Australians concerned about tax exemption for cults

Most people are aware of the scandals surrounding the Church of Scientology. These have been covered several times on New Zealand television.

How many, though, are aware that the Scientology is registered as a charity in New Zealand? This means that are tax exempt and people making donations to them, or tithing to them, can claim tax refunds. It also means that, through our taxes, we subsidise the activity of the Church of Scientology.

What charitable work do they do? You may well ask. They are registered under the advancement of religion sector. In their  application for charitable status they list their main sector of charitable activity as “religious activities” and their main activity as providing “religious services and/or activities.”

Our tax legislation defines such activity as charitable for tax purposes. It also provides religious exemption from local body rates.

A lot of New Zealanders would probably be unhappy about this – if they knew! And this charitable status is also available to other religious cults which cause family disruptions and have been exposed as condoning child sexual abuse.

A bill to amend tax laws

In Australia the tax exemption for the Church of Scientology has caused such a scandal that there is to be a Senate inquiry into this whole question of charitable tax exemption. This is centered around a demand that charities and religious organisations should not receive tax exempt status unless they can demonstrate they serve a public benefit. Senator Nick Xenophon has drafted the Tax Laws (Public Benefit Test) Bill 2010. The Economics Committee of the Senate is taking submissions from the public on this bill.

“This proposed amendment is no threat to charities or religions acting in the public good,” Nick said. “It is simply designed to ensure that people who derive benefit from the Australian taxpayer actually provide benefit to the Australian people through good works.”

Under the Bill a Public Benefit Test would include the following principles:

  • There must be an identifiable benefit arising from an organisations aims and activities
  • The benefit must be balanced against any detriment or harm; and,
  • The benefit must be to the public or a significant section of the public and not merely to individuals with a material connection to the entity.

“This amendment will ensure taxpayer support goes only to groups and organisations that pass this basic and fair test,” Nick said.

Bill threatens powerful interests

The Senate Economics Committee is to report back the results of their inquiry by the end of August.  The submissions and final recommendation will be interesting – but don’t hold your breath. This question has much wider implications than public concern about cults. It does raise the whole question of organisations achieving tax exempt status purely for supernatural beliefs and their promotion. Many of the religious organisations currently registered as charities in New Zealand would fail the above Public Benefit Test.

The religious lobby is too powerful in Australia, as it is in most countries, for Xenophon’s bill to be allowed to succeed.

Max Wallace, author of The Purple Economy(see How to lower taxes), commented in his article The politics of religion:

“Neither the Labor Government nor the Liberal-National Coalition (with some dissenters) would want a bill like this to proceed and become law because it is a potential Pandora’s box. It threatens to throw into question the legitimacy of the tax-exempt status of other religions in Australia, for, in attempting to set additional criteria for tax-exempt status, it is impossible to have those criteria apply to only one religion. By extension, the bill opens a window into how the Australian political system itself is controlled by political parties who surrender to religion in order to ensure their re-election. “

As he points out the tax exempt status for religions in Australia are based on:

  • “All religions that have a supernatural belief, a congregation, with rituals, a building, paying stipends to a minister or someone equivalent, are eligible for tax-exempt status in Australia. Other organisations that “advance religion” in comparable ways are also eligible, such as organisations that produce and sell Bibles.
  • All religions are legally charities. To “advance religion” has been deemed to be of public benefit since the 17th century. The Tax Office makes a determination when a religion applies for tax-exempt status as to whether it meets the definition of religion. That definition came from the 1983 High Court case which involved Scientology itself: Church of the New Faith v Commissioner for Pay-roll Tax (Vic) 1983.
  • Briefly, the Court held that religion is any belief in a supernatural being, thing or principle and canons of conduct (rituals) that give effect to that belief. Senator Xenophon’s bill aims to narrow these yawning goalposts to bring in a public benefit test, presumably, as noted, along British lines.”

The situation in New Zealand is similar.

Religion and belief a private matter

Max points out that it is not the role of governments “to decide whether religion is a public benefit to citizens.” Religion and belief is a private matter for citizens, not a public matter for government.  Religions, atheists, humanists, etc.,  should not be able to get tax exemption purely for holding and promoting their beliefs:

“Government should be policy neutral between religion and non-belief. At the same time, the genuinely charitable organisations that religions run could continue to have tax-exempt status on the grounds that relief of poverty is a public benefit, subject to full disclosure of their income and expenditure in the same way that secular charities must justify their activities. Genuinely educational and scientific organisations could continue as before.”

Some religious apologists defined the privilege of religious tax exemption by suggesting that the New Zealand Humanists have similar tax exempt status. Of course it is impossible for non-supernatural organisations to legally claim tax exemption under the religion sector and the education and research sectors should not accept belief and its promotion as a legitimate reason.


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3 responses to “Australians concerned about tax exemption for cults

  1. Could you please take a look at my recent blog posts (over a weeks worth toknow the whole story)? My family is suffering at the hands of a Mennonite Pastor and I would like to hear from bloggers, what they think of it.


  2. You’re right about Aust; both the main parties currently show a religious gloss to their title, so they won’t touch this.
    It’s too bad because the benefits would be great – it would force religious groups to be more transparent, it would encourage them to engage the community in a helpful way (ie. through their charities) and if not, it would feed the community via taxes where they can provide to be nothing more than a self-serving cult.
    On the plus side at least the religious fever here in Aust (and I assume also in NZ) is less energetic as that in the US. However, I suppose as government and religion are both ideologies, they’ll always be bed-buddies, with scientific reason only called up in a moment of crisis.
    It is good that Nick continues to provide a more reasonable voice though. 🙂


  3. Pingback: Australians concerned about tax exemption for cults - The Catholic Cover Up

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