One of the roles of the ACNC is to provide guidance on its interpretation of the impact of changes in the law relating to charities. So far, the ACNC has issued three interpretation statements and has an exposure draft for another interpretation statement in train.

Despite the overview of the Office of the Register of Indigenous Corporations, charities relating to Indigenous Organisations may be registered and governed by the ACNC. The unique legal issues in indigenous matters include the recognition of indigenous disadvantage, the application of the public benefit test to indigenous organisations and the impact of the Charities Act 2013, which commenced on 1 January 2014.

The ACNC's attitude to indigenous charities is designed to complement the "Closing the Gap" strategy. The Interpretation Statement provides a useful guide to the way in which the ACNC will approach the question of relief of poverty generally, not just in respect of indigenous organisations.

Another Interpretation Statement deals with changes in what constitutes a Public Benevolent Institution. It arises out of the decision of the Federal Court in The Hunger Project (PBI). Prior to this decision it was generally thought that a charity must distribute aid directly to qualify as a PBI. The accepted view is now that the fact that such an institution does not itself directly give or provide that relief, but does so via related or associated entities, is no bar to it being a PBI. This is in stark contrast to the previous ATO Taxation Ruling 2003/5 which imposed a "directness" test. The Interpretation Statement provides a summary of the issues in the case and how the ACNC will apply the case when making decisions.

An exposure draft under consideration by the ACNC relates to Health Promotion Charities. This is defined as an institution whose principal activity is to promote prevention or the control of diseases in human beings. This is a statutory definition and the ACNC will interpret the words in their ordinary meaning.

To be a Health Promotion Charity the entity must satisfy all the elements of the definition. For example it must be an institution, its activity must it be to promote the prevention or control of diseases in human beings, (as opposed to injury, accident or a general health condition or a symptom (unless such a symptom may, if untreated, may lead to a disease)).

The ACNC states that "promote" would extend to a charity that, for example, raises awareness about the benefits of immunisation.

In its first ruling for 2015 the ATO has issued TR 2015/1 dealing with special conditions for tax exempt entities. It focuses on:

  • the need to comply with all substantive requirements in its governing rules;
  • the application of income and assets solely for the purpose of the entity;
  • what is meant by applying funds solely for the entity's purpose;
  • a discussion of what is an ancillary purpose; and
  • the manner in which the entity may accumulate income.

The ruling gives some interesting examples and can be found at http://law.ato.gov.au/atolaw/view.htm?docid=%22TXR%2FT R20151%2FNAT%2FATO%2F00001%22

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.