACNC assuming all administrative responsibilities.

“From 1 July 2019, the Register of Environmental Organisations, Register of Harm Prevention Charities, Register of Cultural Organisations and Overseas Aid Gift Deduction Scheme will be integrated with the ACNC Charity Register. The ACNC will assume all administrative responsibilities for those, harmonising applications and reporting in one central location,” the report said.

“From 1 July 2020, the ACNC and ATO will be funded to conduct additional reviews of DGRs’ eligibility, to ensure that tax concessions remain targeted to those entities that are entitled.

“This measure is estimated to have an unquantifiable gain to revenue over the forward estimates period.”

Community Council for Australia (CCA) CEO David Crosbie told Pro Bono News these new measures seemed consistent with the DGR reforms earlier announced by O’Dwyer, which had been welcomed by the sector.

“In principle, CCA has no objections to the streamlining of DGR and moving most DGR organisations under the umbrella of the ACNC. The increased funding for the ACNC from 2019 is welcome. Provided the additional audits around DGR are focused on transparent risk profiling – they are not a major concern,” Crosbie said.

However Crosbie cautioned that these measures should not be politically motivated, and used to silence the voice of the sector.

“Should the additional ACNC audits be politically directed at active advocacy groups or a segment of the charities sector like all the environmental organisations, (as happened in Canada under [Prime Minister] Harper) CCA would be very concerned,” he said.

“As with so many measures, the principle is fine, but how it is applied will be closely watched to ensure it is not another exercise in the politicisation of the ACNC.”

Australian Greens Senator Rachel Siewert also expressed concern that these expanded resources might be used “to penalise charities and not for profits who they don’t like”.

“While good governance is obviously something we support, these additional resources could be used to attack charities and not for profits. The government has form on this front, they have been clearly targeting environmental organisations. The appointment of Gary Johns to head up ACNC has sent a clear signal of their intent to continue to pressure charities and not for profits,” Siewert told Pro Bono News.

“Charities are already self-censoring to escape the ire of a hyper-sensitive government who do not like being criticised, now they will potentially have the ACNC constantly scrutinising their DGR status.

“There is a clear ongoing political motivation to erode trust in the charity sector so that legitimate advocacy is reduced. Government harassment of charities needs to stop.”

The federal government also confirmed they would not proceed with the proposed In Australia legislation and instead would provide funding to the ACNC to issue external conduct standards.

“The government will provide $1.1 million for the Australian Charities and Not-for-profits Commission (ACNC) to issue external conduct standards under the Australian Charities and Not-for-profits Commission Act 2012 (ACNC Act),” the report said.

“The standards will give the ACNC stronger oversight of charities’ overseas activities and finances, to address the risks of overseas philanthropy such as money laundering and terrorism financing.

“The government will give certainty to not-for-profits by not proceeding with the unlegislated 2009-10 Budget measure titled ‘Philanthropy — reforming the ‘in Australia’ requirements that apply to tax exempt entities’.”

Philanthropy Australia CEO Sarah Davies told Pro Bono News earlier this month that removing the In Australia requirements was a welcome move for the sector.

“We’re particularly pleased that the government won’t be proceeding with the In Australia legislation, which would have restricted the international activities of Australian charities,” Davies said.

“This is an issue we’ve been advocating about for some time, so we welcome and commend [the] decision on this issue, which provides certainty and helps support Australians giving overseas.”

Great to see confirmation in #MYEFO that the 'In Australia' legislation won't be proceeded with and we'll have External Conduct Standards instead – this is vital for supporting international philanthropy out of Australia, and something @PhilanthropyAus has strongly advocated for pic.twitter.com/BAXyRYyV3u

— Krystian Seibert (@KSeibertAu) December 18, 2017

MYEFO also revealed the government will look to extend the current two-year waiting period for newly arrived migrants receiving certain welfare payments to three years.

Migrants arriving from July next year will serve a three year waiting period for a range of welfare payments, including Newstart, while a new consistent three year waiting period will be introduced for other benefits such as Family Tax Benefit and Paid Parental Leave.

The Minister for Social Services Christian Porter, said these measures “further strengthen Australia’s social security system”.

“Australia’s migration system has long had a strong focus on skilled-migration to attract people with the skills and talent to help build Australia’s economy, increase productivity and create jobs,” Porter said.

“That means the majority of new permanent skilled migrants come to Australia to work and contribute to the Australian economy and community before gaining access to welfare payments. There is no doubt new migrants are attracted to the Australian way of life and our highly successful multicultural society and the opportunities our vibrant, growing economy offers them.

“These measures announced today will reinforce the foundational principle that Australians’ expectation of newly arrived migrants is that they contribute socially and economically for a reasonable period before having access to our nation’s generous welfare system.”

But the Australian Council of Social Service (ACOSS) slammed these measures targeting migrants as “cruel”.  

“It is cruel to make newly arrived migrants wait three years to access benefits, including Family Tax Benefit, Paid Parental leave and Carers’ Allowance. This will create an underclass of migrants – new arrivals who find themselves at even more risk financially as they try to settle into Australia,” ACOSS director of policy and advocacy Edwina MacDonald said.

“We know that migrants have made and continue to make an enormous contribution to our society. This will hurt people who lose their job, people who need to care for a child with disability, or a family member with a terminal illness. It will disproportionately affect women and see more children live in poverty.

“This will drive more people to our charities for meeting the essentials of life, such as food and shelter.”

The government said these measures will save $1.3 billion over the period to 2020-21.