15 February 2011

So you want to know about Australian Charities

So you have given money to your favorite charity, and you would like to know where does the money go.

Doesn't it seem that each year it seems you also paying more tax, and getting less in return

In New Zealand they have a Charity Commission
Their is a Charity Commission in England and Wales
The Scots have one as well, as does Northern Ireland
In Canada the Tax Dept looks after Charities

In the USA you can check with the IRS the status of the Charity you with to Donate to.
In the republic of Ireland they don't have a register of Charities, but the Tax Dept has a list for tax purposes. 

for more Information on giving in Canada and  Canadian Charities 

So many counties and so many rules...it's quite mind blowing, and while there are places to find specific Charity organizations such as http://www.givingineurope.org 

  To bad if your in Australia, there is no Charity Commission of any kind. There are Charity Registers such as http://www.givewell.com.au/ , but no way to see the source of any money, or how is it used, or spent.

So why should you care?
Does it matter that Churches don't pay tax on the land they own and have churches residing?
Does it matter that Churches don't pay taxes on their commercial interests?
Does it matter that the Catholic Church is worth ?????
the Uniting Church is worth, and

In 2002, the Australian Federal Government established an inquiry into the definition of a charity. That inquiry proposed that the government should legislate a definition of a charity, based on the principles developed through case law.

 In 2003 the then Government proposed a Charities Bill . The Bill incorporated a number of provisions, such as limitations on charities being involved in political campaigning, which oddly enough many charities didn't like.

The government then appointed a Board of the Taxation inquiry to consult with charities on the Bill. As a result of widespread criticism from charities (funny that), the Government decided to abandon the Bill. Afterwards the Extension of Charitable Purpose Act 2004 was passed, the just legalized the charity status of Child Care, self help groups and other religious orders, not covered elsewhere.

Recently the Govt had the Henry Tax Review, this was to be a comprehensive examination of the Australian tax system on a Federal and State level

The Government has decided against the advise to establish a Charity Commission as was recommended the the Henry Tax Review, From the ProbonoAustralia website 

The Government also rejected a Henry report recommendation that was also recommended by the Productivity Commission report - the establishment of a National Charities Commission.
The Henry report said in its report that consistent with the recommendations of previous inquiries, (2) a national charities commission should be established to monitor, regulate and provide advice to all NFP organisations (including private ancillary funds).
It said the charities commission should be tasked with streamlining the NFP tax concessions (including the application process for gift detectability), and modernising and codifying the definition of a charity.

The Henry Report said in its 1500 page report that Not for Profit organisations make a highly valued contribution to community wellbeing and receive government and community support for their activities.
It pointed out that much of the support provided to the NFP sector comes from tax concessions, including income tax exemptions, GST credits and exemptions, capped exemptions from (or rebates of) fringe benefits tax, and tax deductible gifts.

However it said this system of tax concessions is complex, and does not fully reflect current community values about the merit and social worth of the activities it subsidises.
It said the income tax and GST concessions generally do not appear to violate the principle of competitive neutrality where NFP organisations operate in commercial markets. However, the fringe benefit tax concessions provide recipient organisations with a competitive advantage in labour markets.

It said where NFP clubs operate large trading activities in the fields of gaming, catering, entertainment and hospitality, the rationale for exempting receipts from these activities from income tax on the basis of a direct connection with members is weakened.
It recommended that these issues could be addressed through: the establishment of a national charities commission to monitor, regulate and provide advice to all NFP organisations; reconfiguring the FBT concessions to alleviate competitive neutrality concerns while retaining government support for the NFP sector; and better targeting the application of the mutuality principle.
The Rudd Government rejected this as well as any future study or community discussion on a tax on bequests.  
                     ( Italics mine )

Four reports, and they all recommend some sort of State Office to regulate charities, and Australia is one of the few countries that doesn't have one. Make you wonder doesn't it ? 

David Locke from the UK Charity Commission  gave his thoughts on the matter in June 2010, he was also commenting on the Report on the Not for Profit Sector by the Productivity Commission

        So remember, the issue here is where the money that is given to Charities goes. A lot of this is from the Government, well that's really Australian tax payers money, and Australians have no way of knowing where is spent, and how much money and assets these charities have.

