Non-profit News Service No. 400 - Statutory definition of charity now law
On 28 June 2013, the Assistant Treasurer announced in media release no.124External Link that the parliament had passed the following legislation:
- Charities Bill 2013
- Charities (Consequential Amendments and Transitional Provisions) Bill 2013.
These bills have now received royal assent. Their start date is 1 January 2014. An outline of the legislation is below.
Charities Act 2013
This Act among other things:
- for the purposes of all Commonwealth laws, defines charity and charitable purpose
- describes 12 categories of charitable purposes derived from principles in common law
- extends charitable status to funds contributing to an entity that would be charitable were it not a government entity.
Charities (Consequential Amendments and Transitional Provisions) Act 2013
This Act includes amendments to the tax law that apply from 1 January 2014 to remove the income tax exemption for non-charitable ancillary funds.
Non-charitable ancillary funds provide money, property and benefits to tax exempt deductible gift recipients (DGRs), whether or not the DGR is charitable. An example of a non-charitable DGR is a government DGR.
The amendment to remove the specific exemption recognises that the Charities Act 2013 extends charitable status to funds contributing to an entity that would be charitable were it not a government entity.
From 1 January 2014, these funds must apply for registration with the Australian Charities and Not-for-profits Commission (ACNC) as a charity and be endorsed by us as income tax exempt.
Non-charitable ancillary funds endorsed by us as income tax exempt as at 31 December 2013 will be transitioned into the new arrangements as follows:
- they will be automatically treated as registered with the ACNC as charities and endorsed by us to access income tax exemption from 1 January 2014
- they will be provided with an opt-out provision, should they not wish to be a registered charity and income tax exempt.
We will provide further advice on the changes and transitional arrangements in the coming months.
You can view both ActsExternal Link and the explanatory memorandumExternal Link on the Australian Government Comlaw website.
This measure featured in earlier issues:
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