Explanatory Memorandum
(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)Chapter 12 Reviews and appeals
Outline of chapter
12.1 This Chapter explains:
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- the review and appeal framework under this Bill;
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- what decisions can be reviewed and how they are reviewed and appealed; and
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- the process for appealing a decision to the Administrative Appeals Tribunal (AAT) or court.
Summary of new law
Overview of the review and appeal framework
12.2 The review and appeal framework of the Bill sets out the processes for an entity to challenge certain decisions of the Australian Charities and Not-for-profits Commission Commissioner (ACNC Commissioner), if they are dissatisfied with the ACNC Commissioner's decision.
12.3 These processes are consistent with the review and appeal rights under other Commonwealth legislation and allow objections related to reviewable decisions to be properly reviewed by the ACNC, or to be independently reviewed by the AAT or the courts. [Subsection 155-5(1)]
12.4 The structure of the review and appeal framework in this Bill is modelled closely on the existing review and appeal framework in Part IVC of the Taxation Administration Act 1953 (TAA 1953). This ensures that whilst decisions of the ACNC Commissioner will be reviewed independently and separately from the processes in the tax law, the way in which the review and appeal process operate will be familiar to those NFP entities that operated prior to the establishment of the ACNC and were previously endorsed by the Commissioner of Taxation.
12.5 Consistency between the review and appeal framework in this Bill and in the taxation law also allows for decisions of the ACNC Commissioner and the Commissioner of Taxation to be heard together. This reduces compliance costs for charities that are dissatisfied by a decision and wish to object to both decisions. This is further discussed at paragraph 12.97 of this Chapter.
Detailed explanation of new law
Who can have a decision reviewed?
12.6 Only an entity that is directly affected by the decision can utilise review and appeal rights in respect to the decision of the ACNC Commissioner.
12.7 This ensures that parties are fully informed of the circumstances surrounding the ACNC Commissioner's decisions, and limits the right to lodge objections to those that have a direct stake in the ACNC Commissioner's decision.
12.8 An entity for the purposes of this framework will commonly include an entity that is registered under this Bill, a responsible entity of that registered entity, or an entity that is in the process of applying for registration under this Bill.
What decisions can be reviewed?
12.9 The types of decisions that are reviewable are referenced at various points throughout the Bill as being reviewable under Part 7-2. For the purposes of Part 7-2 these decisions are referred to as an 'administrative decision'. [Subsection 155-5(2)]
12.10 An administrative decision commonly includes decisions made by the ACNC Commissioner which affect a particular entity that may be applying for registration under this Bill or relate to the registration or regulation of that particular entity.
12.11 Within this Bill, the following decisions are 'administrative decisions':
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- refusal of application for registration [Subsection 30-15(4)] ;
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- refusal of registration [Section 30-35] ;
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- revocation of registration [Section 35-20] ;
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- decision to give a direction [Paragraph 85-25(a)] ;
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- decision to vary a direction [Paragraph 85-25(b)] ;
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- decision not to vary or revoke a decisions after 12 months [Paragraph 85-25(c)] ;
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- decision to suspend the responsible entity [Paragraph 100-10(10)(a)] ;
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- decision to change the time a suspension of the responsible entity ends [Paragraph 100-10(10)(b)]
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- decision to remove a responsible entity [Subsection 100-15(7)] ; and
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- decision to remit all or a part of an administrative penalty [Subsection 175-60(3)] .
12.12 Where there are multiple administrative decisions that affect the entity and the entity wishes to challenge an administrative decision under Part 7-2 of the Bill, the set of administrative decisions are deemed to be the one decision. [Section 155-10]
12.13 This allows the ACNC Commissioner to consider circumstances in full and to explicitly consider the implications of changing one decision on other related decisions.
12.14 Entities may also be able to have related decisions of another Commonwealth Government agency or department considered jointly with a review of the ACNC Commissioner's decision by the AAT or courts where certain conditions are met. This is further discussed at paragraph 12.97 of this Chapter.
How is a decision reviewed?
