On 1 December 2010 the majority of the High Court, Chief Justice French and Justices Gummow, Hayne, Crennan and Bell, found that advocacy to generate public debate about change in a government policy is a charitable purpose.
Under various legislation an organization is required to be a “charitable institution” if it wants to obtain certain exemptions from income tax, fringe benefits tax and GST. What a “charitable institution” is under such legislation is not defined: Courts normally refer to the common law relating to charitable trusts to supply the definition.
The Commissioner of Taxation had revoked the status of Aid Watch as a “charitable institution” in 2006 because it encouraged public debate about relieving poverty through foreign aid.
In the subsequent Aid Watch proceedings the majority of the High Court made various remarks about the implied freedom of political communication and the centrality of such political communication in the Australian political order. They ruled that common law has now evolved to the point where lawfully generating public debate concerning foreign aid can be considered a contribution to the public welfare, beneficial to the community, and as such, charitable.
The practical outcome is that Aid Watch can again qualify for tax exempt status as a charitable institution.
Aboriginal Land Councils and organizations that engage in generation of public debate on issues of poverty in the Aboriginal community may benefit from the High Court’s Aid Watch decision. The reasoning in the decision may also apply to Land Councils and organizations that generate public debate on land rights, native title and other policy issues of relevance to Indigenous people.
Given funding issues some of those bodies experience such an extension of eligibility for tax exempt status is likely to be welcome.