These developments will be of interest to those charities that are interested in applying for registration as a PBI. We go into the developments below.
The ACNC had previously announced that it would not be appealing the decision and has now released its ACNC Decision Impact Statement. It has advised that it will be updating its guidance in Commissioner's Interpretation Statement CIS 2016/03 (CIS 2016/03), on the definition of PBI.
This AAT decision examined a situation where the purposes of Global Citizen were to provide benevolent relief in circumstances where the purpose of benevolent relief was mixed with other related purposes and where the connection to the actual delivery of benevolent relief was less clear. The ACNC had previously determined that Global Citizen should not be registered as a PBI because:
- Global Citizen’s specific purposes included education and advocacy and these were not the provision of benevolent relief; and
- Global Citizen did not provide relief directly or through related entities to those in need.
The AAT determined that these were not barriers to registration as a PBI because:
- Education and advocacy were considered incidental and ancillary to the main purpose, being the relief of poverty. The AAT decision also contains some discussion about main purpose and the interaction with other purposes of the organization that were not incidental or ancillary but the AAT did not conclude on this matter; and
- Global Citizen did provide relief to those in need by undertaking activities in collaboration with other entities under which monies were contributed to organisations providing direct relief.
The AAT decision provides important clarification of the determination of purpose and of the circumstances where relief is provided indirectly.
Registration as a PBI
Registration by the ACNC as a PBI, a type of charitable institution, provides charities with possible access to a range of additional tax concessions, including Deductible Gift Recipient status and FBT exemptions. As such, most registered charities would usually aspire to be registered as a PBI by the ACNC if possible.
Can a PBI provide relief indirectly?
A PBI is a charitable institution whose purpose is to provide relief to people in need. CIS 2016/03 noted that the relief does not need to be provided directly by the PBI. It sets out that an organisation can be a PBI where it provides relief indirectly if it has:
- Concrete objects of benevolent relief
- Clear mechanisms for delivering benevolent relief
- A relationship of collaboration or a common benevolent purpose
The Global Citizen decision has provided further clarification of these requirements that may allow additional charities to register as a PBI.
Decision Impact Statement
The ACNC notes that there will be a range of activities that could constitute the provision of relief and that some will be too remote to meet the threshold required for registration as a PBI.
On the issue of the meaning of PBI and main purpose the ACNC notes that the AAT did not reach a concluded view and the decision was made on the specific facts of the case.
The ACNC does state that entities that operate in a similar manner to Global Citizen may be entitled to registration as a PBI.
Response to the decision
If you are a charity that was previously unable to register as a PBI because of purposes, including education or advocacy, that were inconsistent with the provision of relief or where relief was provided indirectly, you should consider whether a new application for PBI can now be made. You may also wish to consider any future updates to CIS 2016/03.