House of Representatives

Charities Bill 2013

Charities Act 2013

Charities (Consequential Amendments and Transitional Provisions) Bill 2013

Explanatory Memorandum

(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Charities Bill 2013 and Charities (Consequential Amendments and Transitional Provisions) Bill 2013

3.1 These Bills are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview

3.2 The Charities Bill 2013 (the Bill) and the Charities (Consequential Amendments and Transitional Provisions) Bill 2013 introduce a definition of charity and charitable purpose for the purposes of all Commonwealth legislation.

3.3 The Government announced in the 2011-12 Budget that it would introduce a statutory definition of charity based on the 2001 Report of the Inquiry into the Definition of Charity and Related Organisations , also taking into account later judicial decisions.

3.4 The meaning of charity and charitable purpose has not previously been comprehensively defined in statute for the purposes of Commonwealth law. The meaning has been determined based on over 400 years of common law. The statutory definition largely preserves the common law principles with modifications to modernise and provide greater clarity and certainty about the meaning of charity and charitable purpose.

Human rights implications

3.5 The Bill engages three separate human rights under the International Covenant on Civil and Political Rights (ICCPR): the right to freedom of expression; the right to take part in public affairs; and the right to equality and non-discrimination.

3.6 Human rights do not apply to charities, only individuals. The Bill does not restrict individuals - it places limitations at the entity level, but only in respect of eligibility for registration under a voluntary regulatory framework. Human rights are only engaged to the extent that the Bill impacts on individuals involved with charities. Individuals are free to engage in behaviours restricted by the Bill by means other than collectively through a charity.

3.7 Registering a charity under the Bill is voluntary. The primary reason that a charity would seek registration would be to access the associated tax concessions. Entities are not required to comply with the limitations under the Bill unless they choose to register as a charity.

3.8 The Bill largely reflects the current requirements on charities under the common law. Right to freedom of expression

3.9 The right to freedom of expression is contained in article 19 of the ICCPR. The right to freedom of expression 'includes the freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any other media of his choice' (article 19(2)). Under article 19(3), the right may be limited by law, where those limitations are necessary for the respect of the rights or reputations of others; for the protection of national security or of public order; or of public health or morals.

3.10 This right is engaged because the definition of charity provides that an entity which is a charity must not have any of the disqualifying purposes set out in section 11 of the Bill.

3.11 The Bill is consistent with the right to freedom of expression.

3.12 Limitations on registered charities do not engage human rights. Human rights are only engaged to the extent that an entity which is able to access the regulatory framework and tax concessions available to charities will offer greater benefit to individuals in furthering charitable purposes than an entity which operates outside that framework and without those concessions.

3.13 Disqualifying purposes in the Bill are: the purpose of engaging in, or promoting, activities that are unlawful or contrary to public policy; or the purpose of promoting or opposing a political party or a candidate for political office. The meaning of these disqualifying purposes is discussed in the explanatory memorandum at paragraphs 1.102 to 1.111.

3.14 Activities engaged in by a charity will not necessarily constitute a purpose of that charity, that is, a charity may engage in an activity without having the purpose of engaging in that activity. For example, a charity may produce 'score cards' setting out how a particular party's policies aligns with the charity's aims and this is unlikely to constitute a purpose of that charity.

3.15 The disqualifying purposes provisions set out in the Bill are necessary for the protection of public order and national security, and they constitute a reasonable and proportionate way of achieving this protection. They reflect the common law.

3.16 First, charities must not have a purpose of engaging in, or promoting, activities that are unlawful or contrary to public policy. This restriction is currently imposed by the common law. Although 'public policy' is not defined, the Bill clarifies that it refers to matters such the rule of law, the system of government of the Commonwealth, the safety of the general public and national security.

3.17 The right to freedom of expression is engaged because individuals cannot use a charity to further a purpose of engaging in, or promoting these activities. This is necessary for the protection of public order and national security because it restricts individuals from using charities to engage in or promote certain activities, such as illegal activities, or activities which threaten national security.

3.18 This limitation on registration is reasonable and proportionate because:

individuals may engage in, or promote, these activities through other means (although they may contravene other laws);
activities are not contrary to public policy merely because they are contrary to government policy; and
it does not affect the ability of individuals to use charities to promote a change in the law. Promoting a change to any matter established by law is a charitable purpose under section 12 of the Bill, where that promotion or opposition relates to one of the other charitable purposes listed in section 12.

3.19 Second, charities must not have a purpose of promoting or opposing a political party or a candidate for political office. This is an existing limitation on charities imposed by the common law, and is necessary for the protection of public order. It promotes the integrity of both the electoral system and the not-for-profit sector by preventing both the system and the sector from misuse by people seeking to obtain a tax benefit. Further it preserves and protects the independence of the charitable sector.

3.20 This limitation on the purposes of a registered charity is reasonable and proportionate. As noted in paragraph 1.105, charities may still engage in activities such as policy debates, advocacy or lobbying activities to further charitable purposes, or publishing comparisons of party policies and how they align with their charitable purpose. They may have a purpose, including a sole purpose of promoting or opposing a change to any matter established by law, policy or practice in the Commonwealth, a state, a territory or another country may be a charitable purpose.

3.21 The Bill enables entities to generate and engage in public debate with fewer restrictions than the provisions relating to political purposes in comparable overseas jurisdictions such as the United Kingdom and New Zealand where such purpose may be only incidental or ancillary to another charitable purpose.