12.15 The review and appeal framework of this Bill provides entities with a number of avenues to have decisions made by the ACNC Commissioner reviewed. These include:
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- making an objection to an administrative decision;
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- reviewing an objection decision or an extension-of-time-refusal decision by the AAT;
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- reviewing an objection decision by the courts; or
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- making a combined application for AAT review or appeal to the court.
Making an objection to an administrative decision
12.16 An entity that is dissatisfied by an administrative decision under this Bill can have that decision reviewed by making an objection to the ACNC Commissioner. [Subsection 155-5(1)]
12.17 So that the objection can be fully considered, it must be lodged in the form specified by the ACNC Commissioner, within a specified period and must state in detail the ground on which the entity is objecting to the decision. [Section 160-5]
12.18 When determining the approved form for lodging objections, the ACNC Commissioner can specify the information required in order to develop a view and respond to lodged objections.
Timeframe for lodging an objection
12.19 The review period means the period of time in which the objection must be lodged and is 60 days after the administrative decision has been served on the entity. This time period provides adequate time for registered entities and responsible entities to consider administrative decisions and develop a case for objection. [Subsection 160-10(1)]
12.20 The review period is also consistent with the timeframe provided under other Commonwealth review and appeal provisions such as section 14ZW of the TAA 1953 which applies to taxpayers wishing to make a taxation objection.
12.21 Where the entity is unable to meet the review period, the entity may apply to the ACNC Commissioner for late lodgement of the objection by lodging the objection along with a written request to the ACNC Commissioner to have the objection considered despite the late lodgement. [Subsection 160-10(2)]
12.22 The written request must include information about why the entity was unable to meet the 60 day time period and give reasons for why the ACNC Commissioner should consider the late lodgement of the objection. [Subsection 160-10(3)]
12.23 The ACNC Commissioner may only accept late lodgement of objections in special circumstances including, but not limited to, situations where:
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- there were unforeseeable and uncontrollable events; or
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- further time is required to ensure all the relevant facts are considered in coming to a view on the objection.
Example 12.53
Jerry is a responsible entity for a registered entity and wishes to object to a decision under this Bill. However, before the end of the review period, Jerry could not lodge the objection with the ACNC because of an unforeseen information technology failure.
In this situation it is likely that the ACNC Commissioner would accept an application for a late objection lodgement from Jerry.Example 12.54
Carrie is the contact officer for an entity applying to be registered under this Bill and is dissatisfied with a decision of the ACNC Commissioner. However, before she can lodge the objection with the ACNC in the review period, there is a devastating natural disaster in her location.
In this situation, it is likely that the ACNC Commissioner would accept an application for a late objection lodgement from Carrie.Example 12.55
Priyanka is the responsible entity for a registered entity under the Bill and is dissatisfied with a decision of the ACNC Commissioner and wishes to lodge an objection.
However, the review period ends one month before the latest financial statements are ready and Priyanka applies for late lodgement of the objection to take account of the latest financial statement.
In this situation, it is likely that the ACNC Commissioner would accept an application for a late objection lodgement from Priyanka.
12.24 After considering the late lodgement request, the ACNC Commissioner must make a decision to accept or reject the request and give the entity written notice of that decision. [Subsections 160-10(4) and (5)]
12.25 Where the ACNC Commissioner accepts the request, then the objection is treated as if it was lodged within the review period. However, where the ACNC Commissioner rejects the request, the objection will be refused and the entity can then apply to the AAT for review of the extension of time refusal decision. [Subsections 160-10(6) and (7)]
Making the decision
12.26 Once an objection has been lodged with the ACNC Commissioner in the approved form and within the review period, the ACNC Commissioner is required to consider the grounds on which the objection was made and make a decision about whether to allow the objection, wholly or in part, or disallow it. [Subsection 160-15(1)]
12.27 This decision of the ACNC Commissioner is referred to as an objection decision and the ACNC Commissioner must, after making the objection decision, provide the entity with written notice of the decision. [Subsections 160-15(2) and (3)]
12.28 This written notice will notify the entity of the ACNC Commissioner's objection decision and set out any further review and appeal rights open to the entity under Part 7-2 of this Bill. The written notice will also inform the entity that they may request a statement of reasons for the objection decision as per their rights under subsection 28(1) of the Administrative Appeals Tribunal Act 1975 (AAT Act).
