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House of Representatives

Charities Bill 2013

Charities Act 2013

Charities (Consequential Amendments and Transitional Provisions) Bill 2013

Addendum to the Explanatory Memorandum

(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)

Chapter 1 - Addendum to the explanatory memorandum

Outline of chapter

1.1 This Chapter adds additional material to the explanatory memorandum to the Charities Bill 2013 and the Charities (Consequential Amendments and Transitional Provisions) Bill 2013.

1.2 The additional materials are explained by way of modification to the explanatory memorandum to the Bills.

Further explanation of new law

Disqualifying purposes

Unlawful activities

1.3 At the end of paragraph 1.102, include the following text:

1.102A There is a distinction between the purposes of an entity and the activities of an entity. This provision is concerned with purpose. Individual instances of engaging in, or promoting, an unlawful activity would generally not cause an entity to be considered to have a purpose to engage in such activity. However, activities can be considered in determining an entity's purposes (see paragraphs 1.27 to 1.29) and an entity's engagement in, or promotion of, unlawful activities to an extent that they could be considered to constitute a purpose to engage in, or promote, such unlawful activities, would be disqualifying.

1.102B In general terms, the purposes of an entity are usually the aims listed in the entity's constitution, and the activities will be the methods by which the entity achieves those purposes. However, not all purposes will necessarily be listed in the entity's constitution. If an entity spends a large portion of its time and resources carrying out certain activities over extended periods of time, these activities may, in fact, amount to a purpose in their own right. Whether the activities have amounted to a purpose will be determined on a case-by-case basis, considering all relevant factors, including but not limited to the factors listed in paragraphs 1.27 to 1.28.

1.102C In addition to the distinction between the activities and purposes of a charity, there is also a distinction between the activities of the entity and the activities of the individuals involved in that entity . The Bill is concerned only with the purpose of the entity and to a lesser extent its actions and activities in determining those purposes, not the actions and activities of individuals associated with the entity unless they are authorised by the entity. Unauthorised individual instances of unlawful activity carried out by an employee, member or volunteer of an entity are unlikely to constitute a disqualifying purpose of an entity. Whether an action of an individual amounts to an action of the entity will be determined according to the law of agency and other relevant factors.

Political activities

1.4 At the end of paragraph 1.110, include the following text:

1.110A The Commissioner of Taxation's current taxation ruling TR 2011/4 [1] [2] explains that if the purpose of an entity that is otherwise charitable, will not generally be affected by non-charitable political activities that are simply a means of giving effect to its charitable purpose. These activities could include seeking to persuade members of the public to vote for or against particular candidates or parties in an election, or distributing material designed to underpin a party political campaign as long as these activities do not alter the entity's purposes. The disqualifying purposes are not intended to alter the outcome as explained in the ruling.

Charitable purposes

Charitable housing

1.5 At the end of paragraph 1.125, insert the following text:

1.125A The examples of purposes are not intended to limit charitable purposes to those specifically mentioned. Particularly under the broad category of advancing social or public welfare, the purposes of an entity may encompass a range of circumstances. For example, a charitable purpose that includes providing housing may address housing needs arising from financial disadvantage under the relief of poverty. Charitable housing may also address particular or special physical, social or psychological needs or other special disadvantages of individuals and families. A special disadvantage is disadvantage suffered by an individual or family that is something more than the issues commonly experienced by the public, such as general problems with housing affordability.

Advancing the natural environment

1.6 In paragraph 1.141, replace the dot point starting with "promoting sustainability development" with the following dot point:

promoting sustainable development, including through promoting ecologically sustainable urban environments and resource sustainability, and promoting biodiversity; and

Public benefit - identifiable detriment

1.7 At the end of paragraph 1.148, insert the following text:

Advocacy to influence government policy or legislation which may result in government policy or legislation being amended to the detriment of certain members of the public will not be an 'identifiable detriment' for the purposes of paragraph 6(2)(b) of the Bill. This is because advancing public debate or advocating about an issue is generally beneficial and produces no detriment to the public itself, except where such advocacy or debate is contrary to law, for example, where the debate is intended to be legally defamatory (including debate that is knowingly libellous or slanderous).

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