Recommendations of the 2001 inquiry into the definition of charities and
Summary of Recommendations
Principles to define a charity
Recommendation 1 (Chapter 11)
That the term ‘not-for-profit’ be adopted in place of the term
‘non-profit’ for the purposes of defining a charity.
Recommendation 2 (Chapter 11)
That the term ‘entity’ be adopted to describe charities, and
that the definition of ‘entity’ include: a body corporate; a corporation sole;
any association or body of persons whether incorporated or not; and a trust;
and exclude: an individual; a political party; a
partnership; a superannuation fund; and the Commonwealth, a State, or a body
controlled by the Commonwealth or a State.
Recommendation 3 (Chapter 12)
That a charity must have a dominant purpose or purposes that
are charitable, altruistic and for the public benefit. If the entity has other
purposes, those purposes must further, or be in aid of, the dominant purpose or
purposes, or be ancillary or incidental to the dominant purpose or purposes.
Recommendation 4 (Chapter 12)
That an entity be denied charitable status if it has
purposes that are illegal, are contrary to public policy, or promote a
political party or a candidate for political office.
Recommendation 5 (Chapter 12)
That the activities of a charity must further, or be in aid
of, its charitable purpose or purposes. Activities must not be illegal,
contrary to public policy, or promote a political party or a candidate for
Recommendation 6 (Chapter 13)
That the public benefit test, as currently applied under the
common law, continue to be applied; that is, to be of public benefit a purpose
aimed at achieving a universal or common good;
practical utility; and
directed to the benefit of the general community or a ‘sufficient section of
Recommendation 7 (Chapter 13)
That the public benefit test be strengthened by requiring
that the dominant purpose of a charitable entity must be altruistic.
Recommendation 8 (Chapter 13)
That self-help groups which have open and non-discriminatory
membership be regarded as having met the public benefit test.
Recommendation 9 (Chapter 13)
That where closed or contemplative religious orders
regularly undertake prayerful intervention at the request of the public, their
purposes be held to have met the public benefit test.
Recommendation 10 (Chapter 13)
That public benefit does not exist where there is a
relationship between the beneficiaries and the donor (including a family or
employment relationship); and that this principle extend to purposes for the
relief of poverty, which the common law currently regards as being exempt from
the need to demonstrate public benefit.
Defining charitable purpose
Recommendation 11 (Chapter 14)
That there be no requirement that charitable purposes fall
either within the ‘spirit and intendment’ of the Preamble to the Statute of
Elizabeth or be analogous to one or more of its purposes.
Recommendation 12 (Chapter 16)
That the principles enabling charitable purposes to be
identified be set out in legislation.
Recommendation 13 (Chapter 16)
The Committee has considered five options for defining
charitable purpose as set out in Chapter 16. It concludes that three options
are viable, but recommends the following preferred option ( Option 5):
Charitable purposes shall be:
advancement* of health, which without limitation includes:
the prevention and relief of sickness, disease or of human
advancement* of education;
advancement* of social and community welfare, which without limitation
the prevention and relief of poverty, distress or disadvantage of
individuals or families;
the care, support and protection of the aged and people with a
the care, support and protection of children and young people;
the promotion of community development to enhance social and
economic participation; and
the care and support of members or
former members of the armed forces and the civil defence forces and their
- the advancement* of religion;
- the advancement* of culture, which without limitation
the promotion and fostering of
the care, preservation and
protection of the Australian heritage;
advancement* of the natural environment; and
- other purposes beneficial to the community, which
without limitation include:
the promotion and protection of civil and human rights; and
the prevention and relief of suffering of animals.
is taken to include protection, maintenance, support, research, improvement or
That the definition of religion be based on the principles
established in the Scientology case, namely:
in a supernatural Being, Thing or Principle; and
and observance of canons of conduct in order to give effect to that belief.
Application of the principles
Recommendation 15 (Chapter 24)
That the encouragement of sport and recreation for purposes
of amusement or competition not be a charitable purpose, it being noted that
the advancement of health, education, social and community welfare, religion,
culture or the natural environment through the encouragement of sport and
recreation would be considered a charitable purpose.
Recommendation 16 (Chapter 25)
That the care, support and protection of children and young
people, including the provision of child care services, be considered a
Recommendation 17 (Chapter 26)
That charities be permitted neither to have purposes that
promote a political party or a candidate for political office, nor to undertake
activities that promote a political party or a candidate for political office.
Recommendation 18 (Chapter 27)
That commercial purposes should not deny charitable status
where such purposes further, or are in aid of, the dominant charitable purposes
or where they are incidental or ancillary to the dominant charitable purposes.
Recommendation 19 (Chapter 28)
That the current approach of denying charitable status to
government bodies be maintained. The Committee agrees with the principles set
out in the Fire Brigades case and the Mines Rescue case for
determining whether an entity is a government body, namely that the entity is
constituted, funded and controlled by government.
Other categories in the framework
Recommendation 20 (Chapter 29)
That there be a definitional framework to distinguish
altruistic entities from other not-for-profit entities.
Recommendation 21 (Chapter 29)
That in the recommended definitional framework, the category
of public benevolent institution be replaced by a subset of charity to be known
as Benevolent Charity, that is a charity whose dominant purpose is to benefit, directly or indirectly, those
whose disadvantage prevents them from meeting their needs.
Recommendation 22 (Chapter 30)
That the framework recommended in this Report should not
include the terms ‘religious institution’, ‘scientific institution’ and ‘public
educational institution’, as altruistic entities with religious, scientific or
public educational purposes and that are for the public benefit are covered by
the categories in the recommended framework.
Recommendation 23 (Chapter 31)
That there be a category, known as ‘Altruistic Community
Organisations’, that are entities that are not-for-profit and have a main
purpose that is altruistic. That is, they can have secondary purposes that are
not altruistic, and that do not further, or are not in aid of, or are not
incidental or ancillary to, their main altruistic purpose.
Administering the definitions
Recommendation 24 (Chapter 32)
That the Government seek the agreement of all State and
Territory Governments to the adoption nationally of the definitional framework
for charities and related entities recommended in this Report.
Recommendation 25 (Chapter 32)
That the Government seek the agreement of all State and
Territory Governments to establish an independent administrative body for
charities and related entities, and to the legislative changes necessary for
Recommendation 26 (Chapter 32)
If an independent administrative body is not established:
the Government set up a permanent advisory panel, including members from the
charitable and related sector, to advise the Australian Taxation Office on the
administration of the definitions relating to charities and related entities,
and to advise the Government on the definitions of charity and related terms;
the endorsement processes currently undertaken by the Australian Taxation
Office be extended to include the endorsement of charities and related entities
in order to access all the taxation concessions to which they are variously
Recommendation 27 (Chapter 32)
That the Government commit to a comprehensive public
information and education campaign to inform the charitable and related sector
of any changes arising from its consideration of this Report.
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