Source Business Directory
MEDIA, JOBS & RESOURCES for the COMMON GOOD
NEWS  |  Politics

Judgement Paves Way for More PBI Endorsements


Thursday, 22nd August 2013 at 9:50 am
Staff Reporter, Journalist
A Federal Court decision has removed the requirement of 'direct relief' used by the Tax Office to deny Public Benefit Institution endorsement and is set to have a significant impact on organisations that have previously been denied PBI status, according to a Not for Profit tax expert.

Thursday, 22nd August 2013
at 9:50 am
Staff Reporter, Journalist


0 Comments


FREE SOCIAL
SECTOR NEWS

 Print
Judgement Paves Way for More PBI Endorsements
Thursday, 22nd August 2013 at 9:50 am

A Federal Court decision has removed the requirement of 'direct relief' used by the Tax Office to deny Public Benefit Institution endorsement and is set to have a significant impact on organisations that have previously been denied PBI status, according to a Not for Profit tax expert.

The Australian Federal court decision was made in July in a case by the Hunger Project Australia.

“This has provided another loss to the Taxation Commissioner in the charity space, this time the loss relates to the definition of a Public Benevolent Institution (PBI). The case removed the requirement of 'direct relief' which has been the foundation for substantial denials of PBI endorsement from the ATO,” Tax Director with Moore Stephens in Melbourne, Stephen O’Flynn

The Hunger Project Australia is a participant in a global collaboration of organisations whose principal aim is the relief of hunger. The court heard that the Project's predominant activity is fundraising. Funds raised are paid to other organisations who undertake the direct hunger relief activities across the globe.

The court was told that the Project does not itself participate directly in any charitable activities of substance.

The organisation applied for endorsement as a PBI from the Commissioner of Taxation. The Commissioner rejected this application on the basis that the Project was not involved directly in benevolent relief. The organisation appealed this decision.

“In its decision, the Federal Court expanded a previous decision made in Commissioner of Taxation v Word Investments (2008). In Word Investments it was held that an organisation was not prevented from being a charity merely because it directed funds to other charitable entities rather than carrying out its own charitable activities,” O’Flynn said.

“In the Project's case His Honour found that the principles in Word Investments should be expanded to PBIs and not purely to charities. His Honour stated that where an organisation has a benevolent objective that is clear and not merely abstract in nature, and the organisation engages in fundraising activities to support this objective, it can qualify as a PBI. There is therefore no need for direct relief to be provided.”

O’Flynn said that whilst this case may be subject to an appeal, cases have not been falling in the Commissioner's favour and a re-application for endorsement may prove successful in light of the decision in the Project's case.

“With the need for direct relief having been removed by the Federal Court there is now an encouraging pathway for PBI's that currently have, or intend to develop, either a fundraising division of their institution or a connection with charitable activities to still be endorsed as PBIs for the purposes of the FBT exemption,” O’Flynn said.


Staff Reporter  |  Journalist  |  @ProBonoNews



Got a story to share?

Got a news tip or article idea for Pro Bono News? Or perhaps you would like to write an article and join a growing community of sector leaders sharing their thoughts and analysis with Pro Bono News readers?

Get in touch at news@probonoaustralia.com.au


Write a Reply or Comment

Your email address will not be published. Required fields are marked *



YOU MAY ALSO LIKE

The Budget – Beyond Economic Units

David Crosbie

Thursday, 10th May 2018 at 9:04 am

Charity Sector Looks To Improve Complaint Handling

Luke Michael

Tuesday, 24th April 2018 at 2:35 pm

Calls for Evidence As UK Takes First Look at Charity Tax Reliefs in 20 Years

Wendy Williams

Monday, 19th March 2018 at 5:05 pm

Privatisation Poses New Challenges for NFPs Managing Their Workforce

Luke Michael

Tuesday, 9th January 2018 at 4:36 pm

POPULAR

Fears NDIA Will Force People into Shared Accommodation Settings

Luke Michael

Monday, 14th May 2018 at 3:48 pm

NDIS Eligibility for People With Autism Under Review

Luke Michael

Monday, 21st May 2018 at 2:35 pm

Government Policy Failure to Blame for Rising Homelessness

Luke Michael

Tuesday, 15th May 2018 at 3:36 pm

Autism: How Much Do We Really Know About It?

Estelle Stathoulis

Monday, 14th May 2018 at 8:00 am

Source Business Directory
pba inverse logo
Subscribe Twitter Facebook

The social sector's most essential news coverage. Delivered free to your inbox every Tuesday and Thursday morning.

You have Successfully Subscribed!