3.22 The engagement of charities in electoral activities may also have consequences under electoral laws. (See paragraph 1.110.)

3.23 As discussed above, this restriction on charities through disqualifying purposes is a reasonable, necessary and proportionate step towards ensuring the integrity of the not-for-profit sector.

Right to take part in public affairs

3.24 The right to take part in public affairs is contained in article 25 of the ICCPR. Relevantly, article 25 provides that 'every citizen shall have the right and the opportunity, without any of the distinctions mentioned in article 2 and without unreasonable restrictions, to take part in the conduct of public affairs, directly or through freely chosen representatives'. None of the distinctions mentioned in article 2 of the ICCPR are relevant to these provisions of the Bill.

3.25 This right is engaged in the same context as the right to freedom of expression: because the definition of charity provides that an entity which is a charity must not have any of the disqualifying purposes set out in section 11 of the Bill. These rights are closely linked.

3.26 Requiring charities to not have any disqualifying purposes is consistent with the right to take part in public affairs, and pursues the legitimate objectives of protecting public order and ensuring the integrity of the not-for-profit sector.

3.27 The objective of protecting public order is discussed above in relation to freedom of expression, and the same arguments apply to the right to take part in public affairs. The relevant provisions are reasonable restrictions based on objective criteria.

3.28 As discussed above in relation to freedom of expression, charities may still engage in activities such as policy debates, advocacy or lobbying activities to further charitable purposes, or publishing comparisons of party policies and how they align with its charitable purpose. Charities may play a significant role in public affairs, and are free to have the purpose of promoting or opposing laws, policies, and practices, where this aids an existing charitable purpose.

3.29 The disqualifying purpose of engaging in, or promoting, activities that are unlawful or contrary to public policy reflects the common law. It promotes the integrity of the not-for-profit sector by bringing the purposes of charities in line with public expectations, and ensuring that those charities do not have a purpose which is detrimental to Australian public policy and society. The Bill notes that activities are not contrary to public policy merely because they are contrary to government policy.

3.30 This provision does not prevent a charity from promoting a change to the law which is relevant to an existing charitable purpose. A purpose of promoting or opposing a change to any matter established by law, policy or practice in respect of an existing charitable purpose may itself be a charitable purpose. For example, although a charity could not have the purpose of promoting an illegal act, it may campaign for a change to that law, if such a change is in furtherance or in aid of one of the other charitable purposes listed in section 12.

3.31 Individuals are not bound by the Bill, and are free to participate in public affairs through other means. Individuals may also act collectively through entities other than charities.

3.32 The disqualifying purpose of promoting or opposing a political party or a candidate for public office promotes the not-for-profit sector by ensuring that the tax concessions associated with charities are not used for a political party or individual candidate's political benefit or detriment.

3.33 This would be inconsistent with the goals of the regulatory frameworks for the not-for-profit sector, and could undermine public confidence in the independence of the sector if such disqualifying purposes were permitted as charitable purposes.

3.34 As explained in paragraph 3.21 the provisions in the Bill relating to generating and engaging in public debate are less restrictive than in comparable overseas jurisdictions.

Right to equality and non-discrimination

3.35 Article 26 of the ICCPR provides: 'All persons are equal before the law and are entitled without any discrimination to the equal protection of the law. In this respect, the law shall prohibit any discrimination and guarantee to all persons equal and effective protection against discrimination of any ground such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.'

3.36 Distinction based on race is permissible if it constitutes legitimate differential treatment. The United Nations Human Rights Committee has noted in General Comment 18 that 'not every differentiation of treatment will constitute discrimination, if the criteria for such differentiation are reasonable and objective and if the aim is to achieve a purpose which is legitimate under the Covenant'.

3.37 As explained in paragraphs 1.89 to 1.94, the Bill creates differential treatment to address a circumstance particular to Indigenous individuals which may otherwise prevent them from meeting a public benefit test.

3.38 The requirement that a purpose be for the public benefit generally prevents entities which limit benefits to persons who are related from being charitable as such limits are not in the public benefit (a core part of charity).

3.39 However, entities may be required to provide benefits only to related Indigenous individuals where the entity manages, holds or receives property or payments related to native title or traditional land ownership, occupation, use or enjoyment rights.

3.40 The Bill allows for the purpose of an entity in these circumstances to be treated as being for the public benefit if the only reason that the purpose is not for the public benefit is because the beneficiaries are related.

3.41 The potential disadvantage arises because the common law does not allow for the special circumstances relating to native title benefits and the traditional relationships exiting between Indigenous individuals. The differential treatment is intended to rectify any disadvantage caused by the operation of the public benefit test.

3.42 The differential treatment is based on reasonable and objective criteria: it applies to the specific circumstances that create the disadvantage. That is, where any entity which has property or payments relating to native title or traditional land ownership or use has a purpose that directs benefits to Indigenous individuals only, and which does not meet the public benefit test solely because the individuals to whose benefits the purpose is directed are related to one another.

3.43 The differentiation is a proportionate response because it is limited to the specific circumstances where an entity would fail the public benefit test due only to particular restrictions on who may hold or receive benefits. The relevant entities must still meet all other requirements of the definition of a charity.

Conclusion

3.44 These Bills are compatible with human rights.

Assistant Treasurer, The Hon David Bradbury


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