Submission from Andrew Letcher
 in response to the Draft exposure of
Tax Laws Amendment (2011
Miscellaneous Measures) Bill (No. 1)
2011: tax exempt body “in Australia”
requirements
 9th August 2011

I am deeply disappointed with the intent of the above draft legislation for two main reasons:

Reason 1: The idea that activities that benefit Australians must occur only in Australia is a parochial and old fashioned idea and is not befitting of twenty-first century policy development. Australia exists in a global society. The events of other nations have a very real and very tangible impact on Australian citizens, at home and abroad.  If a developing nation experiences political or social instability, poor health and hygiene standards or natural disaster then this can have an impact on Australian citizens in Australia. Events like this have the potential to cause:

a)	Dislocation of local people from those countries, causing some of them to attempt to travel to Australia as refugees, by boat or otherwise. This creates angst in the Australian community and efforts to manage the refugees once they arrive on Australian shores costs the taxpayer considerable sums of money.

b)	Pandemics. Avian Bird Flu, SARS and other such diseases are no respecters of international borders. If these diseases are allowed to gain a foothold in developing countries they could easily spread to Australia and have a real impact on Australian citizens. The countries were these diseases might originate may not have the resources to prevent there spreading, and low health and hygiene standards may create conditions that make the spread of these diseases to Australia more likely.

c)	Poor governance and lawlessness in developing countries can result in the development of criminal and terrorist havens that can have significant international impacts, including the potential for criminal or terrorist activities on Australian soil.

The proposed legislation would make it considerably more difficult for Australian citizens and Australian charitable organisations to be actively involved in helping developing nations improve, thereby increasing the likelihood of the above issues impacting Australian society. The challenges faced in the developing world far exceed the resources of the DGR organisations that exist in Australia today. Much good work is done by individuals, churches and other non-DGR organisations to help the people of developing nations build healthier and more stable societies. This draft legislation would cause countless numbers of goodwill projects that Australian citizens are deeply committed to, to cease. It is hard to see how this new policy direction is broadly beneficial to Australia society or consistent with our values as a nation.

Reason 2: The tone of the draft legislation (and the explanatory notes) implies that organisations that are not DGR but carry out good works overseas are suspect. Though they may have been faithfully carrying out these works for fifty, perhaps even one hundred years, they now must defend themselves against legislation that paints them as tax avoiding money launderers. This is nothing short of an insult to the hundreds of thousands of Australian citizens who give their time and money generously and sacrificially to these causes in order to help people overseas.

Reason number 1 above insults my intelligence; reason number 2 insults my heart. Furthermore, the government is seemingly attempting to solve a problem that was, in my view, adequately addressed by providing appropriate exemptions to Prescribed Institutions listed in the Income Tax Assessment Regulations 1997, Regulation 50.50.02. The draft legislation and explanatory notes have made no attempt to explain why the existing legislation is inadequate for a government body to take investigative action against organisations that are suspected of misapplying funds and then prosecute any such organisations where evidence exists of such behaviour.

In addition to this, the Federal government has taken the very welcome and wise step of launching an independent regulator for the charities and Not-for-Profit sector. It would seem to me to be sensible and prudent to hold off on this legislation and allow the new regulator to consider this issue in closer consultation with the sector, and to then make a recommendation to government on any legislative changes that might be needed. At present this proposed legislation is inconsistent with the National Compact and will provide another burden on the charitable sector.