Charities (Amendment) Act Victoria
Wednesday, 8th November 2006 at 4:18 pm
The Victorian Government has passed legislation that allows charitable trusts to make donations to government linked institutions such as public hospitals, museums and libraries.
The changes come with amendments to the Victorian Charities Act of 1978.
Victorian Attorney General Robert Hulls says in the past charitable trusts have not been able to make donations or gifts to organisations carrying out a government function even where their operations are clearly charitable.
However he says since the 1990’s, a series of Australian court decisions have created uncertainty about the legal meaning of ‘charitable at law’ as it relates to government linked bodies.
The Attorney General says this has led to some confusion particularly in relation to donations to organisations such as public hospitals, museums and libraries.
He says that as a result, charitable trusts have been experiencing considerable uncertainty in determining which government linked public bodies that are ‘charities at law’ that they can make grants to without breaching their trust deeds. These include public hospitals, the Royal Botanic Gardens and the National Gallery of Victoria.
The legislation also extends the distribution powers of trusts in relation to grants bodies linked with state and territory governments, local government and the commonwealth government.
However the Attorney general says the law only applies if trusts ‘opt in’ and the ATO will require documentation from the trustees.
Further steps must be taken by Victorian charitable trusts and the commonwealth government for the bill to have full effect. Charitable trusts that ‘opt in’ to the legislation will only be able to exercise the legal power to make grants to government-linked bodies after they have obtained an appropriate tax endorsement from the ATO.
It may also be necessary for the Commonwealth government to amend the Income Tax Assessment Act 1997 to enable, from a tax perspective, charitable trusts to exercise the full powers available under the bill.
The amended legislation was enacted on October 10th, 2006.
Philanthropy Australia says the new law will apply retrospectively for those trusts that choose to opt-in.
It says trusts will still need to take steps necessary to opt-in to the law, and must also ensure compliance with Commonwealth tax law. Nevertheless, this is an encouraging first step.
Philanthropy Australia says it hopes that similar legislation will be enacted in other States and Territories.
It is estimated that there are 1200 trusts and fo3undations in Australia which is estimated to distribute up to $500 million a year to charities.
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