I desire that my contribution to Liberty trust be regarded as a non-refundable charitable donation for the benefit of God's Kingdom.
One of the characteristics of the advancement of religion as a head of charity is that any religion remains an option for the public, not an obligation. A function of a religion's charitable, tax-exempt status is you can take a church's religion or leave it.
But to get the loan, as cited above, one must undertake to become practically involved in Christian work.
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The application form builds in an obligation which is inconsistent with the notion that the tax-exempt status of the 'advancement of religion' as a form of charity is partly dependent on the obligation-free nature of religion as required for a religious 'charity' to retain its tax-exempt status.
The Charities Commission
After a complaint was made in 2008, the Charities Commission investigated and became concerned that the interest-free mortgage scheme was 'an illegal pyramid scheme'. The Commission decided to remove Liberty Trust from the Charity register arguing that the loan scheme did not have a charitable purpose. It said:
The activity of providing interest fee loans to people and the promotion of the teachings of Biblical financial principles are two independent activities, and not ancillary to each other.
The Commission had also cited a 1934 Australian case Roman Catholic Archbishop of Melbourne v Lawlor concerning the charitable status of a Catholic daily newspaper. In denying charitable status, the court made a distinction between the 'advancement of religion' and activity that was 'conducive to religion'. The Commission cited that case. Also citing British and Canadian precedents, it argued that there was no 'public benefit if the private benefits were an end in themselves.' They also argued mutual funds and cooperative schemes have been held to be not charitable because of insufficient public benefit.
The decision
In her decision Justice Mallon noted there has been disquiet about the tax exemption for religion. A case commentary on the 1985 New Zealand case Centrepoint Community Trust v Commissioner of Inland Revenue considered that 'whether there is a social utility in the advancement of religion is 'a very much more doubtful proposition''. This, it was argued, was because the effect of religion 'is usually of a very personal nature' and the question was asked 'why should some members of the community bear a heavier burden of taxation merely because the beliefs of others entitle their organisations to exemption from taxation?'
Her Honour also cited the 2005 NZ case Hester v Commissioner of Inland Revenue where the point was made that
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... given the very considerable concessions made to charities, and given contemporary agnosticism and seeming indifference in many quarters to religion, what is it that today supports the concession in favour of religious charities, and more particularly, where are the edges of this head of charity to be drawn?
I have argued in The Purple Economy religion as a head of charity should be abolished altogether on the grounds that the advancement of religion flies in the face of the twentieth century principle of separation of church and state. How to remove the tax-exempt status of other alternatives to religion also needs to be researched following a review of the common law decisions allowing that status.
But, Liberty Trust's argument was accepted hook, line and sinker. I believe Her Honour erred when she stated that 'Membership is not restricted – it is open to all regardless of faith.' She emphasised this point in her conclusion saying 'the benefits of the scheme are not focussed too narrowly on its adherents. It is open to anyone and the money donated is 'recycled' for the benefit of others. Overall it is a scheme about 'giving' in order to lead a Christian life free from the burden of debt.'
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