The long-awaited revised Commissioner’s Interpretation Statement for Public Benevolent Institutions is finally here: what you need to know
The long-awaited revised Commissioner’s Interpretation Statement on Public Benevolent Institutions was released by the Australian Charities and Not-for-profits Commission on 31 August 2023. The revised Commissioner’s Interpretation Statement sets out the ACNC’s updated view and guidance on whether an organisation is eligible to be registered as a charity with the ‘Public Benevolent Institution’ charity subtype.
The Commissioner’s Interpretation Statement has been revised to take into account recent cases concerning PBIs that have been handed down by the Administrative Appeals Tribunal, and to reflect the ACNC’s updated interpretation of the law that it will apply to determine whether an organisation is a PBI.
We note the following:
- The ACNC now accepts that the right test for determining an organisation is benevolent is the simple test of whether an organisation is “organised, conducted or promoted” for benevolent relief.
The ACNC no longer requires organisations to have a sole purpose of benevolent relief in order to be a PBI (as was the case with the previous Commissioner’s Interpretation Statement, and which caused confusion for many faith-based PBIs). Instead, the ACNC now requires benevolent relief to be an organisation’s “characteristic and predominant purpose and activity”. This change may be of benefit for many faith-based PBIs.
- The ACNC has reconfirmed the current law that PBIs can provide benevolent relief through indirect means. However, the ACNC also considers (following on from recent case law) that if there is a “more abstract and indirect” connection between an organisation’s activities and benevolent relief, an organisation is less likely to be organised, conducted or promoted for benevolent relief. The ACNC has also accepted that PBIs can in some circumstances engage in policy advocacy to provide benevolent relief, although this would depend on whether there is a sufficient or direct enough connection between an organisation’s advocacy and benevolent relief.
- The ACNC has confirmed that organisations that provide benevolent relief of needs other than poverty (e.g., sickness) may charge market rates for services to beneficiaries.
- Importantly, the ACNC has clarified to sector representatives that the Commissioner’s Interpretation Statement does not narrow the ACNC’s interpretation of the PBI charity subtype, and that charities that are currently registered with the PBI subtype of charity will be entitled to maintain their PBI registration.
PBIs can access additional benefits beyond those that most other charities are able to access. Unlike most other charities that can access a Fringe Benefits Tax rebate, PBIs are able to access a Fringe Benefits Tax exemption (up to a cap of $30,000). In addition, registration as a PBI with the ACNC gives an organisation the ability to apply for and receive Deductible Gift Recipient status (allowing it to provide tax-deductible donations to donors).
It is pleasing that the revised Commissioner’s Interpretation Statement was released after significant and targeted consultation with the public, including from charity law and regulatory advisors. We look forward to further guidance from the ACNC and the courts in the near future, on the issues considered in the revised Commissioner’s Interpretation Statement.