I've now read several articles by professional journalists decrying the IPA on the basis that it is a registered charity while also participating in what many people consider to be, in the words of the charities regulator, operating with a 'disqualifying political purpose' through incubating Liberal party candidates and working on Liberal party campaigns (Roskam in AFR, 2005) to name just a couple of obvious concerns.

The question of the IPA's charitable status is valid and one which I have been researching with some enthusiasm based on the extensive work I have done this year with charities data. The Australian Charities and Not-for-Profit Comission (ACNC) provides open data on all registered charities including the so called The Trustee For Institute Of Public Affairs Research Trust. However, it may be significant to questions about their conformance with regulations that apply to charities whether or not the IPA has DGR status as a registered charity or whether their DGR status is due to their status as an Authorised Research Institute.

The regulations that disqualify charities from public support of political candidates apply to organisations awarded DGR status on the basis of their registration with the charities regulator, the ACNC. However the charities regulator is a recent entrant to regulation of the not-for-profit sector.

Prior to the establishment of the charity-specific regulator under the Labor government in December 2012, DGR status was determined solely by the ATO under the Income Tax Assessment Act and once it was granted it was unlikely to be reviewed.

The ATO had no idea if the tens of thousands of organisations that had been granted DGR status and other tax exemptions in the past were still adhering to the requirements under which exemptions were originally granted. Deductible Gift Recipient status is now granted by the ATO to registered charities on the advice of the Australian Charities & Not for Profit Commission (ACNC).

Better regulation for the not-for-profit sector was the rationale behind establishing the ACNC which has legislative power to deal with all NFPs, not just registered charities. Registered charities make up only 10% of the total 600,000 NFPs that will ultimately be required to report to the ACNC. Approximately 30,000 NFPs have DGR status.

When the ACNC was established in 2012, all registered charities that had been given DGR by the ATO were transferred to the administration of the ACNC. This transfer included the Institute of Public Affairs research trust.

Clive Hamilton reported that the IPA became a company limited limited by guarantee in 1987 so they could become an Authorised Research Institute. However, tax deductions for gifts to Authorised Research Institutes began in 1946 just three years after the IPA was founded in 1943, so it is not clear at what point the IPA was first granted tax exempt status for donations or under which version of the Income Tax Assessment Act.

According to an ATO media spokesperson, Section 73A was introduced to the ITAA (1936) in 1946. Secion 73A provides for tax deductibility for donations toward scientific research made to Approved Research Institutes:

"an approved research institute" means the Commonwealth Scientific and Industrial Research Organization, or any university, college, institute, association or organization which is approved in writing for the purposes of this section by that Organization, by the Chief Executive Officer of the NHMRC or by the Research Secretary, as an institution, association or organization for undertaking scientific research which is or may prove to be of value to Australia.

There are currently three Approving Authorities that approve organisations as ARIs: the CSIRO, the NHMRC and Department of Education and Training's Research and Higher Education Infrastructure Branch.

However the IPA was founded under previous versions of the Income Tax Assessment Act. Section 73A of the ITAA was introduced to the ITAA (1936) in 1946. Secion 73A provides for tax deductibility for donations toward scientific research made to Approved Research Institues:

'"an approved research institute" means the Commonwealth Scientific and Industrial Research Organization, or any university, college, institute, association or organization which is approved in writing for the purposes of this section by that Organization, by the Chief Executive Officer of the NHMRC or by the Research Secretary, as an institution, association or organization for undertaking scientific research which is or may prove to be of value to Australia.'

In response to my question on whether all current ARIs have been approved by the current Approving Authorities, ATO media said

We cannot confirm that all DGR endorsed Approved Research Institutes have been approved by the three current approving authorities. Some of the approved research institutes that are DGR endorsed by the ATO may have been approved by alternate approving authorities. Section 73A of the Income Tax Assessment Act 1936 (ITAA 1936) sets out the approval requirements for approved research institutes. While the CSIRO has remained constant as an approving authority, there have been changes to approving authorities over time. These changes are made in line with announced administrative changes and the ITAA 1936 is updated accordingly.

Open data provided by the ATO puts the total of ARI's at 163, however there is no list of Approved Research Institutes anywhere and the ATO claims that it is against the secrecy provisions of the Income Tax Assessment Act to make the names of ARIs public.

Some DGR data is available from the Department of Industry for download as open data but this only data only includes DGR status for Items 1, 2 and 4. Data relating to Authorised Research Institutes is Item 3 and this is not publicly available.

This leaves me none-the-wiser in understanding when the IPA first received tax exemptions. It could be as early as 1946 if it was considered to be an Authorised Research Institute when the category was first introduced to the ITAA.

I believe the relevance of the governing legislation under which the IPA enjoys tax exemptions is necessary to know how to evaluate the legal implications of the actions of the organisation as I think ARIs have different governance requirements to registered charities.