What Needs Changing

The Australian community sector faces many challenges. Some of these are seemingly intractable; others could be quite easily resolved if the will existed.

On this page we will post our view on the things we believe can (and should) be changed in order to assist the Australian community sector to survive and flourish.

Reforming DGR

Article posted June, 2010

Well, we were wrong. We thought they'd got it right, but they hadn't.

In April we reported that

    The NSW Administrative Decisions Tribunal has held that Northern NSW Football Limited (NNFL), a non-profit organisation established for objects of promoting football, has a dominant purpose that is beneficial to the community. On this basis, NNFL was found to be a "charity" entitled to certain payroll tax and stamp duty exemptions.

The Tribunal had found, very sensibly in our view, that the NNFL's Objects, taken as a whole, described a dominant purpose beyond the mere encouragement of a sport:

    They provide and promote football as an undertaking which benefits communities, the benefit being the improvement in the health and general wellbeing of participants….

A previous decision in 1885 (sic) had held that held that "gifts for the encouragement of a mere sport will not be charitable". The Tribunal sensibly preferred a 1981 Canadian decision that made some kind of sense.

But that is not always what the law is about, unfortunately. On appeal, the decision has been reversed. The 1885 precedent was binding on Australian courts, the Canadian one wasn't. Any reform is going to have to come about by legislation.

And surely it's about time that the legislation came? For the past decade Our Community has been pointing out that the present situation is intolerable. If you want to know whether your organisation is a charity, you have to go back and look at the Preamble to the Statute of Elizabeth, a law passed in 1601.

Elizabeth thought that Charity was

  • the reliefe of aged, impotent and poore people;
  • the maintenance of sicke and maymed Souldiers and Marriners, Schooles of Learning, free schooles and schollers in universities;
  • the repaire of bridges, portes, havens, causewaies, churches, sea-bankes and highwaies;
  • the educacion and prefermente of Orphans;
  • the maintenance of Howses of Correction;
  • providing dowries for the Mariages of poor Maides:
  • the supportation, aid and help of persons decayed;
  • the relief or redemption of Prisoners or Captives of the Turk;
  • and the aid or ease of any poor inhabitants concerning payment of fifteens, setting out of Souldiers and other Taxes.

And because that's what she thought, that's what we think now, four hundred and nine years and ten thousand miles away. Every new claim has either to fall within the 'spirit and intendment' of the Preamble to the Statute of Elizabeth or be analogous to one or more of its purposes. We are still shackled by the narrow concepts of our great-great-great-great-great-great-great-great-great-great-great-great-great-grandfathers. Against some strong competition, this may well be the single silliest area of Australian law.

It's not as if this is some big secret, either. The government has in front of it a deskload of reports recommending that the law be changed so that Australian not-for-profits can face up to a law that's simple, sensible, and not reliant on the ideas of people who burnt witches.

    Inquiry into the Definition of Charities and Related Organisations (2001)

    The narrow interpretation of 'benevolence' derived from the Statute of Elizabeth excludes many activities that have evolved to be valued by the community….. The current hierarchy of concessions does not fully reflect current community views about the merit and social worth of different activities, or respond flexibly to special circumstances.

    Consistent with the recommendations of previous inquiries, a national charities commission should be established to monitor, regulate and provide advice to all not-for-profit (NFP) organisations. The charities commission should be tasked with streamlining the NFP tax concessions (including the application process for gift deductibility), and modernising and codifying the definition of a charity.

    The Senate Standing Committee on Economics report on Disclosure regimes for charities and not-for-profit organisations (2008)

    Recommendation 11 (Chapter 14)

    That there be no requirement that charitable purposes fall either within the 'spirit and intendment' of the Preamble to the Statute of Elizabeth or be analogous to one or more of its purposes.

    Recommendation 12 (Chapter 16)

    That the principles enabling charitable purposes to be identified be set out in legislation.

    Productivity Commission Report on the Contribution of the Not-for-Profit Sector (2010)

    The Australian Government should adopt a statutory definition of charitable purposes …

    Australia's Future Tax System (Henry Report) 2010

    Recommendation 41: Consistent with the recommendations of previous inquiries, a national charities commission should be established to monitor, regulate and provide advice to all not-for-profit (NFP) organisations (including private ancillary funds). The charities commission should be tasked with ….modernising and codifying the definition of a charity.

Despite this virtual unanimity the government hasn't yet committed to doing anything of the sort, and now we're coming up to an election under a new PM where it's easy for things to fall off the cart and where we may see the return to government of the party that binned the report of the Definition of Charities inquiry a decade ago.

Indeed, the present government also seems to be inclined simply to tinker at the edges. It's just added another DGR to the list by special dispensation. All donations of $2 or more to the One Laptop Per Child (OLPC) project organisation will now be fully tax-deductible.

Well, yes, all very well and good, but if a good cause doesn't come under the terms of the legislation then the best remedy isn't to make ad hoc exceptions, it's to change the legislation in the way the reports all recommend. There seems to be nowhere within government where these reports are brought together, and there's nobody in the inner cabinet who seems to take much interest in the topic.

Why don't you drop a note to your local member (or the new PM) and let them know you care?