       A well known example is the company Sanitarium its owned by the Seventh Day Adventist church, and Sanitarium has an income of  $A300 Million, it's profits to Charity, so therefore pays no tax.

The Australian Tax Office does try to keep a lid on theses abuses :-
The decision of the High Court in F C of T v Word Investments Limited (High Court, 3 December 2008) gives a green light to charities that want to become more commercially adventurous. The ATO argued that Word should not be endorsed as an income-tax-exempt charity.

Word was a company founded by persons associated with Wycliffe Bible Translators (International), a missionary organisation. Wycliffe is particularly active in developing countries, and among sections of the population who have no written language. The missionaries learn the local language, teach people to read and write that language, translate the Bible into that language, then teach the people how to read it.

The High Court appeal centred on the fact that Word did not carry out these activities itself. Rather, it carried on a funeral business, giving its profits to Wycliffe and other organisations to enable them to perform those missionary activities. The High Court felt that there were four issues, all of which were decided against the ATO.

First, the ATO submitted that Word's objectives were not confined to religious or charitable purposes because of its funeral business. It said that the 'basic function' of Word was to conduct businesses, and that the making of profits and distributions of them to charitable institutions like Wycliffe was merely incidental to the conducting of businesses. The High Court, however, said that it was Word's purpose and the carrying out of that purpose that mattered; not how it carried out that purpose.

Second, the High Court said that an institution can be charitable where it does not engage in charitable activities beyond making profits that are directed to charitable institutions that do engage in charitable activities.

Third, the ATO submitted that if Word were to be a charitable institution, it had to ensure that the distributions it made were utilised by the donees (so far as there relevant) for the advancement of religion. However, the High Court said there was no evidence that Word knew, or ought to have known, that the entities to which it transferred its income would misapply it, or that they did misapply it (there was no suggestion that they had).

Fourth, the ATO tried to argue that Word was not entitled to be endorsed as an income-tax-exempt charity because its activities were not effected in Australia (that broadly speaking being one of the requirements for endorsement). This argument was also rejected. The ATO has revenue collection responsibilities. However, this decision suggests that some entity other than the ATO should be responsible for determining whether an entity is a charity or not.
So basically, they are a religious charity running a Tax free business. 

 Some information from a Hillsong Church insider:-

Tanya Levin’s (2007) “People in Glass Houses”, Chapter 19 (pp. 198-207)
(giving examples of how some religious groups such as Hillsong/Assemblies of God churches take advantage of our money, via the government)
“Everybody knows moonlighting’s where the money is.
When a pastor preaches at his own church, he earns his weekly salary. When he preaches at someone else’s, he gets a traditional ‘love offering’ as well. The love offering stems from the days when evangelists traveled in faith, not knowing where they might rest their heads that night or how they might feed the new baby … It is still a common practice.
The love offering is pocketed. No one sees it.”
Lou Robson reported in Brisbane’s Courier-Mail (2008):
“Prosperous pastor Benny Hinn flew into Brisbane a multimillionaire. He left, 28 hours and three shows later, an estimated $800,000 richer.
The Queensland capital was a goldmine for the flamboyant televangelist who left with cash, cheques and the bank account and credit card details of more than 50,000 Australians fans.
Some attendees, who travelled from as far away as Hong Kong and Perth, handed over gold earrings and wedding rings instead of cash.
An Australian Taxation Office spokeswoman said Pastor Hinn’s Australian haul – part of an estimated $110 million donated to the World Healing Centre Church each year – was seen as a “love offering”.
“The tax office is unable to comment on individual tax matters,” the spokeswoman said.
“However gifts received by churches aren’t usually tax-exempt unless they’re given in a personal capacity. It’s a very complicated issue.”
An Australian Customs Service spokeswoman said Pastor Hinn’s visa allowed him to leave the country two hours after his 3pm show on February 16.
He travelled aboard his $36 million Gulfstream jet to Auckland, part of a 27-stop world tour expected to generate more than $10 million.
The 105,000 Australians who attended Pastor Hinn’s shows in 1998 were believed to have donated more than $1 million.
Brisbane attendees at his February 15 and 16 shows were urged to give as much as $10,000 each. Conservative estimates place the Australian donations, minus merchandise sales, at $800,000.
Pastor Hinn says he is accountable to God and authorities which oversee not-for-profit organisations.
But on November 6, the US Senate Committee on Finance announced he would be investigated. Senator Chuck Grassley said he believed Hinn, and other wealthy pastors, had experienced personal gain through tax-exempt work.
It was believed Pastor Hinn had profited from financial donations.” 1
All tax free...good work if you can get it.