12.29 Where the entity decides to request the ACNC Commissioner to provide a written notice providing a statement of reasons for the objection decision, the ACNC Commissioner shall provide this notice to the entity as soon as practicable but, in any case, within 28 days of making the request.
12.30 Pursuant to section 28 of the AAT Act, the statement of reasons should set out the findings on the material questions of fact, make reference to material or other information on which those findings were based, and provide clearly articulated reasons for the decision.
Requiring the ACNC Commissioner to make a decision
12.31 Under this Bill, if an entity has lodged an objection with the ACNC Commissioner in accordance with the requirements of section 160-5, they can, by written notice, require the ACNC Commissioner to make an objection decision where that decision has not been made within a particular timeframe. [Subsection 160-20(1)]
12.32 That timeframe is the later of:
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- 60 days after the day that the objection was lodged with the ACNC Commissioner (otherwise referred to as the objection day ); and
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- 60 days after the ACNC Commissioner has received the necessary information, in the case where the ACNC Commissioner requires the entity to give further information relating to the objection (so long as the ACNC Commissioner requested this further information within the original 60 day period following the lodgement of the objection).
12.33 To clarify further, the objection day referred to above is also intended to mean the day on which the ACNC Commissioner agrees to allow a late objection lodgement. [Subsection 160-20(2)]
12.34 Where an entity provides the ACNC Commissioner with a written notice requiring a decision to be made, the ACNC Commissioner then has 60 days to make an objection decision. If no decision has been made by then, the ACNC Commissioner is taken to have disallowed the objection, allowing the entity to move to the next stage of the review and appeal process. [Subsection 160-20(3)]
Reviewing an objection decision or an extension of time refusal decision by the AAT
12.35 Division 165 of this Bill enables entities to apply to the AAT where they are dissatisfied with the ACNC Commissioner's objection decision or refusal to provide an extension of time decision (collectively referred to as a 'Commissioner's decision' for the rest of this Chapter). [Paragraph 160-25(a) and subsection 160-10(7)]
12.36 Only entities that are directly affected by a decision of the ACNC Commissioner can apply for an independent review of the Commissioner's decision by the AAT. This is consistent with the framework for objections to an administrative decision.
12.37 When making an application to the AAT for review, the entity is limited to arguing on the grounds stated in the objection to which the relevant decision relates. This is intended to ensure that the AAT has sufficient knowledge and information to handle the objection and that only relevant facts are considered to promote administrative efficiency by limiting the scope of appeals to directly relevant issues. [Paragraph 165-40(a)]
12.38 The entity, when making an application to the AAT, also has the burden of proving that the Commissioner's decision is wrong and should have not been made, or should have been made differently. [Paragraph 165-40(b)]
12.39 This burden is appropriately placed on the entity making the application as it is consistent with common law principles that the party bringing a law-suit or claiming that another entity's decision is wrong must prove that this is indeed the case. Further, the facts and evidence relating to these disputes are peculiarly within the knowledge of dissatisfied entities.
12.40 Both limiting the grounds of objection and placing the burden of proof on the applicant is consistent with Part IVC of the TAA 1953 and it is intended that this Bill operate in the same manner.
12.41 Entities that apply to the AAT for review of a decision are required to comply with the Commissioner's decisions until the AAT review is finalised, and the AAT amends or revokes the decision. [Section 165-50]
12.42 The fact that a registered entity or responsible individual has applied for an AAT review or is granted an AAT review cannot be used as an excuse to fail to implement or comply with a decision of the ACNC Commissioner.
12.43 Entities are required to comply with the Commissioner's decision until the AAT review is finalised because it will often be the case that the Commissioner's decisions will have flow-on implications for the work of other government departments and agencies. For that reason, it is necessary to ensure that the Commissioner's decision remains in place until the review and appeal process has concluded.
12.44 This ensures that decisions of other government departments and agencies, including the Commissioner of Taxation, are not required to be amended multiple times causing uncertainty for the registered entity and potentially increasing administrative costs for government departments and agencies.
