Senate Economics Legislation Committee [Part 2], , 2:30:06 to 2:38:03
Discussion on the ATO's integrity measure for non-profit tax exemptions and the resulting surge in ACNC registrations.
Topics: Integrity, Government spending
Speakers: Senator Dean Smith, Jeremy Hirschhorn, Speaker 5, Unknown Speaker, Rob Heferen, Interjection
was interested to read the chair of the advisory uh committee's report and I thought how valuable her comments about the uh ongoing matter of the self assessment income tax exemption reform and I noticed that the ATA commissioner had been to a meeting of the advisory group in July. Can you from the ACNC's perspective uh give me an update on the uh impact of the self self assessment income tax exemption reform? and I might ask the ATO to give me an update from their perspective.
>> Uh from the ACNC perspective, you'll understand that if a uh an organization either has to register as a charity, in which case then they report to us. Uh so if they're eligible to be a charity, they need to uh register with us and if not, then it falls to the ATO and the self as the the new reporting regime. uh the number of charities that are still indicating to us that they're they're seeking registration with us because of that measure uh has sort of leveled out or even slightly de declined as a percentage. I think it's at about 42% indicate that again a voluntary question on the registration application. So we've certainly seen that the number of uh organizations applying because of that indirectly because of that measure is there. Uh I think uh we have had uh very generous support from the ATO commissioner in terms of staffing support to meet uh the extra demand. Uh that demand has sort of flattened out a bit so that also the resourcing has um reduced appropriately with
>> has it flattened out from a low level or flattened out from a high level?
>> Uh it's flattened out from a fairly high level.
>> That's what I would have thought. That's right. Yeah. Um because in the uh uh in the advisory chair's report uh she says that the report that this is the advisory board the board remains alert to the continuing impact of the self- assessment in tax income tax uh exemption reform registrations and the subsequent increase in ACNC registrations a considerable contributor to that to the to the 3.8% 8% increase in the number of charities regulated by the ACNC by the 30th of June of this year was actually as a result of that reform meaning that many many are sort of moving to the ACNC uh to get registration. >> Yes. So not necessarily organic charities is how I
>> uh yes perhaps just to explain that um over the period since the measure was first introduced the reporting measure was first introduced uh the number of charities in the years prior to that had been fairly stable at about 60,000. So some would come off the register some would come on and it would level out at about that. was fairly stable. Uh since over the last uh 3 years, I think it would be we're now up to 66 and a half thousand charities. So that's a growth of um you know over 10%. Uh and that has really primarily as far as we can ascertain from our data been as a result of of that reporting measure. So these are organizations that are eligible to be charities and are now taking that step.
>> That's right. I've calculated that on average about anywhere between 1,200 to,400 charities might have their registration revoked voluntarily um over the most over the most recent period. Commissioner, can the ATO give me an update? Perhaps you might be able to populate the commissioner's comments with some raw data.
>> You may be able to. Uh fingers crossed. I'll see if Mr. Hers can help.
>> Yes. So, Senator, we um at the time of the measure, and I I might be a little bit rough because I'm trying to work out my arithmetic on the fly, but maybe there are about 160,000 not for profofits who are self assessing us exempt without providing any information.
>> I thought it was But I'll trust you. Yep. 200,000. But I'll trust you. So
since then uh close to 50,000 of those not for profofits have lodged their self-review return so confirming that they are exempt not for profits.
>> A third
>> about a about a third um but across then of the remainder um and the numbers I have in front of me are uh around about 6,000 of the not for profofits on the prompting canceled their ABNs effectively said we no longer operate we are defunct. Mhm. about 3,000 have lodged have effectively acknowledged that they are not taxexempt. >> And they have to um either they don't have enough income to have to lodge or they've been lodging tax returns. Um according to my records about 7,000 organizations realized that they were actually had to be registered as charities not self assesses not for as exempt not for profofits. So I think
that 7,000 sort of alines >> align quite nicely
>> not precisely but certainly order of magnitude with Miss Woodward's evidence >> and uh there are still around about 100,000 not for profofits who have not yet engaged with us who we are continuing to reach out to and ask them to resolve their status one way or the other.
>> So this was an integrity measure correct?
>> It was indeed an integrity measure
because we had no visibility. >> How does it cost? How much does it cost the ATA to implement this integrity measure?
>> Senator, I' I'd have to take that on notice.
>> Yes, please. And how much integrity has been restored to the tax system in in in a dollar value thus far as a result of this initiative because it's captured 7,000.
So it um
>> it's captured 7,000 that
>> so it is is it it is um I'd say it is 3,000 to acknowledge that they are now part of they are part of the tax system. They're not exempt and 7,000 to appropriately engage with the charity system >> um where they should always have been registered.
>> Okay. So the to so the to the the cat very briefly the cat law was about 160,000 and 10,000 got caught. >> Oh sorry not not so so far 10,000 their
status has been resolved differently from how they had self assessed. Mhm. >> Um I'm of course senator as we've previously given evidence given the nature that many uh small many of these not for profofits are are small and volunteer run.
>> Correct.
>> We have been taking a very gentle stance and I suspect that many of the 100,000 are genuine small not for profofits.
>> Is that gentle in an ATA sort of cultural sense or gentle in a in a senatorial? I'm going to say I'm going
to say gentle even as understood by uh
>> common understanding of
>> so particularly gentle for the tax office perhaps >> um but I suspect also that some of the non-compliant the most deliberately non-compliant organizations will actually also be residing in that 100,000 >> and so gradually um over the course of this next year we're we will probably becoming a little bit more insistent with those 100,000 to resolve their status.
>> Okay. Well, with your with your cooperation, perhaps we can do a follow-up private briefing just in regards to this specific matter and um commissioner perhaps we can have a a wider conversation about other matters in the ACNC. Very briefly, if I can, it's just very it is genuinely very quick. I wrote to you in regards to activities of Greenpeace, illegal activities, storming a offshore rig. Uh you were quick to respond to that less than 24 hours. Thank you. But you did say you weren't able to provide me with any information. Is that still >> Thank you. Thank you, Chair.