In 1993 Professor  Ole Gjems-Onstad  reported that besides Australia, only Israel and Hungary have such lax reporting laws on Charities

Now the big question is why? What is it in Australia that makes the Charities so special ?

Most Charities have a religious content......Hmmm
Could it be the longest serving PM John Howard  is a Christian, as was his Treasurer. What about Kevin Rudd, well we all know he will pray for anyone to anyone. How far into Australian society does the Purple Glove of the Church reach?  What does it do with all that money?

Just who is pulling the strings to keep the Churches money and business dealings withheld from scrutiny?

The Business Review Weekly ran a story on 24 March 2005, I can't find it on line , but the main areas of interest are found here at the ADOGS Site again the amount of money involved in staggering.

It was estimated by Treasure that the Black Economy (untaxed and cash in hand) was worth 2% of GDP, and that brought in the GST or consumption tax to Australia, the Purple Economy is certainly worth more.

  Some more financial figures I found are from John L Perkins and Frank Gomez who made a submission to the Australian Senate as part of the recent Tax Review.

But what you really need to know is that it's about 31 Billion Dollars. This is the money that is untaxed and unseen. It's money that the average Australian is partly having to make up for in Council rates and Income Tax.

$ Million 
Revenue of the 10 biggest churches
Estimated collections
Catholic Church Assets
Estimated other church assets
Notes:          W   2005 information from BRW article "God's Business" June 2006 + 20%
                    X   10% of estimated Catholic Church revenue
                    Y   2005 information from BRW article "God's Business" June 2006 + 50%
                    Z   Assumes Catholic assets same ratio of total (40.8%) as of revenue.

Table 2 – Estimates of Cost to Taxpayers

$ Million
Income tax lost (at corporate rate )
Capital gains tax lost (corporate rate) 
Grants for family counselling 
Chaplains in schools programme 
Grants to religious schools (from commonwealth) 
Grants to religious schools (from states) 
Grants for abortion counselling 
Grant for interfaith convention Melbourne 
Grant for Catholic World Youth Day (state & federal) 
Notes:          A   30% of the estimated revenue
                    B   Assumes 10% realised CG from asset holdings, property + shares
                    C   2005/2006 budget forward estimates
                    D   One third of $90 million announced over 3 years
                    E   2007 Budget Papers (90% of total non-govt of $6.256 billion)
                    F   SMH article as above estimate of NSW funding x 3
                    G   Media releases
                    H   2007 Budget Papers
                    I    Govt media + budget
Further estimates of income lost to state and local governments are given in Table 3. The information in these Tables suggests that religious organisations receive ample support via direct grants for many of their activities. It is questionable whether local and state taxpayers should pay higher taxes and rates as a result of extending exemptions to organisations that are already subsidised through direct government expenditure.

Table 3 - Income Lost to State and Local Governments
$ Million
Payroll tax exemptions
Stamp duty exemptions
Land tax exemptions
Rate income lost to councils
$ 610

J      Based on NSW treasury figures X 3 for whole country
K    Pro-rated on above
L     Pro-rated on above
M    Pro-rated on above against Association of Local Councils source

If love of money is the root of all evil, then by their own reasoning and actions, dosen't that make churches the most evil of all.?

1 Thanks to http://www.jesusallaboutlife.com/ for this

 2001 Charities Definitions Inquiry This inquiry also recommended a Charity Commission

To learn more about the role of Churches Charities and Tax in Australia The Purple Economy 
is the best reference.

Leave the matter of religion to the family altar, the church, and the private schools, supported entirely by private contributions. Keep the church and the state forever separated.  -Ulysses S. Grant

No comments: