The Albanese government wants the experience of The Grace Tame Foundation, and other outspoken groups, in getting charity or tax deductibility status to never happen again.
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After removing the "political gag" from charities in social services agreements soon after taking office, the Assistant Minister for Charities Andrew Leigh is now seeking to further depoliticise the struggling sector by removing "meddling" ministers with veto powers from deciding a charity's tax deductibility status.
The foundation by former Australian of the Year and child sexual assault survivor Grace Tame was belatedly given charity status last July by federal Labor after a hold-up by the former Morrison government which dragged out for nearly a year.
Ms Tame has been a frank critic of the Coalition government, particularly former prime minister Scott Morrison, but Dr Leigh has told The Canberra Times that should not come into discussions over a charity's status.
"Part of the Liberals 'war on charities' was holding up tax deductibility status for charities that didn't agree with their political views," he said.
"That happened with the Grace Tame Foundation, whose tax deductibility status was held up after Grace Tame gave Scott Morrison the side eye at The Lodge and a range of other harm prevention charities.
"And it also happened with climate change charities. We've now discovered that there were a handful of climate change charities who had done all of their paperwork in 2020, but weren't approved by the minister."
It is all over getting deductible gift recipient status. Donors can claim an income tax deduction for donations of $2 or more to an organisation that has deductible status.
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Other charity groups with adverse tax deduction decisions which were overturned include Veterinarians for Climate Action and Climate for Change, as well as the Whitsunday Conservation Council.
There are 52 official tax deduction categories for charities but four are contentious and are administered by portfolio agencies and have a ministerial veto. They relate to cultural organisations, environmental organisations, harm prevention charities and the Overseas Aid Gift Deductibility Scheme administered by the Department of Foreign Affairs and Trade.
Dr Leigh wants the four categories administered by the Australian Tax Office like the other 48 to speed up and simplify the system.
He said the ministerial sign off has been used to devastating effect on charities.
"The ability of ministers to meddle in deciding who gets tax deductibility is a hallmark of a system that really needs updating," he said.
"So we're consulting about updating the system and trying to ensure that charities get tax deductibility status, based on the good work they do in the community. Not on whether or not the political views agree with the minister."
The Assistant Minister said the charitable sector is struggling for donations and struggling for volunteers just as Australians are dealing with rising cost of living pressures.
"You have issues such as charity dumping in which these donation bins are filled with unusable items which then have to be disposed of by charities," Dr Leigh said.
"Food rescue charities are facing the challenge of there being far less food disposed of by supermarkets than in ordinary times and that's putting pressure on them. Meals on Wheels is struggling for volunteers because their volunteers tend to come from an older base and many older Australians haven't returned to volunteering activities.
"It's a challenging time for charities which are finding themselves strongly in demand."