On 13 June 2014, the Full Federal Court decided against the Commissioner in his appeal from Perram J's decision. More information about Perram J's decision can be found here.

In the Lower Court, Perram J had determined that an entity like Hunger Project Australia, which was not directly involved in charitable aid activities like relief of poverty, (instead being substantially involved in fundraising operations for such activities), could nonetheless qualify as a Public Benevolent Institution (PBI).

On appeal the Commissioner tried to argue that:

  1. The ordinary meaning of "public benevolent institution" is "an institution that gives or provides relief directly to those in need" based on passages from Perpetual Trustee (1931) 45 CLR 224.
  2. Statutory interpretation of the Fringe Benefits Tax Assessment Act 1986 (Cth) and Estate Duty Assessment Act 1914 - 1928 (Cth) supports a view that there is a distinction between direct provision of aid (qualifying for PBI status) and indirect provision of aid (which does not qualify).
  3. Decided cases such as Perpetual Trustee Co Ltd v Federal Commissioner of Taxation (1931) 45 CLR 224, Australian Council of Social Service Inc v Commissioner of Pay-roll Tax (NSW) (1982) 13 ATR 290, and Commissioner of Taxation (Cth) v Royal Society for Prevention of Cruelty to Animals [1993] 1 Qd R 571 consistently point to the distinction being utilised to restrict PBI status to only those entities directly providing the charitable aid.
  4. The primary judge erred in relying on Word Investments Federal Commissioner of Taxation v Word Investments (2008) 236 CLR 204 where the statutory expression "charitable institution" has a technical meaning different to the ordinary meaning that determines the concept of "public benevolent institution".)

The Full Federal Court (Edmonds, Pagone and Wigney JJ) rejected all four of the Commissioner's arguments ruling that there was no authority to suggest that there is a single or irrefutable test or definition for what constitutes the ordinary meaning of a PBI. The Court specifically noted the distinguishable factual considerations in cases that seemed to support the directness requirement like ACOSS (where the entity was merely providing advice, research and information rather than dispensing relief) as opposed to the provision of funds raised for the use of those funds by others.

The appeal confirms that there is no technical requirement that to qualify as a PBI, an entity must be directly engaged in the provision of aid or other relevant charitable relief and that there is no basis to exclude an institution like Hunger Project Australia, (a fundraiser) from being a PBI. This decision provides greater flexibility to charities operating via more modern structures involving global networks with operational divisions.

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