Chapter 6: Public benefit and other definitional issues

Introduction

6.1 This chapter addresses a range of other issues relating to the draft Bill. They include the following:

The public benefit test and the common law (section 7).
Broadening the list of charitable purposes (sections 10 and 11).
The need to define ‘religion’ in the draft definition (section 12).

Overview of submissions

Public benefit: section 7

6.2 Presumption of public benefit: A number of submissions were concerned that the draft Bill requires entities to meet the public benefit test in section 7. This is seen as a departure from the common law which holds that bodies with a charitable purpose under the three traditional heads of charity (the relief of poverty, the advancement of education, and the advancement of religion) are presumed to be established for the public benefit.

Subsection 7(1), however, omits the presumption by providing that:

(1) A purpose that an entity has is for the public benefit if and only if:

(a) it is aimed at achieving a universal or common good; and

(b) it has practical utility; and

6.3 Several religious organisations were particularly concerned about this new requirement. ‘Any loss of the common law presumption of public benefit will also raise a real possibility of an increased number of disputes between religious and other charitable organisations and government authorities as to whether the requisite public benefit exists for charitable status.’ (Anglican Church Diocese of Sydney)

6.4 There is a perception that administrative costs could be considerably increased if it became necessary for religious bodies to demonstrate public benefit for each of their constituent entities, as required by the definition. The Anglican Church Diocese of Sydney suggested instead that the ‘common law public benefit presumption be included as part of clause 7 of the proposed definition of charity in respect of all religious and other charitable purposes except where the purpose is a “purpose that is beneficial to the community” (paragraph (10)(1)(g)).’

6.5 ‘Numerically negligible’: A majority of respondents believed that subsection 7(2) might disqualify legitimate charitable bodies which have only a small number of beneficiaries.

Subsection 7(2) states that:

A purpose is not directed to the benefit of a sufficient section of the general community if the people to whose benefit it is directed are numerically negligible.

6.6 Some submissions argued that this test could exclude independent schools in geographically isolated communities, schools that cater for particular religions or the indigenous community, and schools with specialised education policies. The Deafness Forum of Australia provided the example of people who are both profoundly deaf and legally blind, where the number of people afflicted is small compared with the much larger group with hearing impairment. Other submissions noted that a trust established for a family whose house has burnt down, or a single person with a rare disease, have traditionally been considered to be charitable but appear to be excluded by the draft Bill.

6.7 Some respondents suggested that the terms ‘sufficient section’ and ‘numerically negligible’ were too vague and needed to be clarified, while others were concerned about the cost of compliance.

Charitable purpose: section 10

6.8 In general, there was broad support for section 10 of the draft Bill. The clarification in section 11 that the ‘advancement of social or community welfare’ includes the care of, and the support and protection of, children and young people, and in particular, the provision of child care services was welcomed. Many respondents also considered that paragraph 10(1)(g) of the draft Bill (any other purpose that is beneficial to the community) provided adequate flexibility to meet the changing needs of the charitable sector in the future.

6.9 A number of submissions suggested further changes to section 10 and/or the EM, as follows.

Health

6.10 It was suggested that paragraph 10(1)(a) of the draft Bill could be clarified as outlined below:

Advancement includes health promotion, health education, protection, early intervention, maintenance, treatment, support, research, health improvement and community development.
Include services covering substance abuse and mental health. (The Australian Divisions of General Practice; Lifeline)
Include the support of people with disabilities. (ACROD Ltd)

Social or community welfare

6.11 The EM should make clear that the ‘advancement of social or community welfare’ in paragraph 10(1)(c) includes ‘the provision of housing and accommodation support for people with special needs or who are otherwise disadvantaged in terms of their access to housing’. (ACOSS, with support from Aged & Community Services Association of NSW & ACT; Aged and Community Services Australia; QCOSS; Australians for Native Title and Reconciliation; Multicultural Disability Advocacy Association of NSW; NCOSS; TASCOSS; and the Community Housing Federation of Australia)

Care of children

6.12 It was suggested that paragraph 10(1)(b) (the advancement of education) should be amended to include playgroup services as they fulfil an important role in early childhood and parent education. Playgroup Queensland noted that other organisations providing services to children and young people such as the Police Citizens Youth Club movement, Guides and Scouts have previously been listed by name to provide them with access to income tax exemption.

