On 8 April the government commenced public consultation on
exposure draft legislation for a statutory definition of
The definition is contained in the Charities Bill 2013
and is expected to commence on 1 January 2014. The Bill seeks to
define both charity and charitable purpose. At present these two
concepts are defined by common law. The statutory definition has
been developed in response to concerns that the common law does not
adequately address matters relevant to the contemporary Australian
To be a charity an entity must be a not-for-profit entity and be
established for charitable purposes. As the explanatory material
notes the definition of charitable purpose provides a framework for
considering charity and charitable purposes. The definition retains
the flexibility inherent in the common law that enables the courts,
and parliament, to continue to develop the definition and extend it
to other charitable purposes beneficial to contemporary
Under the draft legislation, a charity is permitted to have
purposes other than charitable purposes only to the extent that
those non-charitable purposes are "incidental or ancillary to,
and in furtherance or in aid of" the entity's charitable
purposes. Where an entity undertakes commercial activities, those
activities must be only to further its charitable purpose.
In general, a charity must be for the public good. However, the
public benefit test will not apply to open and non-discriminatory
self-help groups and closed or contemplative religious orders.
The new statutory definition will apply to all Commonwealth
legislation. It is hoped that it will provide a framework that will
be adopted by the States and Territories over time.
The draft legislation, explanatory materials and a fact sheet
are available at the
Public consultation on the draft legislation closes on 3
If you are a charity nothing will change for you when
the statutory definition starts on 1 January 2014.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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