Is it now easier to qualify?

The recent decision of the Hunger Project Australia v Commission of Taxation [2013] FTA 693 has decided that it is not necessary for a charity which is providing benevolent relief to the public to deliver that relief directly.

Formerly, on application to the Australian Taxation Office for public benevolent institution (PBI) status, an entity needed to prove that its work and its activity provided direct relief of poverty, sickness, suffering or distress, misfortune, disability, destitution or helplessness in areas where the public would be moved to empathy.

For example, the types or works which qualified for PBI status would have included organisations which were:

  • operating a soup kitchen
  • providing meals to homeless people
  • operating night patrol services around cities or town for people living rough
  • providing community service to disabled people
  • assisting children from broken families
  • supporting victims of violent crime by offering housing, shelter, clothing and safe places

The work would need to be delivered directly, for example by:

  • providing safe houses to persons in need
  • providing prepared food, delivering meals, blankets or clothing to persons in need
  • conducting activities for disabled people

The Hunger Project decision now means that an entity which is mainly raising money to directly fund such activities can itself have public benevolent institution status.

The Hunger Project entity was raising the money but was closely linked with other entities in the same group who were delivering food to alleviate hunger. It may be that the ATO will require a similar linkage for any new fund raising entities who seek PBI status.

Justice Perram noted that the involvement of the Hunger Project in the relief of hunger was "concrete" We provide some pertinent extracts from his reasoning here.

We await with interest to see if other fund raising limbs of larger charitable organisations attempt to secure their own PBI status.

Here is a link to the ACNC Interpretation statement on how it will interpret the decision.

Commissioner Interpretation Statement CIS 2013/01

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.