This is part of a series on charities in Australia. Read more of the series here.
Former Labor senator Chris Schacht is leading calls for the federal government to abolish the special tax treatment granted to religious institutions. His call comes in the wake of a Crikey investigation this week that revealed how large, well-heeled churches have been able to run their financial affairs in secret and with little or no accountability by signing up as a “basic religious charity” (BRC).
Schacht, the founding chair of a federal human rights sub-committee and now an ambassador for the National Secular Lobby of Australia, told Crikey it was “absolutely outrageous” that religious organisations were given an exemption from transparency and good governance, in addition to generous tax breaks.
“There should be no special exemption,” he said. “Does any of the money donated to these organisations end up being used to pay compensation for victims of abuse?”
“On the governance issue, all charities — but especially religious charities — need to be transparent about how they appoint their boards. They need to declare what they are paid, how they appoint their staff and whether or not they comply with anti-discrimination laws.
“We are talking about hundreds of millions of dollars in taxpayers’ money,” he said.
As Crikey reported this week, the BRC category came about through intense church lobbying in Canberra a decade ago as legislation was being developed to establish the regulatory Australian Charities and Not-for-profits Commission (ACNC). The BRC exemption was originally sold as being necessary to help small church entities, run by the stereotypical elderly parishioner who would struggle with meeting the online requirements of the ACNC.
Schacht’s call for change to the BRC regulation has been echoed by Victorian upper house MP Fiona Patten; David Crosbie, CEO of the Community Council for Australia (representing Australian charities and not-for-profits); and Terry Hamilton, a former assistant commissioner for the Australian Taxation Office (ATO). Hamilton has campaigned relentlessly for tax exemptions to be removed from church organisations shown to have covered up paedophile crimes during the Peter McClellan royal commission.
“The objective of protecting vulnerable people, particularly children, cannot be achieved whilst religious institutions that register as a basic religious charity do not have to comply with any governance standards,” Hamilton told Crikey.
Victorian Reason Party MP Fiona Patten has previously called for changes to the definition of a charity so as to remove tax breaks and other protections for organisations that are essentially profit-making businesses. Some hold large tax-free property and business portfolios.
“State governments can’t influence whether or not a church charity gets classified as a basic religious charity. That’s for the federal government. But states can act on areas like payroll tax exemption or land tax exemptions,” she said.
One example is the Catholic Church Insurance (CCI), which is registered as a charity with the ACNC. The ACNC’s most recent records show that CCI has more than 220 full-time staff with annual incomes totalling $351 million. The “charity” has received federal tax breaks on GST, FBT and income tax for more than 15 years.
“Paying its fair share of tax should not impair the ability of a business like this to generate profit for the church,” she said.
“My bill was to ensure that tax exemptions only applied to organisations that are engaged in objectively charitable works rather than money-spinning enterprises,” Patten said.
“Most people understand a charity to be an organisation that provides help and raises money for those in need. Genuine charitable work, including the charitable work performed by religious institutions, should be tax-exempt. However, the ‘advancement of religion’ definition for a charity permits something else and it should be removed.” (Patten’s bill was withdrawn following a complaint on technical grounds from religious conservative upper house MP Inga Peulich.)
David Crosbie told Crikey the government should “revisit” the BRC regulation.
“The 2018 expert review panel recommended it be revisited,” he said. “The Baptists and others argued for the exemption on the grounds that they had small congregations. But given the changes since (the passing of the legislation in 2012) it ought to be revisited.”
Crikey’s reports showed that multimillion-dollar organisations with large staff numbers had signed on to the BRC bandwagon. These include the Australian Catholic Bishops’ Conference, Hillsong and the Anglican Church.
Former ATO assistant commissioner Terry Hamilton said that since leaving the ATO he had identified “serious and ongoing non-compliance” by large numbers of religious institutions and other charities with both ACNC and ATO legislation.
“The High Court of Australia has set the ground rules necessary for church bodies to qualify as ‘religious institutions’ and therefore attract significant financial benefits, particularly through tax exemptions and charity status. One of the conditions is that the practices and conduct of the religious institution must not offend against the laws of Australia.
“However, the royal commission revealed that over 4000 children were sexually abused in 1691 different religious institutions, including 2489 children sexually abused in 964 religious institutions managed by the Catholic Church. I believe that the associated crimes committed by these institutions breach the taxation law obligations that must result in a forfeit of tax exemptions and registration as tax-exempt charities,” he said.
Hamilton said the charities’ law also contained a “get out of jail free” card allowing a religious institution to self-assess its formal charitable status as a “basic religious charity”, which meant it did not have to comply with the ACNC’s governance standards.
“The law must be changed to remove the concept of a “basic religious charity” so that all charities are on a level playing field that demands compliance with the ACNC’s governance standards to retain registration as a charity.”
Crikey asked Assistant Minister for Competition, Charities and Treasury Andrew Leigh earlier this week if he plans to address the appropriateness of the BRC exemptions. We have not received a response. Crikey’s request remains open.
Do you think religious charities should receive special treatment? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
Excellent article. Please keep digging and pushing this view. No religious organization should receive the BRC tax breaks. Special treatment for all religious organizations needs to be put under the microscope. Their power and reach is severely waning (see census data of actual church goers rather than just those who identfy with a religion etc). So why do they have a hold over so many of our pollies?
They don’t. They are infiltrating politics and other institutions with their adherents.
In most countries they can no longer burn people at the stake for saying the universe doesn’t revolve around the Earth, so they’ve adopted contemporary methods.
Got no problem with genuine charities. I have big problems with churches. Industrial scale rorts from start to finish. End their tax concessions now.
I would love to know the combined income and asset value of all religious institutions in Australia. And how much is sent overseas to head office. And their costs. Just wondering.
BRCs are a bit like bikie gangs and opal miners – nobody knows.
Me too.
Tax exemptions should not exist for charities, they should exist for charitable undertakings – which should mean that an organisation needs to approve that 100% of its activity was charitable to get a full tax exemption. Do this and the concept of a basic religious charity no longer exists – and tax exemptions only exist for churches for the component of their work that is actually charitable.
great concept
How do you tax gifts as opposed to payment for goods or services
And while we’re at it – lets ban taxpayer funding of Private Schools.
Yes, we have a far, far higher proportion of these private schools than comparable countries do. At the same time, our educational outcomes are certainly not superior as a result. And undesirable effects abound, including, for example, the amplification of socioeconomic class prejudice and the waste of large sums of government money on the subsidisation of some of these (already wealthy) schools.