Independent National Security Legislation Monitor Jake Blight is reviewing the definition of a terrorist act, which requires a motive, and is proposing a broad definition of ideology to ensure the rising threat of right-wing extremism is appropriately covered.
But whether an explicit reference to religion as a motivation - one of three in the current legislation alongside political and ideological - should remain has become a contentious issue.
Jewish groups called for the religious motivation to stay saying it didn't single out a religion and removing it could weaken the laws.
"To try to blur religious motivation by subsuming it within a broader ideological definition, I think is only going to invite scepticism and even a higher degree of stigmatisation or negative reaction," Executive Council of Australian Jewry co-CEO Peter Wertheim said.
Addressing concerns removing religious motivation meant a defendant could claim their motivation was purely religious and therefore fell outside the scope of terrorism offences, special envoy for Islamophobia Aftab Malik said there was no religious justification for terrorism.
"When we describe acts of terror as religious, we misidentify the problem," he said.
"Extremism occurs due to a wide range of factors. These include social isolation, undiagnosed mental health problems and a response to a perceived sense of injustice and humiliation," he told a public hearing into terrorism legislation on Wednesday.
Islamic Council of Victoria president Mohamed Mohideen said framing political acts as religious may lend legitimacy to groups who claimed their cause was a "holy war".
Australian Federal Police deputy commissioner Hilda Sirec said terror legislation was robust, effective and well tested in courts and the agency's risk appetite if the definition was changed was low.
Addressing concerns about the religious term, the deputy commissioner said there should be no conflation between Islam and Islamic State-inspired terrorism, which was why the agency didn't use the term Islamic-inspired terrorism.
ASIO director general Mike Burgess said there had been a rise in what he branded "anarchist revolutionist violent extremism" that had a focus on property damage, as the watchdog also reviews what should fall inside the terrorism definition, which currently covers property damage.
"In particular, focused on small to medium enterprises or defence companies that they think are supplying the Israeli war machine, in their view, and that has focused on property," he said.