Culture

6.13 The following suggestions were made to clarify the definition of culture (paragraph 10(1)(e)):

Define culture to avoid issues of interpretation. (Artists Foundation of WA)
Include all heritage listed sites and buildings, not just national ones. (Heritage Council of NSW; History Council of NSW)
Add the advancement of arts, heritage and science. (CAF)

Natural environment

6.14 The addition of this purpose at paragraph 10(1)(f) was widely welcomed. A number of respondents suggested adding ‘the built environment’ or simply referring to ‘the environment’ which would include the built environment. (Arnold Bloch Leibler)

Other purposes beneficial to the community

6.15 ACOSS recommended that consideration should be given to amending paragraph 10(1)(g) to add the word ‘similar’ to the phrase ‘any other purpose that is beneficial to the community’ while retaining the proposed examples of such purposes in the EM. The intention would be to keep this ‘head’ of charity broadly consistent with its present common law meaning and that of the other ‘heads’.

6.16 A number of respondents recommended that the promotion of civil and human rights and reconciliation, and the protection and advancement of human rights should appear in the draft Bill rather than in the EM (paragraph 1.84). (Australian Network of Environmental Defenders Offices; the Federation of Community Legal Centres (Vic) Inc; Central Highlands Community Legal Centre; Oxfam Community Aid Abroad; CAF; National Association of Community Legal Centres & Federation of Victorian Legal Centres; Australian Democrats; Blind Citizens Australia; Reichstein Foundation and Fitzroy Legal Service)

6.17 Other suggestions for additional charitable purposes included:

‘Advancement of women and an equitable and just civil society.’ (YWCA Sydney)
‘Amateur sport’. (CAF)
‘Promotion of patriotic activities’. (RSL)
‘Aged care’ to be inserted in the EM. (Cutler Hughes & Harris)

Advancement: subsection 10(2)

6.18 A number of submissions, including the Catholic Church, argued that ‘advancement’ at subsection 10(2) should be expanded to include ‘advocacy’ in addition to ‘protection, maintenance, support, research and improvement’.

Definition of Religion: section 12

6.19 Some respondents objected to religion being defined in revenue legislation and urged that the common law should be retained in this respect. (B’Nai B’rith Australia; NSW Board of Jewish Deputies)

6.20 The National Aboriginal and Torres Strait Islander Ecumenical Commission noted: ‘Religion as interpreted by clause 12 is a predominantly Western concept: one that fails to respond adequately to the diversity of traditions within contemporary Australian society.’ ‘The danger is that, in reflecting that heritage, other traditions which also merit being described as religious will be excluded, or may have to work much harder to justify their inclusion. NATSIEC is concerned both with traditional Christian theology and with Indigenous spirituality. While Christianity clearly falls within clause 12, some Indigenous people would not see their beliefs as constituting a religion in the sense defined by that section, and would therefore be at risk of falling outside its scope.’

6.21 Another option suggested was that the draft Bill could either incorporate the formulation of Mason ACJ and Brennan J in The Church of New Faith v Commissioner of Pay-Roll Tax¹, which was accepted by the CDI Report as spelling out the principles of a religion. (Ann O’Connell)

Board assessment

6.22 The Board believes that section 7 would be more workable if it provided that the size of the group intended to receive a charitable benefit be assessed against the size of that part of the community to whom the purpose would be relevant, rather than the community at large.

6.23 There were many suggestions for clarifying or expanding the definition of charitable purpose in the draft Bill. The Board’s view is that expanding the definition is outside its Terms of Reference and it notes the many suggestions for clarification. The Board’s view is that the definition is adequate and that further clarifications should be addressed in the EM.

6.24 The Board notes that a number of respondents had concerns about the definition of religion in the draft Bill. However, the Board’s view is that the draft Bill does not purport to define religion; in fact it simply lists matters to be considered in identifying a religion (subsection 12(1)) and specifies that other matters may also be considered (subsection 12(2)).

Recommendation

6.25 The Board recommends that section 7 be amended to provide that ‘sufficient section’ is defined as one which is not ‘numerically negligible’ compared with the size of that part of the community to whom the purpose would be relevant.

¹ The Church of New Faith v Commissioner of Pay-Roll Tax (1983) 154 CLR 120.

Next: Chapter 7 - Altruism