The Government has Passed the Charities Act –
Finally a Statutory Definition of Charity
Following public consultation in 2011 and earlier this year, the
Federal Government passed the Charities Act 2013 (Act) and
related legislation on 27 June 2013.
The key purpose of the Act is to set out a single national
definition of charity. The Act and related legislation form part of
the government's reform agenda for the not-for-profit sector,
which includes the establishment of the Australian Charities and
Not-for-profits Commission (ACNC), Australia's first
independent charities regulator.
The ACNC Governance Standards for charities were also passed as
regulations by Parliament on 27 June and will apply to charities
(other than basic religious charities) from 1 July 2013. These
standards are intended to promote a minimum standard of governance
for registered charities. More information about them is available
from the ACNC website: www.acnc.gov.au
Definition of Charity
The former definition of charity is based on a statute from the
1600s which has been interpreted by the courts over time. This has
led to considerable confusion and uncertainty in the charity
sector, so the passing of the Act is a welcome step.
The definition of charity is that an entity must be:
have only charitable purposes that are for the public
The statutory definition of charity will start on 1 January
More detail about this definition is included below.
Categories of charitable purposes listed in the Act are:
advancing health, education, social or public welfare,
religion, culture and the natural environment
promoting reconciliation, respect and tolerance between
individuals, promoting or protecting human rights, protecting the
safety of the general public, and preventing or relieving the
suffering of animals
any other purpose beneficial to the general public that is
analogous to the above purposes
promoting a change to any matter established by law, policy or
practice where the change will aid one of the above purposes, or
opposing such a change where the change will oppose or hinder one
of the above purposes.
An entity may have incidental or ancillary purposes that aid the
charitable purpose, but it must not have an independent,
The list of charitable purposes in the Act does not exclude
charitable purposes identified by courts prior to the commencement
of the statutory definition. However, once the Act becomes law, the
courts will not be able to create new charitable purposes; only
charitable purposes listed in the Act will qualify.
If an entity has either of the following purposes, it is
disqualified from meeting the definition of charity:
engaging in or promoting activities that are unlawful or
contrary to public policy
promoting or opposing a political party or a political
candidate. This does not apply to advancing debate about or
critiquing the policies of political parties or candidates.
According to the Act, an entity's purposes will be of
'public benefit' if:
achieving those purposes would be of public benefit (taking
into account any possible detriment to the general public) and
the benefit (tangible or intangible) is available to the
general public, or a sufficient section of the general public.
This definition of public benefit is consistent with common law
Certain purposes are presumed to be of public benefit, including
relieving sickness and human suffering, advancing education or
religion, relieving poverty, and supporting the aged and
individuals with disabilities. Entities that hold or manage
benefits that relate to either native title or indigenous land
rights, for the benefit of indigenous individuals, will be
considered as having a purpose for the public benefit.
For existing charities, nothing will change when the statutory
definition of charity starts on 1 January 2014.
ACNC will develop a statement outlining its approach to the
definition of charity, charitable purposes and the different types
of charities. The statement will be released for comment prior to
Charities (other than basic religious charities) are expected to
comply with the ACNC Governance Standards from 1 July this year.
The ACNC is developing guidance about complying with the Governance
Standards, and recommends that charities wait for this guidance
before taking action. This will prevent any unnecessary time or
expense being incurred while undertaking compliance activities. The
ACNC has indicated that for the first two years after 1 July, its
compliance focus will be directed towards serious breaches of
Governance Standards (such as gross financial negligence), and it
expects most well-run charities will be largely compliant with the
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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