Government to finalise new definition of charity

The Federal Government is seeking feedback on exposure draft legislation for a statutory definition of charity.

The statutory definition is intended to provide Australians with a clear understanding of what a ‘charity’ is and what a ‘charitable purpose’ is.

The proposed refined definition will preserve aspects of common law, which provided the basis for current definitions, and will incorporate both recent Australian court decisions and the suggestions of more than 200 submissions responding to the 2011 consultation paper, A Definition of Charity.

Assistant Treasurer David Bradbury said the legislation would provide Australia with its first complete definition of charity.

“The meaning of charity and charitable purpose has not been previously comprehensively defined for the purposes of Commonwealth law,” Mr Bradbury said.

“Having a clear and succinct definition of charity set out in legislation will cut down on compliance costs for those wishing to establish charities and make the definition more accessible to the community,” he said.

A statutory definition of charity is expected to reduce red tape for not-for-profits seeking charitable status by providing a clearer understanding of the term.

Key features of the draft legislation include:

• To be a charity an entity must be not-for-profit, and all charitable purposes must be for the public benefit.
• A charity may have incidental or ancillary purposes (such as fundraising) that may not be charitable in themselves but which aid or further the charitable purposes.
• The public benefit provided by a charity may be tangible or intangible.
• An entity with a purpose to promote change to government laws and policy can be charitable, where the purpose is to further or protect one or more charitable purposes.
• Categories of charitable purposes listed in the Bill are:
  • advancing health, education, social or public welfare, religion, culture, and the natural environment
  • promoting and protecting human rights, preventing or relieving the suffering of animals, and protecting the safety of the general public.
• Disaster relief and other charitable funds can now assist in rebuilding the assets of not for profit entities after a disaster.

Public consultation will close on May 3, with a Government intention to finalise the legislation during the winter sittings of Parliament.

The definition is expected to come into effect on January 1, 2014.

> For further information, including the draft legislation and explanatory material, visit the Treasury website.