12.45 Once the AAT's decision on the review of a Commissioner's decision has become final, the ACNC Commissioner has 60 days to implement the AAT's decision. This includes amending any determination as is necessary to give effect to the decision. [Section 165-45]
12.46 For the purposes of determining when a decision is final, where no such appeal has been made within the appeal period, then the AAT's decision is taken as final and must be implemented by the ACNC Commissioner after 60 days. [Subsection 165-45(2)]
Modifications to the application of the AAT Act to this Bill
12.47 Under this Bill there are modifications to the manner in which the AAT Act applies to a Commissioner's decision.
12.48 The modifications are made to promote transparency and accountability over the operations and activities of the sector, promote administrative efficiency, and make provisions specific to the documents and notices that the ACNC Commissioner will provide.
12.49 These modifications are also modelled on Part IVC of the TAA 1953 and are intended to operate in the same manner.
Modifications to sections 27, 41 and 44A of the AAT Act
12.50 Under this Bill, sections 27 and 41 of the AAT Act do not apply to a Commissioner's decision and section 44A of the AAT Act will not apply to objection decisions only. [Section 165-10]
Section 27 of the AAT Act
12.51 Section 27 of the AAT Act allows an application to be made to the AAT for a review of a decision by or on behalf of any person, or persons, whose interests are affected by the decision.
12.52 The AAT Act defines an association of persons to have interests that are affected by a decision if the decision relates to a matter which is included in the objects or purposes of the association.
12.53 This provision would allow persons or entities beyond those that are directly affected by the decision to apply for a review.
12.54 The charities sector is made up of an estimated 56,000 entities. It is possible that decisions which relate to, for example, registration, could affect a large segment of the sector. Under this AAT Act provision, a large segment of the sector and public (including donors and members) would potentially be able to apply for a review which would be an inefficient use of government resources, as well as those of the registered entity.
12.55 Likewise, were section 27 of the AAT Act to apply to a Commissioner's decision, entities that would apply under section 27 but were affected indirectly by the decision, may not have access to private information considered in objection decisions.
12.56 The modification ensures that only well-informed registered entities or responsible entities (those entities directly affected by decisions) are able to initiate an AAT review.
12.57 Entities indirectly affected by decisions would not be able to initiate AAT reviews, however, they would have the right to become party to an initiated review which would allow the review to cover important tangential issues of relevance. See paragraph 12.76 of this Chapter.
Section 41 of the AAT Act
12.58 Section 41 of the AAT Act allows the AAT to make an order varying or revoking the objection decision related to the review prior to completion of the review, if the AAT is of the view that the order would be appropriate for the purposes of securing the effectiveness of the hearing.
12.59 The section also allows the person who made the decisions, in this case the ACNC Commissioner, to make a submission in relation to the matter.
12.60 Providing the AAT with the authority to amend or vary the ACNC Commissioner's objection decision without having conducted a full review could undermine the authority of the ACNC Commissioner and create uncertainty for the sector.
12.61 The ACNC Commissioner's decisions will have flow-on implications for the work of other government departments and agencies. Given these linkages, providing the AAT with the authority to change objection decisions made by the ACNC Commissioner without a full review would introduce administrative costs for these other departments and agencies who would have to change tax assessments, the issuance of grants or similar decisions on multiple occasions.
12.62 Furthermore, it would also result in the AAT authorising the spending of public monies, a responsibility that appropriately rests with the agency authorised to do so by the Parliament.
12.63 Such decisions may also undermine the object of this Bill by affecting the public's reliance on the ACN Register because an entity's registration may change multiple times in respect of the same period.
12.64 The Bill currently employs the tax law review and appeal model so that decisions of the ACNC Commissioner and of the Commissioner of Taxation can be managed together in any review by the AAT or by the Courts.
12.65 There are a number of reasons why this single review model is used for the ACNC. Allowing decisions of both the ACNC Commissioner and the Commissioner of Taxation to be reviewed together ensures that compliance costs and administrative expense are minimised. Furthermore, it prevents erosion of tax system integrity. Finally, it ensures the equitable treatment of all taxpayers.
12.66 Despite provisions in the Bill which modify this section of the AAT Act, the ACNC Commissioner retains the ability to offer a registered entity an administrative stay of the review or appeal decision, in certain circumstances.
