Despite its liberal colloquial use, the term “charity” actually has a very specific meaning in Australian law. Only some types of organisations are recognised as charities. Charities are a type of non-profit organisation. Not all non-profit organisations are charities but all charities must be not for profit. In order to be legally recognised as a charity, an organisation must meet a strict set of requirements and be endorsed by both the Australian Charities and Not-for-profits Commission and the Australian Taxation Office.
The legal definition of charity was recently explicitly defined in Commonwealth law and will take effect from 1 January 2014. The Charities Bill 2013 introduced a statutory definition of charity that is applicable across all Australian states and territories. It replaces the common law definition of charity that dated back to 1601 and was based on hundreds of years of case law. More information on the statutory definition of charity is available here.
Under the statutory definition of charity, charities are defined as non-profit organisations that have demonstrated that their purpose is for the public benefit. The common law permitted relieving poverty, advancing education, advancing religion, relief from illness and the needs of the aged as charitable purposes in the public benefit. The new statutory definition incorporates some additional charitable purposes, including but not limited to: promoting and protecting human rights, preventing or relieving the suffering of animals, and protecting the safety of the general public. The statutory definition has also clarified some aspects of the common law that have resulted in some significant cases in the past.
Organisations that are registered as a charity are often entitled to a range of additional tax and other benefits beyond those already granted to other non-profit organisations. Some tax exemptions, however, such as Deductible Gift Recipient status (the capacity to offer donors the ability to claim their donations as an income deduction in their personal tax return), are only granted to specific types of organisations and require undergoing additional endorsement processes. Deductible Gift Recipient status is also sometimes granted to non-charities (see our DGR status fact sheet for more information).
This fact sheet is intended as a simple overview of the legal term charity. Charity law is incredibly complex and there are many other components, allowances, restrictions and exceptions that are not described above. This fact sheet is not intended and should not be taken as legal advice. Legal advice should be sought from a legal practitioner before taking action.