APPENDIX 4
Summary of Recommendations of 2001 Inquiry
Principles to define a charity
Recommendation 1 (Chapter 11)
That the term `not-for-profit' be adopted in place of the term
`non-profit' for the purposes of defining a charity.
Recommendation 2 (Chapter 11)
That the term `entity' be adopted to describe charities, and that the
definition of `entity' include: a body corporate; a corporation sole; any
association or body of persons whether incorporated or not; and a trust;
and exclude: an individual; a political party; a partnership; a
superannuation fund; and the Commonwealth, a State, or a body controlled by the
Commonwealth or a State.
Recommendation 3 (Chapter 12)
That a charity must have a dominant purpose or purposes that are
charitable, altruistic and for the public benefit. If the entity has other
purposes, those purposes must further, or be in aid of, the dominant purpose or
purposes, or be ancillary or incidental to the dominant purpose or purposes.
Recommendation 4 (Chapter 12)
That an entity be denied charitable status if it has purposes that are
illegal, are contrary to public policy, or promote a political party or a
candidate for political office.
Recommendation 5 (Chapter 12)
That the activities of a charity must further, or be in aid of, its charitable
purpose or purposes. Activities must not be illegal, contrary to public policy,
or promote a political party or a candidate for political office.
Recommendation 6 (Chapter 13)
That the public benefit test, as currently applied under the common law,
continue to be applied; that is, to be of public benefit a purpose must:
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be aimed at achieving a universal or common good;
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have practical utility; and
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be directed to the benefit of the general community or a `sufficient
section of the community'.
Recommendation 7 (Chapter 13)
That the public benefit test be strengthened by requiring that the
dominant purpose of a charitable entity must be altruistic.
Recommendation 8 (Chapter 13)
That self-help groups which have open and non-discriminatory membership
be regarded as having met the public benefit test.
Recommendation 9 (Chapter 13)
That where closed or contemplative religious orders regularly undertake
prayerful intervention at the request of the public, their purposes be held to
have met the public benefit test.
Recommendation 10 (Chapter 13)
That public benefit does not exist where there is a relationship
between the beneficiaries and the donor (including a family or employment
relationship); and that this principle extend to purposes for the relief of
poverty, which the common law currently regards as being exempt from the need
to demonstrate public benefit.
Defining charitable purpose
Recommendation 11 (Chapter 14)
That there be no requirement that charitable purposes fall either
within the `spirit and intendment' of the Preamble to the Statute of Elizabeth
or be analogous to one or more of its purposes.
Recommendation 12 (Chapter 16)
That the principles enabling charitable purposes to be identified be
set out in legislation.
Recommendation 13 (Chapter 16)
The Committee has considered five options for defining charitable
purpose as set out in Chapter 16. It concludes that three options are viable,
but recommends the following preferred option ( Option 5):
Charitable purposes shall be:
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the advancement* of health, which without limitation includes:
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the advancement* of education;
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the advancement* of social and community welfare, which without
limitation includes:
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the prevention and relief of poverty, distress or
disadvantage of individuals or families;
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the care, support and protection of the aged and
people with a disability;
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the care, support and protection of children and
young people;
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the promotion of community development to enhance
social and economic participation; and
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the care and support of members or former members of
the armed forces and the civil defence forces and their families;
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the advancement* of religion;
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the advancement* of culture, which without limitation includes:
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the promotion and fostering of culture; and
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the care, preservation and protection of the
Australian heritage;
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the advancement* of the natural environment; and
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other purposes beneficial to the community, which without limitation
include:
(* Advancement is taken to include protection, maintenance, support,
research, improvement or enhancement.)
Recommendation 14 (Chapter 20)
That the definition of religion be based on the principles established
in the Scientology case, namely:
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belief in a supernatural Being, Thing or Principle; and
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acceptance and observance of canons of conduct in order to give
effect to that belief.
Application of the principles
Recommendation 15 (Chapter 24)
That the encouragement of sport and recreation for purposes of
amusement or competition not be a charitable purpose, it being noted that the
advancement of health, education, social and community welfare, religion,
culture or the natural environment through the encouragement of sport and
recreation would be considered a charitable purpose.
Recommendation 16 (Chapter 25)
That the care, support and protection of children and young people, including
the provision of child care services, be considered a charitable purpose.
Recommendation 17 (Chapter 26)
That charities be permitted neither to have purposes that promote a
political party or a candidate for political office, nor to undertake activities
that promote a political party or a candidate for political office.
Recommendation 18 (Chapter 27)
That commercial purposes should not deny charitable status where such
purposes further, or are in aid of, the dominant charitable purposes or where they
are incidental or ancillary to the dominant charitable purposes.
Recommendation 19 (Chapter 28)
That the current approach of denying charitable status to government
bodies be maintained. The Committee agrees with the principles set out in the Fire Brigades
case and the Mines Rescue case for determining whether an entity is
a government body, namely that the entity is constituted, funded and controlled
by government.
Other categories in the framework
Recommendation 20 (Chapter 29)
That there be a definitional framework to distinguish altruistic
entities from other not-for-profit entities.
Recommendation 21 (Chapter 29)
That in the recommended definitional framework, the category of public
benevolent institution be replaced by a subset of charity to be known as
Benevolent Charity, that is a charity whose dominant purpose is to benefit,
directly or indirectly, those whose disadvantage prevents them from meeting
their needs.
Recommendation 22 (Chapter 30)
That the framework recommended in this Report should not include the
terms `religious institution', `scientific institution' and `public educational
institution', as altruistic entities with religious, scientific or public
educational purposes and that are for the public benefit are covered by the
categories in the recommended framework.
Recommendation 23 (Chapter 31)
That there be a category, known as `Altruistic Community
Organisations', that are entities that are not-for-profit and have a main
purpose that is altruistic. That is, they can have secondary purposes that are
not altruistic, and that do not further, or are not in aid of, or are not
incidental or ancillary to, their main altruistic purpose.
Administering the definitions
Recommendation 24 (Chapter 32)
That the Government seek the agreement of all State and Territory
Governments to the adoption nationally of the definitional framework for
charities and related entities recommended in this Report.
Recommendation 25 (Chapter 32)
That the Government seek the agreement of all State and Territory Governments
to establish an independent administrative body for charities and related
entities, and to the legislative changes necessary for its establishment.
Recommendation 26 (Chapter 32)
If an independent administrative body is not established:
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that the Government set up a permanent advisory panel, including
members from the charitable and related sector, to advise the Australian
Taxation Office on the administration of the definitions relating to charities
and related entities, and to advise the Government on the definitions of
charity and related terms; and
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that the endorsement processes currently undertaken by the Australian
Taxation Office be extended to include the endorsement of charities and related
entities in order to access all the taxation concessions to which they are
variously entitled.
Recommendation 27 (Chapter 32)
That the Government commit to a comprehensive public information and
education campaign to inform the charitable and related sector of any changes
arising from its consideration of this Report.
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