12.67 The ACNC Commissioner may negotiate with a registered entity to allow the entity to continue to operate as if registered with the ACNC, pending the outcome of the review or appeal process, similar to the administrative concession offered by the Commissioner of Taxation. This negotiation would take into consideration the Commissioner of Taxation's views about the revenue at risk, the potential risk to donors and the legitimacy of the basis on which an entity reviews or appeals a decision (that is, whether the entity is merely attempting to delay a decision, or not).
12.68 In negotiating an administrative stay of a decision, the ACNC Commissioner must have regard for the need to consult with other regulators to ensure that an administrative stay of a decision is appropriate in each circumstance. This is because the ACNC Commissioner's decision can have significant implications for other Commonwealth regulatory systems, including the tax system, prudential regulatory system and money laundering and terrorist financing regulation.
Section 44A of the AAT Act
12.69 In cases where there is an appeal to the Federal Court of Australia, section 44A of the AAT Act allows the courts to make orders varying or affecting the operations or implementation of the ACNC Commissioner's objection decision.
12.70 The policy reasons for why section 44A of the AAT Act should not apply to objection decisions made by the ACNC Commissioner are the same as those given for section 41 of the AAT Act as described above.
12.71 As explained under the heading 'Section 41 of the AAT Act' above, the ACNC Commissioner can negotiate with a registered entity an administrative stay to allow the registered entity to operate as if it were registered with the ACNC pending a decision, in low-risk cases.
Modification to section 29 of the AAT Act
12.72 Section 29 of the AAT Act sets out the processes and framework for applying for an AAT review.
12.73 The modification to section 29 of the AAT Act within this Bill makes it clear that applications must be in writing, lodged with the AAT, and lodged within 60 days after the entity making the application is served with the ACNC Commissioner's written notice of the objection decision. [Section 165-15]
12.74 The 60-day timeframe ensures consistency with the time period for lodging objections with the ACNC Commissioner.
12.75 The modifications within the Bill are identical to those made in section 14ZZC of the TAA 1953.
Modification to section 30 of the AAT Act
12.76 Subsection 30(1A) of the AAT Act allows other persons whose interests are affected by the decision which is being reviewed by the AAT to apply to become a party to the proceedings.
12.77 The modification to subsection 30(1A) of the AAT Act in this Bill makes clear that the person making application to be party to the proceedings consents to the order made by the AAT. [Section 165-20]
12.78 This enables entities indirectly affected by decision to become party to an initiated review which would allow the review to cover tangential issues of relevance.
Modification to section 37 of the AAT Act
12.79 Subsection 37(1) of the AAT Act provides guidance to the person with the authority to make objection decisions, in this case the ACNC Commissioner, on the documents that have to be lodged with the AAT.
12.80 It also provides the AAT with authority to shorten deadlines and request documents setting out reasons for objection decisions, and outlines situations where the person with the authority to make objection decisions is not required to lodge documents.
12.81 The proposed modifications to section 37 of the AAT Act in this Bill simplify these requirements leaving no uncertainty over the documents and information the ACNC Commissioner would have to provide the AAT, and makes the wording consistent with the documents and notices issued by the ACNC. [Paragraph 165-25(1)(a)]
12.82 Subsection 37(2) of the AAT Act provides for the AAT to request other documents or information that it feels may be required to conduct its review in an effective manner.
12.83 Modifications to this provision under this Bill allow the AAT to make requests orally at a conference as defined in the AAT Act, and allow the AAT to request a list of documents that is in the person's possession or under the person's control. [Paragraph 165-25(1)(b)]
12.84 This simplifies the authority for the AAT to request relevant information and extend authority to allow the AAT to request a list of documents, including in a conference setting. [Section 165-25]
12.85 A related consequential modification will also be made to section 38 of the AAT Act so that a reference to paragraph 37(1)(a) of the AAT Act within section 38 is instead read as a reference to subparagraph 165-25(1)(a)(i) of the Bill. [Section 165-30]
Modification to section 43 of the AAT Act
12.86 Section 43 of the AAT Act mandates that the AAT give reasons orally or in writing for its decision, and provides parties to the proceeding the right to request reasons in writing from the AAT.
