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Not for profit Law's submission to the Treasury’s Tax Deductible Gift Recipient Reform Opportunities Discussion Paper (the Discussion paper) makes the following overall comments
- Burden on small charities: We are concerned that several proposals in the Discussion Paper would have a direct and disproportionately negative impact on these charities, adding unnecessary, additional reporting obligations for no clear public benefit
- Need for broader deductible gift recipient reform: We have advocated for the simplification and transparency of NFP tax concessions, including in relation to deductible gift recipient (DGR) endorsement since the establishment of our service in 2008. Our previous recommendations, aligned with the Productivity Commission’s Contribution of the Not-for-profit Sector 2010 report and the Not-for-profit Sector Tax Concession Working Group’s 2013 report that DGR endorsement should be simplified and extended to all charities registered with the Australian Charities and Not-for-profits Commission (ACNC), where those charities use donated funds for purposes not solely for the advancement of religion, childcare, or primary or secondary education. While we appreciate that the Discussion Paper has not proposed such extensive change, we reiterate that any attempt to reform the DGR system without addressing the fundamentally ad hoc, disparate nature of the existing system will do little to reduce the overall complexity and workability of the DGR framework
- Streamlining processes and reporting: In principle, Not-for-profit Law supports the proposal that DGRs (other than government entities) be required to register with and report to the ACNC as charities in order to be eligible for DGR endorsement, provided that they otherwise meet the requirements for charitable registration. However, we note that this broad proposal requires further investigation. Not-for-profit Law welcomes the proposal to remove the burdensome requirements for charities on the Register of Harm Prevention Charities, Register of Cultural Organisations and Register of Environmental Organisations to establish and maintain public funds, where the purposes of the public fund are the same as the entity. We recommend that further consideration is given to the potential impact of removing public fund requirements where the entity running the public fund and the public fund itself do not have the same purposes, to ensure that such reform does not require the establishment of a separate entity.
- Some proposals unworkable and unnecessary: Not-for-profit law is strongly opposed to the proposals for additional reporting about advocacy activities and a requirement for environmental organisations to spend a percentage of their annual revenue on remediation work. We are also of the view that there is no evidence to support rolling reviews of DGRs or a sunset period for specifically listed DGRs
We also specifically comment on the following questions:
Q4. Should the ACNC require additional information from all charities about their advocacy activities?
Q5. Is the Annual Information Statement the appropriate vehicle for collecting this information?
Q6. What is the best way to collect the information without imposing a significant additional reporting burden?
Q7. What are stakeholders’ views on the proposal to transfer the administration of the four DGR Registers to the ATO? Are there any specific issues that need consideration?
Q9. What are stakeholders’ views on the introduction of a formal rolling review program and the proposals to require DGRs to make annual certifications? Are there other approaches that could be considered?
Q10. What are stakeholders’ views on who should be reviewed in the first instance? What should be considered when determining this?
Q11. What are stakeholders’ views on the idea of having a general sunset rule of five years for specifically listed DGRs? What about existing listings, should they be reviewed at least once every five years to ensure they continue to meet the ‘exceptional circumstances’ policy requirement for listing?
Q12. Stakeholders’ views are sought on requiring environmental organisations to commit no less than 25 per cent of their annual expenditure from their public fund to environmental remediation, and whether a higher limit, such as 50 per cent, should be considered? In particular, what are the potential benefits and the potential regulatory burden? How could the proposal be implemented to minimise the regulatory burden?
Q13. Stakeholders’ views are sought on the need for sanctions. Would the proposal to require DGRs to be ACNC registered charities and therefore subject to ACNC’s governance standards and supervision ensure that environmental DGRs are operating lawfully?
Read our submission