STEPincLogo A

Displaying items by tag: tax deductibility

The Australian government proposal, first floated in 2016, to remove tax deductibility status from donations to environment groups unless they use at least 25% of their donations for on the ground works has fizzled out. But now there is a new threat with a much broader reach, the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017. This so-called ‘foreign donations bill’ has been introduced in the name of protecting Australian politics from foreign influence. This poorly constructed bill would devastate the work of charities across the board if it goes ahead.

It is a great idea to limit foreign donations to political parties but this bill, as drafted, will have other much broader consequences for democracy in Australia. It could shut down the voices of community advocates, impose burdensome red tape restricting their work and it could severely limit the ability to do research and provide information to assist the general public to understand or participate in public debate.

All organisations that spent $100,000 or more on political activities in any of the previous four years would have to register as a ‘political campaigner’. Political expenditure is broadly defined and includes the expression of ‘any views on an issue that is, or is likely to be, before electors in an election’ whether it is during the campaign period or not. The cost of many charities’ advocacy on issues including homelessness, the age pension, low wages, refugees and the environment would be deemed political expenditure, forcing them to register.

The new status of ‘political campaigner’ comes with requirements to keep records to ensure donors of more than $250 pa are ‘allowable donors’ – such as Australian citizens or residents – and are not foreign entities. To comply donors would have to complete a statutory declaration and have it signed by a justice of the peace. It would be nigh impossible for groups to track individual donations and then ask for a statutory declaration. In any case many donors are likely to not bother. Other red tape requirements include the nomination of a financial controller that is liable for the charities’ disclosures, and the disclosure of the political affiliations of senior staff.

For donations from non-citizens or non-residents, charities would have to set up special accounts to keep revenue separate from other sources and ensure it was not spent on political expenditure. Breaches of these rules could trigger fines of more than $50,000.The ultimate effect for charities will be a set of complex, cumbersome and costly administrative requirements.

An example of an organisation that would be affected is the World Wildlife Fund that has over a number of years been strong advocates for Australia leading on conservation measures in the Antarctic. Their ability to advocate for that cause is only possible in large part because of funding from international donors and they will be restricted or banned from doing that.

Constitutional law experts have warned that the law is likely to be unconstitutional


There has been a strong campaign against the proposed law from charities in all spheres. On 10 April the Senate electoral committee released a bipartisan report with 15 recommendations related to the bill. Notably, they called for the Australian government to rewrite parts of its foreign donations bill, which would remove some of the contentious elements related to charities funding. If these recommendations are agreed the bill will still create new obstacles for charities speaking out for the people they represent. Charities are still calling for the bill to be totally redrafted.

Published in STEP Matters 195

STEP’s public fund, the Environment Protection Fund, is registered as a Deductible Gift Recipient (DGR) via the Register of Environmental Organisations administered by the Department of Environment and Heritage. This means that donations to the fund can be claimed as a tax deduction.

We have received the annual return form. This form used to be a simple exercise especially for a small organisations like STEP. However this time there are more questions. The government wants to know the breakup of the application of donations in categories of on-ground environmental remediation (no definition provided), research, education, advocacy, legal, overseas, administration and staff. Is this question anticipating a change in the eligibility requirements for DGR status of donations?

In 2016 the Senate Standing Committee on the Environment conducted an enquiry on this issue. The committee’s report concluded that the purpose of granting DGR status should be to support practical environmental work in the community but then took a very narrow interpretation of the meaning of ‘practical’ and recommended that:

annual expenditure on environmental work be no less than 25% of the organisation’s annual expenditure from its public fund.

Treasury has released a Discussion Paper on this issue and the general administration processes for charities. Currently there is overlap and some confusion between reporting and responsibilities under the Charities and Not-for-profits Commission and the Register of Environmental Organisations. Resolving these issues is welcome but they are also proposing that eligibility should be based on the amount of remediation work carried out.

Why single out the environment organisations for what is basically a financial penalty compared with other charities and lobby groups?

The Discussion Paper states that:

DGR tax arrangements are intended to encourage philanthropy and provide support for the not-for-profit (NFP) sector. Along with other tax concessions to the NFP sector, DGR status encourages the delivery of goods and services that are of public benefit.

It asks for ‘stakeholder views’ on the recommendations of the parliamentary committee, and also whether the government should go even further:

Views are sought on requiring environmental organisations to commit no less than 25% of their annual expenditure from their public fund to environmental remediation, and whether a higher limit, such as 50%, should be considered?

We ask the question, is the revenue forgone in providing tax deductions to environment groups a cost or a benefit? It is more cost effective to prevent damage to the environment in the first place rather than clean up the mess afterwards.

Activities like research, education and monitoring are vital for the prevention of damage. Take as an example the recent ABC program on Four Corners of illegal dumping of construction waste next to the Hunter River discovered by the Community Environment Network on the Central Coast. They were doing the job for the Environment Protection Authority. How much would the clean-up cost if dumping continued unabated? This monitoring would not count as remediation.

Donations and their tax deductibility are especially valuable for organisations like the Environmental Defenders Offices that provide a vital means for the general public to receive advice of their rights when threatened by developments.

Often it is the people living near the development site or mine who are aware of the potential damage not the government bodies. Take the coal seam gas exploration operations as an example, local farmers had no way of obtaining the scientific analysis to be able to object to miners entering their land. Ultimately when the full picture of potential groundwater pollution became clearer the NSW government had to take steps to limit the powers of miners to explore.

Business lobby groups like the NSW Minerals Council are actively supporting the limitation on deductibility status on the grounds that groups like Lock the Gate are simply activists ‘destroying the economy’.

If the proposal goes ahead it will demonstrate that the financial clout and expert lobbying teams of business interests are more important than the views and wellbeing of individual citizens who are concerned about the environment or are adversely affected by a development.

Submissions are now closed but STEP found out about the paper in time to make a submission. It is not too late to send a protest to your local member of federal parliament.

Published in STEP Matters 192