12.87 The modification to section 43 of the AAT Act in this Bill ensures that the AAT has the authority to publish decisions related to both private and public hearings. This extension is particularly important for an objection decision of the ACNC Commissioner as the sector is comprised of entities that operate for the public benefit and it is necessary that this information be made public to promote transparency and accountability in the NFP sector. [Section 165-35]
Reviewing an objection decision by the courts
12.88 Under the review and appeal framework of this Bill, an entity who is dissatisfied with an objection decision of the ACNC Commissioner has the right to appeal to the courts. [Paragraph 160-25(b)]
12.89 To have the decision reviewed by the courts the entity must lodge an appeal with the relevant court within 60 days of receiving written notice from the ACNC Commissioner of the objection decision. [Section 170-5]
12.90 When making an appeal to the court, the entity is limited to arguing on the grounds stated in the objection to which the relevant decision relates. They also have the burden of proving that the ACNC Commissioner's decision is wrong and should not have been made, or should have been made differently. [Section 170-10]
12.91 This is consistent with the treatment for entities having the decision reviewed by the AAT as explained at paragraph 12.38 of this Chapter.
12.92 The court may make any order it sees fit when hearing an appeal against an objection decision. This would include an order to confirm or vary the objection decision. [Section 170-15]
12.93 Where the court makes an order that is final, the ACNC Commissioner has 60 days to do all things necessary to implement the court's decisions. This provides adequate time for the ACNC Commissioner to go through required administrative processes to implement the courts' findings. [Subsection 170-20(1)]
12.94 A court order is final when no appeal is lodged against the order within the period for lodging an appeal. Where the only possible appeal against the order is to the High Court of Australia with special leave, and no application for special leave is made within the period of 30 days after the order is made, then the order will also be considered final. [Subsection 170-20(2)]
12.95 The fact that an appeal is pending does not interfere with, or affect, the objection decision. This ensures that the ACNC Commissioner's authority is not undermined and limits any uncertainty for the NFP sector related to the application of objection decisions once an appeal to the Courts has been, or is being, lodged. [Section 170-25]
12.96 Decisions of the ACNC Commissioner have flow-on effects for the work of other government departments and agencies. Given these inter-linkages, ensuring that objection decisions remain valid until otherwise determined ensures compliance costs for NFPs and administrative costs for governments are not increased unnecessarily.
Making a combined application for AAT review or appeal to the court
12.97 Under this Bill, entities that are dissatisfied with a decision of the ACNC Commissioner and are also intending to apply for a review or appeal of a related administrative decision taken by another government agency or department, either simultaneously or sequentially, are able to make a joint action in certain circumstances. [Sections 165-55 and 170-30]
12.98 A government agency or department for the purposes of combined appeals to the AAT is intended to include all Commonwealth government agencies or departments.
12.99 In respect to combined appeals to the court, this would include a decision made by an Australian government agency which as defined in this Bill includes the Commonwealth, a State or a Territory or an authority of the Commonwealth or of a State or a Territory. [Subparagraph 170-30(1)(a)(ii)]
12.100 Entities may make a combined application for AAT review or a combined appeal to the court and the AAT, and the relevant court may deal with the decisions together where:
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- the decisions are directly related; and
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- it would be useful from a procedural and efficiency perspective to consider decisions jointly.
[Sections 165-55 and 170-30]
12.101 The need for joint actions under this Bill arises from the linkage between a decision of the ACNC Commissioner to register an entity and the fact that ACNC registration will be a necessary precondition for entities to access other forms of Commonwealth government support.
12.102 In this instance, Commonwealth government support includes, but is not limited to, access to tax concessions, exemption from regulations and access to government grants and contracts.
12.103 If an entity's registration is altered by a reviewable decision of the ACNC Commissioner, then there will potentially be flow on effects to the range of government support the entity can lawfully access and, more relevantly, reviewable decisions of other government agencies and departments.
12.104 Having joint actions under this Bill is intended to promote cost savings and administrative efficiency for the NFP sector, as well as ensuring that the totality of issues are considered by the AAT or courts when reviewing and assessing decisions taken by the ACNC Commissioner, and related decisions made in other Commonwealth government agencies and departments.