The Federal Government has introduced the Statutory Definition of Charity Bill into Parliament with just four sitting weeks left before the Federal Election.

The Federal Government announced a later start date for the charity definition in the May Budget saying that it will now take effect from 1 January 2014, rather than 1 July 2013 as originally announced.

The Treasurer Wayne Swan said at the time that the new start date would provide time for the Australian Charities and Not-for-profits Commission to develop guidance for charities regarding the definition.

Assistant Treasurer David Bradbury said today the meaning of charity and charitable purpose has largely been administered on the basis of principles derived from the common law, going all the way back to the Statute of Elizabeth of 1601.

“A statutory definition of charity is a sensible and evidence based reform, which has been recommended by numerous reviews such as the 2001 Inquiry into the Definition of Charities and Related Organisations, and the 2010 Productivity Commission report, Contribution of the Not-for-Profit Sector,” he said.

Bradbury said the proposed statutory definition would help support charities by providing a succinct and clear definition of charity which is easier for charities and the community to understand.

In April the Federal Government released the long awaited exposure draft legislation for a statutory definition of 'charity' in Australia preserving the common law definition of charity, including the presumption of public benefit for certain charitable purposes.

It also incorporates recent court decisions, such as Aid/Watch Incorporated v Federal Commissioner of Taxation, which extended the circumstances in which a charity may advance public debate.

The Not for Profit sector made more than 200 submissions on a public consultation paper in 2011 and further consultation on the draft Bills.

Key changes included in the final Bills:

• The inclusion of a preamble that acknowledges the distinctive and important role of charities in the Australian community, outlines the benefits of a statutory definition of charity and charitable purpose, and states that familiar common law concepts are being used to ensure continuity;
• Clarification of the definition of government entity by including an example to provide further information about the State and Territory entities intended to be captured by the definition (see section 4);
• Changes to how the public benefit requirement is described, to ensure it remains consistent with common law principles (see section 6);
• The description of purposes presumed to be for the public benefit has been broadened to more closely match descriptions of purposes in the Report of the Inquiry into the Definition of Charities and Related Organisations (see section 7);
• Purposes presumed to be for the public benefit are specified under the broader categories of charitable purposes where their link to the broader categories was previously unclear (see section 12 and Part 3 of Division 2);
• The inclusion of an exemption from part of the public benefit requirement for the purpose of relieving the necessitous circumstances of one or more individuals who are in Australia (see section 8);
• Refinement of the description of entities that hold or manage native title or other traditional land related assets (see section 9);
• Clarification that charities are free to critique the policies of political parties and candidates, as distinct from direct partisan political engagement (see section 11);
• Clear provision for the ongoing status of existing charitable purposes that do not come under the specific categories listed in the Bill (see paragraph 12 (k));
• Minor changes to clarify the provision that allows funds to contribute to charity-like government entities and the provision relating to cy-pres schemes (see sections 13 and 18); and
• Grandfathering of existing charitable entities that provide for ‘poor relations’ and ‘poor employees’ (see Part 3 of Schedule 2 to the Consequential and Transitional Provisions Bill).