Finally after 400 years, a statutory definition of charity has been introduced in Australia.  The Charities Act 2013 (Cth) (the Act) received royal assent on the 29 June 2013 and will come into force on the 1 January 2014.  You can access the Act here.

The passing of the Act is a monumental milestone as it defines a principle first established in 1601 and provides a modern framework that will support Australia’s diverse and growing not-for-profit industry.

However, what does the passing of the Act mean for registered charities and not-for-profit organisations and organisations proposing to apply for charitable status?

It means that the statutory definition will become the primary test used by the Australian Charities and Not-for-profit Commission (ACNC) and other Commonwealth agencies including the Australian Taxation Office (ATO) to determine whether an organisation may be registered as a charity.

After the Act commences, the ACNC will use the Act’s definition to continue its review of organisations registered with the Government regulator to determine whether they may be registered as charities and whether they should be entitled to charitable tax concessions with the ATO.

The consequences of organisations failing to satisfy the statutory meaning of a charity are severe and may involve an organisation becoming deregistered with the ACNC and losing its charitable tax concession entitlements.

Subsequently, organisations planning to apply for charitable status may also be affected as they may not register with the ACNC nor apply for charitable tax concession entitlements if they do not satisfy the statutory meaning of charity.

For all charities this means there has never been a more important time to reassess, revive and if necessary align your organisation.  The introduction of the statutory definition of a ‘charity’ may affect registered and prospective organisations with their ACNC registration and charitable tax concessions entitlements.