The decision of the High Court last week in Aid/Watch v
Commissioner of Taxation  (Aid/Watch) overturned the decision
of the Full Federal Court in September 2009 which ruled that
Aid/Watch was not a charitable institution, due to its political
This decision in favour of Aid/Watch is important for other
not-for-profit organisations, particularly those seeking to
influence government policy in the public interest.
Aid/Watch "monitors, researches, campaigns and undertakes
activities on the environmental impact of Australian and
multinational aid and investment programs, projects and
policies." To achieve this, Aid/Watch sought to generate
public debate about the efficiency of foreign aid directed to
relieve poverty, influence Government and where necessary, change
Government policy with a view to changing the laws applicable to
Aid/Watch had self-assessed its tax exempt status, exempting it
from Income Tax, Fringe Benefits Tax (FBT) and
Goods and Service Tax (GST). It was then endorsed
as a 'charitable institution' by the Commissioner from 14
July 2000 (income tax) and 1 July 2005 (FBT and GST). In October
2006, the Commissioner revoked the tax exempt status on the basis
that it was not a 'charitable institution'.
The term is not defined in the income tax legislation, meaning
that the definition is based on common law.
At common law, a purpose is charitable if it falls within one of
the following four categories:
The relief of poverty.
The advancement of education.
The advancement of religion.
Other purposes beneficial to the community.
An entity is not charitable if its purpose is advocating a
political party or cause, attempting to change the law or
government policy, or promoting a particular point of view.
However, if an entity's purpose is otherwise charitable, the
presence of political, lobbying or promotional activity that is
incidental to the charitable aims will not prevent it being a
The decision by the majority of the High Court held that
Aid/Watch's primary objectives fell within two of the
categories described above; the alleviation of poverty and public
benefit and its activities were ultimately in pursuit of these
The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).