Following the Federal Court's decision confirming that the
Hunger Project Australia (HPA) is a public benevolent institution
(PBI), the Australian Charities and Not-for-profits Commission
(ACNC) has released a
Commissioner's Interpretation Statement to provide guidance
on the law as it now stands.
In July 2014, we
reported that the Full Court of the Federal Court had dismissed
an appeal by the Commissioner of Taxation, classifying HPA as a
PBI. This decision eliminated the 'directness' requirement
for PBIs where there is a significant link to another PBI that does
directly contribute to providing benevolent relief.
As the decision represented a significant development in the law
and is now legally binding, the Commissioner has sought to provide
guidance to ACNC staff, charities and the public by issuing the
Statement, which is a reflection of how it will assess applications
for PBIs with similar factual scenarios.
The ACNC maintains the case has not changed the definition of
'institution', in that an institution still requires
structure, permanence and activities. However, fundraising can now
constitute 'activities' for the purpose of satisfying the
definition of institution, when it previously could not. It should
be noted that active fundraising is still distinct from merely
administering a trust or a fund.
Further, there is no 'directness' requirement for PBIs
(compared with the previous ATO Taxation Ruling 2003/5) where a
charity also has a concrete object of benevolence (as previously
reported). Therefore, a charity can provide relief via related
or associated entities, such as the Hunger Project, and still be
classified as a PBI.
While the case refrained from forming a single test or
definition for PBI, it found that a PBI is an institution that is
organised, or conducted, for promoting the relief of poverty or
distress that has:
concrete objects of benevolent relief;
clear mechanisms for delivering the benevolent relief; and
a relationship of collaboration and a common public benevolent
With the ACNC's interpretation of the Hunger Project
Australia decision, endorsement as a PBI in Australia may now be
available to more charities.
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