On 29 May 2013, the Federal Government introduced legislation into Parliament which creates a statutory definition of charity. The definition will come into effect on 1 July 2014, and will assist the Australian Taxation Office, the Australian Charities and Not for Profit Commission and other Commonwealth agencies (and potentially in the future, some State Government agencies) determine whether an entity is as a charity and can receive charitable concessions.

Up until now, the terms “charity” and ‘charitable purposes’ have not been comprehensively defined for the purposes of Australian law and their meaning has been determined under the common law which has developed over 400 years. This case law was largely based on the preamble to the English Statute of Charitable Uses of 1601 (also known as the Statute of Elizabeth). Although it is not intended that these new definitions depart from the common law, it is intended that they provide greater clarity about what is meant by those terms.

Key features of the legislation are as follows:

  • to be a charity, an entity must be not-for-profit and its only purposes must be charitable purposes for the public benefit, or purposes that are incidental or ancillary to, and in furtherance of such charitable purposes.
  • charitable purposes include:
    • advancing health, education, social or public welfare, religion, culture, and the natural environment;
    • promoting reconciliation, mutual respect and tolerance between groups of individuals that are in Australia;
    • promoting and protecting human rights;
    • protecting the safety of the general public;
    • preventing or relieving the suffering of animals;
    • any other purpose that may reasonably be regarded as analogous to or within the spirit of the above charitable purposes.
  • an entity with a purpose to promote or prevent change to government laws or policy may be a charity provided the change relates to the above charitable purposes and the purpose is pursued for the public benefit.
  • in the absence of any evidence to the contrary, certain charitable purposes are presumed to be for the benefit of the public, namely:
    • relieving illness;
    • relieving the needs of the aged;
    • advancing education;
    • relieving poverty;
    • advancing religion.
  • a charity cannot be an individual, a political party or a government entity.