Government releases draft legislation for statutory definition of charity - Start date deferred to 1 January 2014
As part of the wider Not-for-profit reforms, the Government has proposed the introduction of a statutory definition of charity.
Following consultation in 2011, the Treasury released the draft legislation yesterday. The government intends to introduce the bill into the winter sitting of Parliament. Click here for a copy of the exposure draft and exploratory memorandum.
The draft legislation seeks to incorporate the common law definition along with the definitions included in the Extension of Charitable Purpose Act 2004.
Key highlights include:
- The new legislation will have a start date of 1 January 2014 (6 month deferral). The presumption of public benefit will be retained for relief of poverty and the advancement of religion and education. The relief of poverty is to be incorporated into a new charitable purpose - advancing social or public welfare.
- There are a range of other proposed amendments that include the ability for ancillary funds to donate to charity like government entities and the expansion of the number of sub type registrations from 6 to 14.
- The explanatory memorandum provides a significant level of description as to the government's view as to what is a charity under each of these new categories which requires further consideration.
Under the proposed legislation, there is no grandfathering of charitable status and there is a clear requirement for charities to assess their status on an ongoing basis. The government has indicated that this definition is not intended to narrow the existing charity definition but has acknowledged that there will be a need for some charities to register as different sub types and potentially amend their governing rules to satisfy the new requirements. There is a proposed transitional period of 18 months for existing charities to make the necessary changes to amend their registration.
The consultation period for the draft legislation closes on 3 May 2013. As part of our commitment to the not-for-profit sector, and to assist our clients in having a forum to express their views, Moore Stephens will be making a submission. To this end, we are seeking client input for our submission and request that you provide your comments to nfp@moorestephens.com.au.
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