Congratulations on registering your charity with the Australian Charities and Not-for-profits Commission (ACNC). Once registered, your charity can apply for charity tax concessions from the Australian Tax Office (ATO).

Your charity can apply for additional tax benefits if it is a public benevolent institution (PBI), health promotion charity (HPC) or charity for the advancement of religion

This article is part 4 of a 5-part series to assist charities. Part 1 is to help you choose the right structure. Part 2 describes the legal documents that you need. Part 3 explains the requirements and benefits of being registered with the ACNC and part 5 will explain how to obtain deductible gift recipient (DGR) status.

Public benevolent institution (PBI)

A PBI is a sub-type of a charitable organisation. PBIs can apply for charity tax concessions and may be eligible to be endorsed as DGRs by the Australian Tax Office (ATO). A PBI’s main purpose is to relieve poverty and/or distress.

If you want your organisation to have DGR status under the PBI category, your charity must be registered with the ACNC, as a charity, with the subtype of ‘public benevolent institution’. It must also satisfy other requirements of the ATO.

PBIs must have a main purpose of benevolent relief. Benevolent relief includes working for the relief of poverty or distress, such as sickness, disability, destitution, suffering, misfortune or helplessness.

PBI’s must provide benevolent relief to a section of the community that needs help, i.e. people in need. The PBI cannot provide services to the public generally.

The PBI must aim to alleviate a significant level of distress. A charity only meets the definition if its purposes try to meet a need that is:

  • significant enough (and the circumstances difficult enough) to arouse compassion in people in the community;
  • beyond the suffering experienced as part of ordinary daily life; and
  • concrete – aimed at helping people who are recognisably in need of benevolence.

The PBI can provide a range of services. For example, providing education and life skills to people in need, not just relieving their immediate suffering with food and shelter. Another example is assisting people with disabilities, providing aged care services, or providing low cost housing for people in need.

As long as the PBI’s main purpose is benevolent, it can also have other incidental non-benevolent purposes, for example, education of the general public.

Health promotion charity (HPC)

Your organisation may be a HPC if it is a charitable institution which promotes the prevention or control of disease in human beings, and this is the organisation’s principal activity.

A HPC can register with the ACNC, can apply for charity tax concessions, and may be eligible for deductible gift recipient status with the Australian Tax Office.

Some examples of a HPC include some community health care providers, some medical research organisations and organisations that raise awareness of human diseases.

Disease is interpreted broadly and may include any mental or physical ailment, disorder or defect. Examples of HPC’s include institutions regarding cancer, multiple sclerosis, depression, asthma and autism.

Your HPC must specify which disease or diseases it is concerned with preventing or controlling. The disease must affect people, not animals or plants.

Activities to prevent or control disease in human beings include educating sufferers and their support people, developing or providing aids or equipment to help people suffering from the condition or disease, and engaging in medical research into the causes, prevention or treatment of the condition or disease.

Charity for the advancement of religion

There are certain requirements which must be met to be registered as a religious charity.

A basic religious charity is a registered charity that meets all of the following requirements:

  • it is registered as a subtype of charity for the advancement of religion;
  • it would not be able to be registered as any other subtype of charity;
  • it is not a body corporate registered under the Corporations Act 2001, an Indigenous corporation (under the Corporations (Aboriginal and Torres Strait Islander) Act 2006), a corporation registered under the Companies Act 1985 of Norfolk Island, or an incorporated association in any state or territory;
  • it is not endorsed as a DGR itself. It can be endorsed to operate DGR funds, institutions or authorities, as long as their total revenue is less than $250 000 for the particular financial year;
  • the ACNC has not allowed it to report as part of a group, and
  • it has not received more than $100 000 in government grants in the current financial year or either of the previous two financial years.

Conclusion

Once registered with the ACNC as a charity, your charity can apply for certain categories of deductible gift recipient (DGR) status with the ATO. This is discussed in part 5 of this article series.

If you would like to discuss the possibility of starting a charity, read the ACNC checklist that will guide you through the steps before setting up your charity.

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