A Liberal-chaired senate committee has recommended Australia's charities regulator be abolished despite a majority of the submissions to its inquiry opposing its closure.
The head of the Australian Charities and Not-for-Profit Commission, Susan Pascoe, said on Tuesday she was upset about the decision, but the fledgling regulator would keep performing its legislative functions until Parliament voted otherwise.
"There is no doubt the Repeal Bill and the Senate inquiry has caused confusion and uncertainty for parts of Australia's charity sector over the past few months," Ms Pascoe said.
"We will continue to build Australia's first credible, free public national charity register, and we will continue to ensure public trust and confidence in the sector is maintained while the ACNC Act is in force."
Eighty per cent of the 155 submissions to the senate committee opposed the regulator being shutdown, with many asking for the regulator to remain for a few more years so it can prove it is working.
The ACNC was set up in December 2012 by the former Labor government, but its abolition was an election commitment of the current government.
The chairman of the ACNC advisory board, Robert Fitzgerald, slammed the committee's recommendation on Tuesday, saying the regulator should have been reviewed after five years of operation, as allowed by the ACNC Act, not just one year.
"It has taken 17 years, at least six inquiries, 2000 submissions and volumes of evidence to get an effective national regulatory model," Mr Fitzgerald said.
"By moving to abolish the ACNC the government is going against the tide."
However, the senate committee recommends the regulator be abolished because too many charities have found its regulations too onerous.
"The committee has ... formed the view that the abolition of the ACNC would, as intended, relieve the regulatory burden from many charities," the committee report says.
The ACNC was designed to become a one-stop-shop for the registration of charities.
Registration as a charity has consequences under many Commonwealth laws. Most significantly, it is a condition for many taxation concessions.
More than 60,000 charities are registered in Australia.
The senate committee recommended that the ACNC be abolished and its regulatory functions returned to the Tax Office and Australian Securities and Investments Commission.