Publications / Nonprofit
From 1 January 2014, housing providers previously described as a charity because they were a provider under the National Rental Affordability Scheme (NRAS) will no longer automatically be deemed to be a charity.
To this point NRAS providers have been deemed as charitable to remove any risk that they would not be regarded as a charity because of their undertaking of commercial activities.
With the introduction of the Charities Act 2013 (the Act) this deeming provision will be removed.
As a result from 1 January 2014:
- an existing housing provider which is currently registered as a charity with the Australian Charities Not for Profit Commission (ACNC) will remain registered as a charity,
- a new housing provider will need to satisfy the ACNC that it falls within the definition of charity under the Act.
Existing providers may feel some comfort from the grandfather provision ensuring automatic recognition as a charity, however be aware that this will not guarantee that on an audit of the organisation it will remain so registered. A good risk management strategy would be to undertake an audit of governing documents and activities to ensure that the organisation can still be described as a charity under the Act.
Under the Act, a housing provider will, (unless it falls within another specific provision) need to satisfy the ACNC that it is a not for profit entity and that all of its purposes:
- are for the relief of poverty
- advance social or public welfare and are for the public benefit, or
- are beneficial to the general public in a way analogous to other charitable purposes and are for the public benefit.
The addendum to the explanatory memorandum to the amending legislation states:
‘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 house affordability.’
It would seem that housing providers which provide housing to the aged, indigenous persons or persons with a disability will continue to fall within the definition of charity.
However it raises afresh the issue of whether only social housing advances social or public welfare in today’s society or whether the net is wide enough to cover ‘affordable housing’.
The change to legislation makes it essential for all housing providers to review their governing documents, their purposes and their activities before 31 December 2013.
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.