Taxing times for outspoken charities


In February this year Environment Minister Ian Campbell sent a letter to 317 environment groups, warning them that they risked losing their charity status if they engaged in political activity.

The letter outlined that environment groups’ Deductible Gift Recipient (DGR) status was dependent on organisations working on ‘the conservation of the natural environment and not for any other purpose, such as political activity’.

‘We definitely perceived it as a threat when we received it’ says Cate Faehrmann, director of the NSW Nature Conservation Council. ‘This is a big stick that the Government can wield if we get too critical.’

Thanks to Sharyn Raggett

Thanks to Sharyn Raggett

Revoking the charity status of environmental NGOs could have serious consequences. ‘For most of them taking away DGR status would destroy them’ says Clive Hamilton, executive director of the Australia Institute. Hamilton believes that the motivation of the letter is obvious: ‘They’re going out after dissenting organisations.’

‘There’s no question at all that the leaders of charities are constantly worrying that anything they say will bring down the wrath of the government on them,’ he says.

For Hamilton, and others, this latest development is part of a long-term push to intimidate the community sector into silence.

In 2000 the Howard Government set up the independent Inquiry into the Definition of Charities and Related Organisations, chaired by David Gonski. The Inquiry’s report was released in August 2001, and was well received by the community sector.

In 2003 when the Treasurer released a draft version of its proposed Charities Bill, it was clearly based on many of the Inquiry’s recommendations.

With one notable exception. The Inquiry had suggested some commonsense provisions to prevent outright politicking by charities, such as not allowing them to stand candidates in elections or support political parties. Apart from these provisions, the Inquiry recommended that the strong role of advocacy in the modern charity sector be acknowledged in any new legislation.

However, the Treasurer’s draft bill went one step further, making ‘attempting to change the law or government policy’ an unlawful or ‘disqualifying purpose’ for a charity. The bill allowed charities to engage in lobbying only if it were ‘ancillary or incidental to the other purposes of the entity concerned’.

Jo Symonds, manager of a small environmental NGO, says ‘you had to be putting blankets around people (or) giving people soup to justify having some kind of advocacy role.’

While Treasurer Costello said that the bill was not intended to stop charities from speaking out, some NGOs began to see it as part of a concerted attempt to silence the community sector.

Eventually, amidst a flurry of press releases on budget night in May 2004, the Treasurer announced the decision to drop the bill, saying that it ‘(did) not achieve the level of clarity and certainty that was intended to be brought to the charitable sector.’

However, in a draft tax ruling released for comment earlier this year, the Australian Tax Office has outlined its own interpretation of the common law on charities, which contains some remarkable similarities to the contested parts of the abandoned bill.

The ruling, which is expected to take force later this year, lists ‘advocating a political party or cause, attempting to change the law or government policy,’ and ‘promoting a particular point of view’ as ‘purposes which are not charitable.’ Again, political aims or activities are only accepted if they are ‘ancillary or incidental to the main purpose.’

The decision on whether an activity is merely incidental or something more rests with the tax office. A spokesperson for the ATO explained that there are no prescriptive rules on this: ‘It is a matter of weighing up all relevant features,’ she said.

The word ‘charity’ was last defined in law 400 years ago, when it covered ‘the aid of persons decayed; the relief of the impotent, prisoners and captives; and the marriage of poor maids’.

A spokesperson for ACOSS says the modern understanding of charities has moved a long way from giving bread to the poor.

ACOSS is worried about the potential for NGO advocacy to be limited through the tax office legislation. ‘The water is getting muddier all the time,’ the spokesperson said.

Mark Lyons, a professor of social economy at the University of Technology Sydney, says that in the face of legislative uncertainty, political bias has usually ruled the day. ‘The way the government, Labor and Liberal alike, used to operate was that if they took a set against the organisation, they’d refer it to the tax office and the tax office would revoke its DGR status.’

The National Council of Women in Tasmania lost its DGR status in this way under Labor, Lyons says: ‘They got up the nose of somebody.’

In April the tax office informed the Wilderness Society that its charity and DGR status was up for review. The ATO asked for a ‘description of the nature of each activity conducted by the organisation’ from 2002 to 2004, and ‘the number of hours per week the organisation devoted to conducting each activity’ as well as copies of all directors’ meeting minutes.

The review could turn out to be a test case for what level of political activity is seen as being more than ‘ancillary or incidental.’

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.