Prime Minister Malcolm Turnbull says Labor's plan to prevent foreign political donations is a "joke" and that he won't be changing the government's legislation when it comes to charities.
Mr Turnbull said the problem with Labor's plan is its narrow definition of 'foreign donations' as money being physically located outside Australia, which doesn't include money brought into an Australian bank account.
"Labor's foreign donations legislation was a joke," Mr Turnbull told parliament on Monday.
"Under our bill, charities are able to take as much money from foreign entities as they want. But they can't use that foreign money to fund political campaigning in Australia."
Labor disputes Mr Turnbull's characterisation of its bill, saying it includes provisions to prohibit money or property being transferred to Australia for the purpose of donation.
Opposition Leader Bill Shorten told AAP on Sunday Labor is not interested in laws which punish Australian charities and believes donations can be cleaned up without silencing charities and the not-for-profits sector.
However, Labor would continue to work with the government to reform political donations and ban foreign donations, an issue Mr Shorten says his party has led the way on.
Advocacy group GetUp national director Paul Oosting said he was encouraged by Labor's stance and its focus was now on the government and the crossbench to ensure the dangerous "charity gag" bill is not passed into law.
"We will continue to fight this dangerous law, which would result in fewer people being afforded a voice in public debate, less ability for civil society to advocate for the values millions of Australians care deeply about, and a greatly reduced contest of ideas," Mr Oosting said in a statement.
