Charities Act 2013 takes effect: meaning of charity clarified

On 1 January 2014, the Charities Act 2013 (Cth) commenced. The Act introduces statutory definitions of 'charity' and 'charitable purpose' for the purposes of all Commonwealth legislation and, in doing so, provides much-needed clarity in the not-for-profit sector. Previously, these terms were defined only by case law.

 

Overview

On 1 January 2014, the Charities Act 2013 (Cth) (Act) commenced. Before the introduction of the Act, the definition of charity relied on over 400 years of case law. This resulted in charity law that was, in several areas, unclear or inconsistent.

The Act clarifies and condenses the definition of charity by restating the case law in modern language.

The Act also expands the meaning of 'charitable purpose' to better address the needs and practices of the contemporary not-for-profit sector.

What is the definition of 'charity' under the Act?

Under the Act, a charity means an entity:

  • that is not-for-profit;
  • all of the purposes of which are charitable purposes for the 'public benefit' (discussed below), or incidental or ancillary to, and in furtherance or in aid of, such purposes;
  • which does not have any 'disqualifying purposes' (discussed below); and
  • which is not an individual, a political party or a government entity.

'Charitable purpose'

Before the Act's commencement, 'charitable purpose' was confined to certain areas, including the advancement of religion and education. Under the Act, 'charitable purpose' has been expanded and now includes the following purposes:

  • advancing health;
  • advancing education;
  • advancing social or public welfare;
  • advancing religion;
  • advancing culture;
  • promoting reconciliation, mutual respect and tolerance between groups of individuals in Australia;
  • promoting or protecting human rights;
  • advancing the security or safety of Australia or the Australian public;
  • preventing or relieving the suffering of animals;
  • advancing the natural environment;
  • any other purpose beneficial to the general public that may be reasonably regarded as analogous to, or within the spirit of, the above purposes; and
  • promoting or opposing a change to any matter established by law, policy or practice in the Commonwealth, a state, a territory or another country, in furtherance or protection of one or more of the above purposes.

Purposes for the 'public benefit'

Pursuant to the Act, an entity's purpose will be for the public benefit if the achievement of the purpose would be of public benefit and the benefit would be available to a sufficient section of the general public.

The following purposes are presumed to be purposes for the public benefit, in the absence of evidence to the contrary:

  • preventing and relieving sickness, disease or human suffering;
  • advancing education;
  • relieving the poverty, distress or disadvantage of individuals or families;
  • caring for and supporting the aged or individuals with disabilities; and
  • advancing religion.

'Disqualifying purpose'

An entity will not be a charity under the Act if it has a disqualifying purpose.

A disqualifying purpose is defined in the Act to be a purpose which involves:

  • engaging in, or promoting, activities that are unlawful or contrary to public policy; or
  • promoting or opposing a political party or a candidate for political office.

What effect does the Act have on charities seeking to be registered?

In light of the new legislation, the application form to register a charity with the Australian Charities and Not-for-profits Commission has been updated to reflect the new definition of charity as set out in the Act.

More information from Maddocks

For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the General Commercial team.

More information on companies from Cleardocs

You can read earlier ClearLaw articles on companies and not-for-profits.

Order Cleardocs company document packages