ACNC clarifies position on PBI

Posted on 06 Nov 2023

By Greg Thom, journalist, Institute of Community Directors Australia

The Australian Charities and Not-for-profits Commission (ACNC) has clarified its position on Public Benefit Institution (PBI) status for charities ahead of a pending court challenge with big tax implications for many organisations.

The regulator has published a new Decision Impact Statement (DIS) aimed at making clear the law on PBI "as it stands.”

The statement aims to clarify existing rules for the estimated 3200 PBIs in Australia, most of which benefit from special tax status.

Charities with PBI status may be eligible to be endorsed as a deductible gift recipient (DGR) by the Australian Taxation Office, allowing them to receive tax deductible donations.

The DIS makes clear the current law while the ACNC waits on the results of a Federal Court challenge.

The ACNC acknowledged those guidelines could change depending on the outcome of the court challenge by LGBTQI+ organisation Equality Australia, which is fighting to be classified as a PBI.

Equality Australia applied for PBI status to reflect the nature of its advocacy and to “streamline" donations.

To qualify, it needed to demonstrate “relief of distress” and show that members of its LGBTIQ+ community were “in need of benevolence.”

The ACNC earlier this year rejected the organisation’s bid to change its existing charity sub-category from “advancing public debate”.

The ACNC ruled Equality Australia had a “non-benevolent” purpose of engaging in advocacy to agitate for law reform and social change.

Equality Australia appealed the decision, but the Administrative Appeals Tribunal (AAT) ruled in favour of the ACNC, prompting Equality Australia to take the matter to the Federal Court.

While that decision is pending, the decision impact statement adds to a “Commissioners interpretation statement“ issued in August.

"The term ‘Public Benevolent Institution’ is not defined in legislation, so we welcome the opportunity for this issue to be tested in the Federal Court.”

ACNC Commissioner Sue Woodward.

The new ACNC Decision Impact Statement will apply until the Federal Court issues its judgment on the Equality Australia PBI case.

The statement said that the ACNC would “continue to determine whether an applicant is a PBI by undertaking a holistic analysis, taking account of the aims (or objects or purposes) it is set up to achieve, and the way it achieves those aims through its activities.”

The overriding consideration would be whether there was “a sufficient connection between a PBI’s purpose and activities and the benevolent ends it pursues.”

ACNC Commissioner Sue Woodward said the new statement spelt out the current law.

“We note that the appeal to the Full Federal Court may provide further clarification of the law,” she said.

"The term ‘Public Benevolent Institution’ is not defined in legislation, so we welcome the opportunity for this issue to be tested in the Federal Court.”

Eligibility for DGR status, continues to be a contentious issue in the charities sector.

During a recent ACNC regulators day event, Associate Commissioner Krystian Seibert said questions about DGR status had been consistently raised during the Productivity Commission inquiry into philanthropy.