Consultation on the Definition of a Charity

Background

On 22 July 2003, the then Treasurer announced the release of exposure draft legislation on the definition of a charity, and asked the Board of Taxation to undertake public consultations on the workability of the legislative definition of a charity proposed in the draft legislation. The Chairman of the Board of Taxation issued a press release welcoming the terms of reference and announcing that the Board would consult with interested charitable organisations on the exposure draft legislation.

Terms of Reference

The Terms of Reference for the review as announced in by the then Treasurer were as follows:

Consultation by the Board of Taxation on the definition of a charity

1. The Government has announced that it will codify the existing common law meaning of a charity and expand it to encompass certain child care organisations, self-help bodies and, closed or contemplative religious orders.

   Pursuant to this decision, the Board is to consult on the workability of the legislative definition of a charity proposed in the exposure draft Charities Bill 2003.

2. In addition, the Board should specifically consult on whether the public benefit test in the Charities Bill 2003 should require the dominant purpose of a charitable entity to be altruistic, as recommended by the Report of the Inquiry into the Definition of Charities and Related Organisations.
3. The Board should consult primarily with organisations intended to fall within the new definition of a charity.
4. The Board should consider views put forward and provide its recommendations in a report to the Government by 1 December 2003.

Submissions

The Board received a total of 267 written submissions as well as input via meetings with key charitable bodies and representative groups, and group discussions in all State and Territory capitals. The Board wishes to thank all respondents for their interest and input. Publicly available submissions are available below for review.

Board Report

The Board’s report, Consultation on the Definition of a Charity: A Report to the Treasurer, was provided to the then Treasurer on 19 December 2003 and released publicly on 11 May 2004 when the then Treasurer announced the Government’s response.

Government Response

In response to the Boards final report the Government stated that “the Government has taken advice from the Board of Taxation that the draft legislation does not achieve the level of clarity and certainty that was intended to be brought to the charitable sector.” The Government announced the common law meaning would continue to apply with specific extensions to be enacted.

The Charities Bill 2003 did not proceed. The Extension of Charitable Purpose Act 2004 enacted the Government’s response by maintaining the common law definition of charity with specific extensions. Royal assent received 30 June 2004.

For further information about this report please contact the Board of Taxation Secretariat on (02) 6263 4366 or at taxboard@treasury.gov.au.

Submissions received