The Rationalist Society of Australia has called on the Albanese government to review laws that exempt religious charities from having to comply with the financial reporting obligations and governance standards that apply to other charities.
In a letter to the Assistant Minister for Competition, Charities and Treasury, Andrew Leigh, last week, the RSA raised concerns that “potentially billions” of dollars were going unreported in the Australian economy.
Officials from the Australian Charities and Not-for-profits Commission (ACNC) and the Australian Taxation Office confirmed the claim at Senate estimates in November and revealed that 94 per cent of ‘Basic Religious Charities’ (BRCs) – 7,719 out of 8,210 – utilised the exemption in relation to providing financial information.
Under laws passed in 2012, BRCs – which qualify for charity status solely for ‘advancing religion’ – do not need to lodge financial details or comply with other governance standards required of other charities.
In her letter Dr Leigh, RSA president Dr Meredith Doig said the Australian public could lose trust in the charity system given the increasing numbers of scandals involving religious organisations in recent years.
“We agree – and we believe the overwhelming majority of Australians would agree – with Senator David Shoebridge’s observation at Senate estimates that it was a ‘fraught environment’ to have billions of dollars moving through the economy with almost no reporting to taxation authorities,” Dr Doig said.
“One way to restore integrity to the system would be to require that the financial and governance obligations of other charities also be applied to all religious charities.”
Dr Doig reiterated that a proper inquiry was needed into the operation and scope of the tax exemption for entities claiming to be religious.
“All organisations that enjoy tax-exempt status should be obliged to demonstrate their activities are in the public benefit – as is required in the United Kingdom,” she wrote.
“Widespread doubt remains over whether it is appropriate for the ‘advancement of religion’ to be considered as a charity subtype – especially considering the great harm caused by some religious organisations, as evidenced in sexual abuse scandals, sociopathic practices such as shunning, and gross financial improprieties.”
In September last year, the RSA called on Dr Leigh to pursue reform of the charities tax system and the automatic exemption status for entities claiming to be religious in order to ensure integrity of the system.
In response, Dr Leigh said the Albanese government had committed to developing a charity sector blueprint and strategy to boost giving and would consider “proposals that support our valuable community building charities”.
In 2021, as the then opposition spokesperson, Dr Leigh suggested a parliamentary inquiry was needed into the Church of Scientology and its wealth, and allegations that it was shifting assets into Australia.
A new online petition calling for financial transparency in religious institutions and changes to charity tax laws has garnered more than 25,000 signatures.
If you want to support our work, please make a donation or become a member.
Image: Andrew Leigh MP (Facebook)
Letter to Dr Andrew Leigh, 13 April 2023
Dear Dr Leigh,
I’m writing to follow up our concerns about the inadequate financial reporting required of ‘basic religious charities’ (BRCs) to the Australian Charities and Not-for-profits Commission (ACNC).
In our letter to you in September last year, we argued there was an overwhelming public interest in ensuring the integrity of the charity system and ensuring organisations receiving charity tax exemptions were accountable.
We were alarmed to hear that at Senate estimates in November an official from the ACNC confirmed that there were “potentially billions” of dollars going unreported in the Australian economy because BRCs were exempt from submitting financial reports to tax authorities. It was revealed that 94% of BRCs – 7,719 out of 8,210 – utilise the exemption in relation to providing financial information.
At the same estimates hearing, officials from the Australian Taxation Office confirmed that there were no limitations in regards to the volume of money or the size of the charity for the use of the BRC exemption.
We agree – and we believe that the overwhelming majority of Australians would agree – with Senator David Shoebridge’s observation at Senate estimates that it was a “fraught environment” to have billions of dollars moving through the economy with almost no reporting to taxation authorities.
The Australian public may lose trust in the charity system amidst scandal after scandal involving religious organisations in recent years. One way to restore integrity to the system would be to require that the financial and governance obligations of other charities also be applied to all religious charities.
As we have said to you previously, we believe Australians want to see a proper inquiry held into the operation and scope of the tax exemption for entities claiming to be religious. All organisations that enjoy tax-exempt status should be obliged to demonstrate their activities are in the public benefit – as is required in the United Kingdom.
Widespread doubt remains over whether it is appropriate for the ‘advancement of religion’ to be considered as a charity subtype – especially considering the great harm caused by some religious organisations, as evidenced in sexual abuse scandals, sociopathic practices such as shunning, and gross financial improprieties. Further, there should be serious investigation into whether it is appropriate that the commercial operations of religious organisations should be eligible for this exemption.
Dr Leigh, will you review the 2012 laws that provide BRCs – which qualify for charity status solely for ‘advancing religion’ – with the exemption from having to lodge financial details and from complying with governance standards required of other charities?
Very sincerely,
Dr Meredith Doig,
President, Rationalist Society of Australia