ACNC has issued an exposure draft to identify institutions which would be eligible for registration as health promotion charities. It has drawn on the ATOs tax ruling 2004/08 and interpreted the definition of "institution whose principal activity is to promote the prevention or control of diseases in human beings".
The underlying rule in determining whether an institution is charitable is to study its objects. Activity is usually a secondary consideration. This therefore may create tension between the objects of an institution and whether its activities pursue those objects.
"Disease" has a broad interpretation to encompass both physical and mental illnesses. There may be some situations where ACNC will need to call on experts for determination as to whether a particular illness is a mental illness. Physical symptoms are not "disease" but may lead to "disease" eg ACNC cites, obesity which can lead to heart disease or diabetes. ACNC will be open to advice from health authorities on identification of new or emerging diseases.
ACNC needs to identify whether the activities being undertaken are aimed at "promoting the prevention or control" of a particular disease. The exposure draft distinguishes the concept of "promotion" from the broader activity of "prevention" or "control", eg promotion of public awareness would qualify, but actual research, may not. This distinction may be difficult to discern, so, we will watch to see if any submissions received (due before 15 February, 2015) suggest any change is made.
There will also be some interest in whether an entity whose sole purpose is fundraising, for another charity that, for example, is providing treatment, would itself be an eligible health promotion charity. Commissioner of Taxation v Word Investments [2008] HCA 55 and Commissioner of Taxation v The Hunger Project Australia [2014] FCAFC 69 both recognised fund raising entities as eligible charities themselves.
ACNC will also analyse the constitution of an institution seeking registration, and will study the website of that institution. Websites are often advertisements for charities and may not accurately reflect the objects within the constitution nor the activities which the charity carries out. Charities should be alerted to monitor the content of their websites so as to not misrepresent their role.
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