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How to Register a Charity in Australia

Guest blog by BlueRock Partners

Charities are everywhere. We generally consider all organisations that act with a benevolent purpose to be charitable. With such an influx of these organisations in Australia and overseas it has become increasingly difficult to determine which of these organisations are in fact reputable charities.

A charity can be formed out of an Australian company (limited by shares or by guarantee), an incorporated association, or even a trust. However, a charity—like a company—is a distinct legal entity which needs to satisfy a number of tests prior to satisfying the registration requirements. These requirements arise from a number of different pieces of legislation. Therefore, aspiring charities should be aware of the relevant legislative requirements and framework.

There are four key factors that determine whether or not an organisation will be considered for registration as a charity. The organisation must:

  1. be a not-for-profit
  2. have a charitable purpose and be for the public benefit
  3. not have any disqualifying purpose
  4. not be an individual, political party or government entity.

Why register as a charity?

The benefits of registering as a charity include:

  • tax concessions and benefits
  • being eligible for categories of deductible gift recipient status
  • a number of other Commonwealth concessions and benefits, including grants and regulatory exemptions.

Requirements to be eligible to register as a charity

Not-for-profit

In order to be a registered charity, an organisation needs to be a not-for-profit organisation. This does not mean that the organisation cannot make a surplus, but any surplus must be kept to satisfy the future aims of the organisation. A not-for-profit will also be required to have appropriate provisions in their Constitution to prove that they are in fact a not-for-profit (e.g. winding-up clauses, typical rules adopted by not-for-profits, demonstrating that they are a not-for-profit etc.).

It is important not to confuse charities with not-for-profits. A charity must be a not-for-profit, but a not-for-profit may not always be a registered charity. In Australia, there are approximately 600,000 not-for-profit organisations, and only 60,000 of these are registered charities.

Charitable purpose

A registered charity’s purpose must be charitable and for the public benefit. Alternatively, if they are not explicitly charitable purposes, this requirement will be satisfied if they fulfil the furtherance of a purpose incidental to one or more of the 12 charitable purposes in the Charities Act 2013 (Cth).

The non-exhaustive list of charitable purposes are:

  • advancing health
  • advancing education
  • advancing social or public welfare
  • advancing religion
  • advancing culture
  • promoting reconciliation, mutual respect and tolerance between groups of individuals that are in Australia
  • promoting or protecting human rights
  • advancing the security or safety of Australia or the Australian public
  • preventing or relieving the suffering of animals
  • advancing the natural environment
  • promoting or opposing a change to any matter established by law, policy or practice in the Commonwealth, a state, a territory or another country, (where that change furthers or opposes one or more of the purposes above)
  • other similar purposes ‘beneficial to the general public’ (a general category).

There are a number of further requirements that must be satisfied under each of these purposes.

Public benefit requirement

The organisation is required to benefit the public. Certain purposes (such as education, religion, combatting poverty) are inherently in the public benefit, subject to evidence to the contrary.

  • The ‘public’ aspect of this test does not require the entire public to be benefited, simply a sufficient section—so long as it does not give rise to more than incidental personal benefit. For instance, benefiting third-world communities will satisfy the public element of this test.
  • The ‘benefit’ aspect does not require the purpose to be wholly beneficial (i.e. to be void of any detriment); however, any detriment or harm must not outweigh the benefit.

Governance standards and exclusions

Finally, in order to qualify for charity status, the organisation must:

  • have an ABN
  • meet the governance standards
  • not be an excluded organisation.

Excluded organisations include political parties, government entities, and organisations noted as engaging in terrorist or criminal activities.

Additionally, not-for-profits with a ‘disqualifying purpose’ will also not be capable of being registered as a charity. The Charities Act 2013 (Cth) defines a ‘disqualifying purpose’ as “engaging in or promoting activities which are unlawful or contrary to public policy, or promoting or opposing a political party or candidate”.

Navigating your way through the legislative requirements can be both complicated and confusing. If you would like assistance with registering your organisation as a charity, contact BlueRock Partners on 03 8682 1111 or partners@thebluerock.com.au or CCASA on 08 9340 9400 or craig@ccasa.com.au for more information.

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