Until now the only interpretation guidance available was Taxation Ruling 2003/5 and the ACNC Commissioner’s Interpretation Statement: The Hunger Project case (CIS2013/01). These did not reflect the current case law on PBIs, nor how the ACNC has interpreted PBIs since about 2015.

At its simplest, a PBI:

• must have benevolent relief as its main purpose; and
• that relief must be:
  • specifically targeted at people in need; and
  • provided to relieve the needs of those people

According to the ACNC’s recently released Australian Charities Report 2015, 16% of registered charities in Australia – more than 8,000 – are registered as PBIs.

The release of the PBI CIS follows consultation with the public, charity sector members and professional advisors, including Prolegis Lawyers, and is available in full on the ACNC website. 

The key questions addressed in the PBI CIS which were not in previous interpretative guidance include the following:  

Does my charity need to provide direct relief to qualify as a PBI?

No.

To be a PBI, there is no requirement that the charity must itself directly give or provide the benevolent relief. A charity can provide relief via, or in coordination with, related or associated entities and still be a PBI.

Your organisation is not precluded from being registered as a PBI if some of its services are provided by agents or contractors.

As set out in the Commissioner’s Interpretation Statement: The Hunger Project case, the ACNC takes the view that an organisation can be a PBI if it has:

• concrete objects of benevolent relief;
• clear mechanisms for delivering the benevolent relief; and
• a relationship of collaboration or a common public benevolent purpose.

The ACNC takes the view that a PBI may provide relief via, or in coordination with, related or associated entities that are not PBIs for the fulfilment of benevolent purposes only.

If your organisation is providing direct or indirect benevolent relief to persons in needyou may be eligible to be endorsed as a PBI. Endorsement enablesaccess to tax concessions, including income tax and FBT exemptions, GST concessions; and deductible gift recipient (DGR) endorsement. We have extensive expertise in these types of PBI applications, so please do not hesitate to contact us to discuss your organisation and its benevolent activities further.

Can my charity operate overseas and be a PBI?

Yes.

Your organisation is not precluded from being registered as a PBI if it has a main purpose of providing benevolent relief to people overseas.

Organisations that are currently registered PBIs or that are applying for registration as a PBI subtype of charity, ought to address risks associated with the potential of non-compliance with the ACNC governance standards and should expect the ACNC to enquire as to how the organisation will address those risks.

If your organisation is providing benevolent relief to people overseas and you are currently not endorsed as a PBI, you may be eligible for PBI endorsement and appropriate tax concessions and DGR endorsement. We have significant experience in these types of PBI applications, so please do not hesitate to contact us to discuss your organisation and its overseas benevolent activities.

Can my charity undertake both prevention and relief activities?

Possibly yes.

The ACNC considers that in some circumstances, a purpose of preventing poverty or distress from arising may be benevolent. It will apply the following principles in its assessment:

• a PBI’s benevolence must be targeted at people in need;
• a PBI’s benevolence must actually relieve the needs of people in need;
• a PBI’s main purpose must be the provision of benevolent relief targeted at people in need and for the relief of those needs. A PBI may undertake prevention activities provided that these activities are in aid of or further the main benevolent purpose;
• a PBI’s main purpose must be benevolent;
• a PBI’s benevolence must be targeted at people in need.

If your organisation is undertaking benevolent activities of a preventative and relief nature, please do not hesitate to contact us to discuss your PBI endorsement eligibility. You may be able to access valuable tax concessions and DGR endorsement to further your benevolent work.

My organisation has not yet started operating – can it be registered as a PBI?

Yes.

A new organisation that is yet to commence operating may be eligible for registration as a PBI. To qualify, you must demonstrate that you have concrete plans to operate in the foreseeable future (within one year of establishment) in order to evidence how your benevolent purposes will be fulfilled.

Alternatively, your organisation may be wishing to embark on a restructure, focussing your efforts now on benevolent activities.

Prolegis Lawyers has advised many organisations from established charities to proposed organisations in relation to PBI endorsement eligibility. Although the PBI CIS is a new publication, the legal framework and how it has been administered by the ACNC is not. Please do not hesitate to contact us to discuss your charitable, benevolent work.

If you have any further questions about PBIs, the PBI CIS, ACNC registration, tax concessions or tax deductible donations, please do not hesitate to contact us.