ATO Interpretative Decision

ATO ID 2002/496 (Withdrawn)

Income Tax

• This ATO ID is withdrawn as responsibility for registering a body as a health promotion charity passed to the Australian Charities and Not-for-profits Commission (ACNC) with effect from 3 December 2012. This ATO ID continues to be an ATO precedential view for the period up to and including 2 December 2012.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the Foundation a deductible gift recipient pursuant to subsection 30-20(1), item 1.1.6 of the Income Tax Assessment Act 1997 (ITAA 1997) on the basis that it is a charitable institution, the principal activity of which is to promote the prevention or control of diseases in human beings?

Decision

Yes, the Foundation is eligible for endorsement as a deductible gift recipient pursuant to subsection 30-20(1), item 1.1.6 of the ITAA 1997 on the basis that it is a charitable institution, the principal activity of which is to promote the prevention or control of diseases in human beings.

Facts

The Foundation is a public company, limited by guarantee. The Foundation's constitution contains acceptable non-profit and winding up clauses which prohibit the distribution of profits to members during operation or in the event of winding up and stipulate that any excess would be distributed to an organisation which has been accepted by the Commissioner as a Deductible Gift Recipient pursuant to subdivision 30-B of the ITAA 1997.

The main objects of the Foundation are:

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to provide various forms of relief to individuals suffering from a particular disease and their carers, including but not limited to any activity which enhances the support and quality of life for people with the symptoms of the disease and their carers;

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to provide broad based education to individuals suffering from the disease;

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to provide broad based education to carers and service providers including health care workers and other organisations to enable them to appropriately support individuals suffering from the disease;

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to engage in medical research into the causes, prevention and treatment of the disease;

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to engage in activities to raise community awareness of the disease and other similar diseases; and

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to become and act as trustee of and administer funds settled for purposes within the scope of the objects listed above.

Reasons for Decision

Item 1.1.6 of subsection 30-20(1) of the ITAA 1997 provides that a charitable institution whose principal activity is the promotion of the prevention or control of disease in human beings will be eligible to obtain tax-deductible status with no special conditions.

The Explanatory Memorandum to Taxation Laws Amendment Bill (No. 2) 2001 which inserted item 1.1.6 provides the following explanation at paragraph 5:20:

The charitable institutions to be covered by the amendment are medical or health organisations whose principal focus is preventative in nature, rather than providing direct relief of sickness or suffering. These organisations typically, focus on particular types of ailments or health issues, for example, asthma, cancer, AIDS.... paraplegia and kidney conditions.

'Promote' in the provision has its ordinary meaning. As French J said in Brown v. Members of the Classification Review Board of the Office of Film and Literature Classification (1998) 154 ALR 67 at 81 (in a different context):

According to the Shorter Oxford English dictionary, to promote is to further growth, development, progress or establishment of (anything); to further advance, encourage.

The Macquarie Dictionary defines promote: 'to further the growth, development, progress, etc of: encourage'.

All of the objectives of the Foundation are consistent with the promotion of the prevention or the control of diseases in human beings because:

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providing relief to individuals with this degenerative disease and their carers is concerned with control and management of the disease (as defined in subsection 995-1(1) of the ITAA 1997) in the individual;

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educational activities are aimed at promoting the control of the disease in individuals through early diagnosis;

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research activities are aimed at both the prevention and control of the illness in individuals in the general population.

The Foundation, has only recently commenced these activities having being incorporated in 2001. It has received grants from various government departments to fund its research and educational activities. Public lectures have been organised to educate members of the public about this degenerative disease that affects a significant number of human beings. Education and research are two clear means of promoting the prevention and control of the disease in human beings.

'Disease' is defined in subsection 995-1(1) of the ITAA 97 to include any physical or mental ailment, disorder, defect or morbid condition whether of sudden onset or gradual development and whether of genetic or other origin. The disease with which the Foundation is concerned falls within the definition.

The objects of the Foundation lead to the conclusion that the Foundation is carrying out a charitable purpose for the benefit of the community (or at least, an appreciable portion of it). The Foundation is considered to be an 'institution' and accordingly,

is considered a 'charitable institution', the income of which will be exempt pursuant to section 50-5, item 1.1 of the ITAA 1997.

As well as endorsement as a Deductible Gift Recipient and an Income Tax Exempt Charity, the Foundation is entitled to the same benefits available to Public Benevolent Institutions (subsection 30-45(1), item 4.1.1 of the ITAA 1997) in relation to Fringe Benefits Tax, Tax Deductible Gift Recipient status and exemption from Goods and Services Tax.

Year of income:  Year ending 30 June 2001 and following

Legislative References:
Income Tax Assessment Act 1997
   subsection 30-20(1), Item 1.1.6
   subsection 995-1(1)
   section 50-5, Item 1.1
   subsection 30-45(1), Item 4.1.1

Keywords
Deductible gift recipients
Income tax exempt charities

Business Line:  Small Business/Individual Taxpayers

Date of publication:  30 April 2002

ISSN: 1445-2782