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29 Jul 14
PBI requirements clarified in Hunger Project ruling

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Recently, the Full Federal Court handed down a unanimous judgment in the Commissioner of Taxation v Hunger Project Australia [2014] FCAFC 69, which may have significant implications for some existing public benevolent institutions and other entities seeking such an endorsement.

The Court found ‘direct relief’ is not an essential requirement for public benevolent institutions and fundraising alone may be enough.

Case details
Hunger Project Australia (HPA) is a charitable not-for-profit entity that is organised in Australia and raises funds for partner organisations within the global Hunger Project network.  The funds are ultimately provided for hunger relief work in developing countries.

The Commissioner of Taxation argued that an entity that merely engages in fundraising activities and does not perform charitable works directly for the benefit of the public is not a public benevolent institution.

However, the Court dismissed the Commissioner’s argument and held that ‘…whilst there is no single or irrefutable test or definition, the ordinary meaning or common understanding of a public benevolent institution includes…an institution which is organised, or conducted for, or promotes the relief of poverty or distress’.

It was on this basis that the ordinary and contemporary understanding of a public benevolent institution was broad enough to encompass an organisation, like HPA, whose dominant activity was fundraising – not providing ‘direct relief’.  The Court held that HPA should not be precluded as a public benevolent institution simply because it conducted its relief work activities through associated and related entities.

The Australian Taxation Office (ATO) has since confirmed that it will not appeal the judgment.

Implications
The Court’s ruling moved away from a long established view that public benevolent institutions were required to be organisations actively engaged in providing ‘direct relief’.  As such it is now no longer required that the public benevolent institution must itself directly provide the benevolent relief.  Rather it can be a fundraising organisation associated with, or related to, entities which provide the relief.

The judgment broadened the scope of organisations that may be approved as public benevolent institutions – and therefore eligible for charitable tax concessions.  It important to note, however, that the ATO is unlikely to allow its interpretation to stray too far from the facts of the HPA case.

As Heather Watson, Partner, says, ‘This is an encouraging development.  The unanimous judgment recognises the ever more complex corporate and fundraising structures adopted to provide benevolent relief within an increasingly globalised world’.


Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

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