The Government must address a gap in the charity framework, namely the exemption for religious charities having to be transparent about the benefits they receive.

There is a simple principle at the heart of the charity framework: in exchange for public benefit, the community confers public subsidy. Registered charities receive income tax exemption, fringe benefits tax concessions and GST benefits. What the community receives in return is transparency – the ability to see how those publicly subsidised assets are raised, held and deployed. The basic religious charity (BRC) exemption breaks that bargain.

Under the Australian Charities and Not-for-profits Commission Act 2012, a basic religious charity enjoys exemptions unavailable to any other registered charity. It need not answer financial questions in its Annual Information Statement, lodge annual financial reports or comply with ACNC Governance Standards. The Commissioner cannot remove or replace its responsible persons. These are not minor administrative differences. They are categorical immunities from the disclosure regime every other charity – however small, however local – must observe.

The tax concessions, meanwhile, apply in full. The financial benefits of charitable status flow without qualification; the transparency obligations do not. This asymmetry was a deliberate political accommodation made a generation ago, before a Royal Commission documented in forensic detail the governance failures of the institutions most likely to rely on it.

Last week the Assistant Minister for Charities, Andrew Leigh MP, addressed the National Press Club. He made a serious and welcome contribution. The Minister spoke compellingly about charities as trust-builders, the importance of sound governance and the Government’s commitment to a charities commission with backbone rather than, in his memorable phrase, a clipboard addiction. He acknowledged the Productivity Commission’s Future Foundations for Giving report and committed the Government to continued work on its recommendations.

I had written to the Minister in April seeking the Government’s position on the Commission’s recommendation to repeal the BRC exemption. No response had come. After the Press Club address – premised explicitly on the proposition that trust is national infrastructure – I wrote again.

The gap is not easily reconciled. The BRC exemption is the single largest structural impediment to the accountability the Minister otherwise champions. To speak at length about rebuilding civic trust while declining to address the one category of registered charity that faces no obligation to disclose its finances is, at minimum, a conspicuous omission. If the Government’s trust agenda means what the Minister says it means, the BRC exemption is its most obvious unfinished business.

The Productivity Commission recommended repeal of the exemption and concluded that removal would not contravene section 116 of the Constitution – which states the Commonwealth is not to legislate in respect of religion. The constitutional argument has been the exemption’s instinctive defence. The Commission properly distinguished between the practice of religion, which section 116 protects, and the financial administration of large incorporated institutions, which it does not. Requiring the Catholic Archdiocese of Sydney, deemed to be a body corporate under the Roman Catholic Church Trust Property Act 1936 (NSW), to publish audited accounts burdens religious practice in precisely the same sense that requiring BHP to lodge an annual report burdens mineral extraction.

The ACNC Commissioner has been equally clear. Sixteen per cent of charities on the register have no publicly available financial information. Reduced transparency, she has observed, impairs public trust and slows compliance work. Where clear breaches of law could be identified, she told the Victorian Parliament, the regulator had something to hang its hat on. Where the BRC exemption applies, that hat-peg does not exist.

The ACNC’s enforceable undertakings against Hillsong College Limited – following allegations of fraud, money laundering and tax evasion – were possible because Hillsong is not a basic religious charity and had reporting obligations against which breaches could be measured. The investigation could proceed because there was something to investigate.

The Joint Standing Committee on Electoral Matters is currently inquiring into all aspects of the conduct of the 2025 federal election and related matters. It has received disturbing testimony about the Plymouth Brethren Christian Church’s involvement, including coordinated volunteering and electoral expenditure that may have triggered disclosure obligations. The PBCC operates as a registered charity without any obligation to disclose its finances. An organisation whose members reportedly donated very substantial sums to a political lobby group and mobilised thousands of volunteers in a coordinated campaign is not required to account publicly for how it raises or deploys its resources.

The BRC exemption is not a denominational problem. It is a structural one.

In the Catholic context, the story is one of commitments made and deferred across nearly a decade. In 2020 the Australian Catholic Bishops Conference committed to publish full annual financial reports and to treat ACNC governance standards as exemplars of good practice. Neither commitment has been honoured. The Synod on Synodality, concluded in October 2024 and given magisterial authority by Pope Francis, has now insisted universally on the very things the bishops agreed to in 2020. The bishops now have every form of authority that could be required. The absence of action is explicable only by the absence of external compulsion.

The internal reform processes of the institutions most affected by the BRC exemption have demonstrated, over nearly a decade, that they will not deliver  transparency voluntarily. The exemption is a shield and it is being used as one.

The Government must eventually decide a question that is not complicated. Where the community confers a financial benefit through the tax system, it is entitled to know how the recipient deploys the resources that benefit helps to accumulate. The religious freedom argument has been examined and found wanting. The voluntary compliance record has been examined and found wanting. The constitutional position has been assessed and found navigable.

The Minister’s own framework, as he articulated it at the Press Club, points toward repeal. The gap between that framework and the exemption he did not address is the measure of what the Government has yet to decide.

The views expressed in this article may or may not reflect those of Pearls and Irritations.