The full bench of the Federal Court has dismissed an appeal by the Commissioner of Taxation against the finding that the Hunger Project Australia (HPA) is a public benevolent institution (PBI).
The Commissioner appealed the case on the grounds that, in order for HPA to be a ’public benevolent institution’ it has to actually undertake the charitable activities and it was not sufficient if it only raised funds for use by other entities to provide relief.
In January 2014, we reported that Justice Perram of the Federal Court found that there was no ‘directness’ requirement for PBIs, as long as HPA was significantly linked to the Hunger Project network, and all of the funds raised directly contributed to the network’s projects to relieve hunger. As a result, HPA was entitled to endorsement as a PBI.
On appeal, the full bench held that Justice Perram was correct in finding that HPA was a PBI.
This decision confirms that, while there is still no single definition of a PBI, the ordinary meaning or common understanding of a PBI includes an institution that is organised, conducted for, or promotes the relief of poverty or distress. The fact that the institution does not itself directly give or provide that relief, but does so through related or associated entities, does not restrict it from being a PBI in the eyes of the courts.
This case may now create opportunities for charities that have previously been denied endorsement as a PBI on the basis that they do not provide ‘direct relief’.