Part 14 - Conservation
Issue 1: The GST legislation contains a number of special rules for endorsed charities and gift deductible entities. How will conservation groups determine whether they are included in either of these categories?
Non-interpretative – straight application of the law
For more information refer to TR 2011/4 Income tax and fringe benefits tax: charities.
The policy intent is for the commercial activities of charities to be subject to GST and non-commercial activities of charities to be GST-free. For more information, please refer to Income tax guide for non-profit organisations and GiftPack.
A charity's sole or dominant purpose is to provide benefits to the public or to relieve poverty. An entity will not be a charity if any benefit to the community is merely incidental to, or a consequence of, a non-charitable purpose.
For an organisation that is not a fund to be a charity, its sole or dominant purpose must be charitable. If it has purposes which when viewed in isolation would not be charitable, they must be incidental or ancillary to the charitable purpose.
The characteristics of each entity will determine whether it is a charity. An entity's governing or constituent documents (constitution, memorandum and articles of association, trust deed, rules, charter etc) must show that it is a charity. For entities that are not merely trust funds, their activities must also show they are charities.
There is no general doctrine in Australia which excludes a charity from having political purposes. In certain circumstances, an entity can be charitable if it has a purpose (including a sole purpose) of generating public debate with a view to influencing legislation, government activities or government policy that comes within the definition of a charitable purpose.
Political parties are not charitable and an organisation is not charitable if its sole purpose is engaging in activities associated with political parties.
However, if an organisation's purpose is otherwise charitable, the presence of political, lobbying or promotional activity that is incidental to the charitable aims will not prevent it being a charity.
Can conservation groups be charities?
Purposes are considered to be charitable if they benefit the community, or some section of it, through:
- the relief of poverty or sickness or the needs of the aged
- the advancement of education
- the advancement of religion, or
- other purposes beneficial to the community.
The category of most relevance to conservation groups is the last one - other purposes beneficial to the community.
Other purposes beneficial to the community
Charitable activities for other purposes that may be beneficial to the community include:
- preserving defence and public order
- relieving stress due to natural disasters
- providing community facilities such as a museum, library, hall, garden or fire service
- promoting art and culture such as through music and drama
- promoting health, for example through educating the public about disease
- protecting animals, and
Organisations that are not charitable include:
- organisations carried on for the profits of their members
- organisations carried on for their members' common interests, such as professional or trade groups, and
- community service organisations that have significant membership purposes, such as traditional service clubs, sporting, recreational and social clubs.
Non-profit organisations that operate for the public benefit to protect, preserve, care for, and educate the community about the environment are charities. Political bodies are not charities.
Examples of charities
- conservation bodies which help protect the environment provided they are not for political purposes
- environmental associations whose purpose is to educate the public about environmental issues
- flora and fauna conservation societies which are not political in nature
- land care groups and other greening organisations involved in tree-planting and revegetation
- marine conservation societies which are involved in the conservation of Australia's coastal areas or coral reefs
- natural resource organisations which educate the public about the wise use of Australian resources such as soil, water and forests
- support groups for national parks
- friends of botanic gardens.
Examples of non-charities
- bushwalking clubs
- government instrumentalities carrying out the ordinary functions of government.
- outdoor recreation clubs
- political bodies
- resident action groups set up to oppose planning policies detrimental to their lifestyles, for example a residents action group formed to lobby against a proposed rubbish dump
- water sports clubs.