The legal definition of what constitutes a charity has developed
over the past 400 years, dating back to the Charitable Uses Act
1601, commonly known as the Statute of Elizabeth.
Consequently, much uncertainty has ensued as to the technical
legal meaning of the term, given the lack of codification in
Many years of consultation, various judicial decisions and the
introduction of the Australian Charities and Not-for-profits
Commission (ACNC) last year have now resulted in a the statutory
definition of charity as contained in the Charities Act
2013, which will take effect from 1 January 2014.
This new law endeavours to preserve the common law principles of
charity, making only minor amendments in an attempt to provide
greater clarity and certainty about the meaning of both
'charity' and 'charitable purpose'.
An entity will be 'charitable' if it is a
'charity'. 'Charity' is defined to mean an entity
is a not-for-profit entity;
has purposes that are charitable purposes (or incidental to
such purposes) that are for the public benefit;
does not have purposes that are disqualifying purposes (as
defined in the legislation); and
is not an individual, a political party or a government
The definition will apply for the purposes of all Commonwealth
laws. Definitions of the same or similar terms for the purposes of
state or local laws (for example, under state fundraising
legislation) will not be impacted by this new law.
The new law provides for 12 categories of charitable purposes
derived from common law including advancement of health, education,
social or public welfare, religion, culture, the natural
environment, the promotion or protection of human rights and
preventing or relieving the suffering of animals.
It is anticipated that the introduction of the statutory
definition will not have a significant impact on entities.
For entities that were endorsed as a charity by the ATO before 3
December 2012 and were automatically registered with the ACNC,
there is no need to re-register. However, such entities should
review their registration subtype with the ACNC as the new law
provides for more comprehensive categories of charitable
Although it is voluntary to register as a charity, an entity
will not qualify for any charity tax concessions from the ATO
unless it is registered with the ACNC.
Before being elected, the new federal government indicated that
it would repeal the new statutory definition and abolish the ACNC.
However, at this point in time the new legislation and ACNC
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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