Charitable Funding Post 1 January 2014

By way of background on 1 January 2014, the Charities Act 2013 (Cth) (Act) commenced. Whilst there has been much conjecture about the Act the Act is currently Law. There is however currently an amendment to the Bill 2013 before Parliament to delay the commencement of the Act to 1 September 2014 (Bill). The Bill has been referred to three different parliamentary committees.

The Act introduces statutory definitions of ‘charity’ and ‘charitable purpose’ for the purposes of all Commonwealth legislation, in doing so the Act provides much-needed clarity in the not-for-profit sector. Businesses and individuals who wish to establish a deductable gift receipt charitable fund or a charitable fund during their lifetime or in the event of their death now have much more clarity.

What follows is an overview of the Act outlining the new definitions of charity and charitable purposes.

Definition of Charity

Under the Act, a charity means an entity:

  • That is not-for-profit;
  • All of the purposes of which are charitable purposes for the ‘public benefit’ (discussed below), or incidental or ancillary to, and in furtherance or in aid of, such purposes;
  • Which does not have any ‘disqualifying purposes’ (discussed below); and
  • Which is not an individual, a political party or a government entity.
Charitable Purpose

‘Charitable purpose’ under the Act has been expanded to include the following purposes:

  • Advancing health;
  • Advancing education;
  • Advancing social or public welfare;
  • Advancing religion;
  • Advancing culture;
  • Promoting reconciliation, mutual respect and tolerance between groups of individuals in Australia;
  • Promoting or protecting human rights;
  • Advancing the security or safety of Australia or the Australian public;
  • Preventing or relieving the suffering of animals;
  • Advancing the natural environment;
  • Any other purpose beneficial to the general public that may be reasonably regarded as analogous to, or within the spirit of, the above purposes; and
  • Promoting or opposing a change to any matter established by law, policy or practice in the Commonwealth, a state, a territory or another country, in furtherance or protection of one or more of the above purposes.
Purposes for the ‘Public Benefit’

Under the Act, an entity’s purpose will be for the public benefit if the achievement of the purpose would be of public benefit and the benefit would be available to a sufficient section of the general public.

The following purposes are presumed to be purposes for the public benefit, in the absence of evidence to the contrary:

  • Preventing and relieving sickness, disease or human suffering;
  • Advancing education;
  • Relieving the poverty, distress or disadvantage of individuals or families;
  • Caring for and supporting the aged or individuals with disabilities; and
  • Advancing religion.
‘Disqualifying Purpose’

An entity will not be a charity under the Act if it has a disqualifying purpose.

A disqualifying purpose is defined in the Act to be a purpose which involves:

  • Engaging in, or promoting, activities that are unlawful or contrary to public policy; or
  • Promoting or opposing a political party or a candidate for political office.

Commercial Lawyers Sydney at Pavuk Legal can assist you on many legal aspects in relation to your charitable funding, estate planning requirements including establishment of charitable gift recipient funds, review and amendment of your charitable trust deed, preparation of testamentary gift and your compliance requirements to comply with the new Act.

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