In the past two editions of our Firm's Community & Associations Newsletter, we considered the implications of the Productivity Commission's draft report on its inquiry into philanthropy for faith-based, educational and other charitable organisations. Our Firm made a submission responding to the Draft Report and has been monitoring the Commission's inquiry into philanthropy very closely.
The Commission's final report was released on 18 July 2024. The recommendations in the Final Report are largely unchanged from the recommendations in the Draft Report. Relevantly, the Final Report recommends:
- the abolition of the school building fund and religious education in government schools DGR categories (this was proposed in the Draft Report), and the abolition of the ethics education in government schools DGR category (this was not proposed in the Draft Report). If the Commission's recommendation here was to be implemented fully, there would be a transitional period of five years where existing entities with DGR status can maintain such DGR status and continue to receive tax-deductible donations.
However, the Commonwealth Labor Government immediately rejected the Commission's recommendation that the school building fund DGR category be abolished. This will be good news for many faith-based and educational organisations that currently operate DGR school building funds.
- the expansion of DGR status to a large number of other charities that currently do not have DGR status;
- that the ACNC work to register new and existing charities with all applicable charitable subtypes where a charity has endorsement as a DGR or has indicated they will be seeking such endorsement;
- the development of a legislative definition of what constitutes a Public Benevolent Institution;
- that the Basic Religious Charity and the associated exemptions from reporting requirements under the Australian Charities and Not-for-profits Commission Act 2012 (Cth) and from the ACNC Governance Standards be abolished;
- that the ACNC Act be amended to introduce a public and private rulings scheme, which is similar to the public and private rulings scheme administered by the Australian Taxation Office; and
- certain changes to the regulatory framework affecting Public
Ancillary Funds and Private Ancillary Funds, to encourage:
- further giving to Ancillary Funds;
- flexibility in administration and operation of Ancillary Funds; and
- greater distribution of Ancillary Fund assets to eligible Deductible Gift Recipients.
The Final Report also recommends that Public Ancillary Funds and Private Ancillary Funds be renamed 'Public Giving Funds' and 'Private Giving Funds'.
The Final Report comments on our Firm's submission responding to the Draft Report, including to:
- disagree with our Firm's view that issues relating to the Basic Religious Charity were beyond the scope of the Terms of Reference for the Commission's inquiry into philanthropy – which was, in our Firm's view, in fact supposed to be focused on encouraging philanthropic giving; and
- agree with our Firm's view that the ACNC Act should be amended to introduce a rulings scheme (our Firm's view has been shared by others who responded by way of submission to the Draft Report).
The Commonwealth Government is still considering the Commission's recommendations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.