Federal Charities Law and the Taxation Power: Three Constitutional Problems

Abstract

The Australian Charities and Not-for-Profits Commission Act 2012 and Australian Charities and Not-for-Profits Commission Regulation 2013 have established a comprehensive regulatory framework for the charities and not-for-profit sector at a federal level. When making the Act and Regulation the Commonwealth relied upon several heads of legislative power in section 51 of the Constitution, the most important of which is the taxation power. This article develops and assesses three arguments why the relevant provisions of the legislative scheme are not supported by the taxation power. These arguments are, firstly, that the Act and Regulations do not have a sufficient connection to the subject matter of taxation, secondly, that they are not reasonably capable of being considered appropriate and adapted to achieving a legitimate purpose or object that falls within the taxation power and, thirdly, that in combination with the Income Tax Act 1986 and Income Tax Assessment Act 1997, they impose an obligation to pay money in a manner that is so arbitrary that they cannot be characterised as laws with respect to the subject matter of taxation. It is concluded that these three lines of argument provide strong reasons why the Act and Regulations are not supported by the taxation power.