Taxation of Charities: ATO response to Aid/Watch Case

The decision of the High Court of Australia last December (1/12/2010) in Aid/Watch Incorporated v Commissioner of Taxation [2010] HCA 42 held that:

“an organisation whose objects are to promote greater efficiency and effectiveness of foreign aid directed to the relief of poverty, by campaigning and generating public debate, may be considered a charitable institution for the purpose of tax concessions.”  Click here to read a discussion of the decision.

In short some organisations which do not fall within the charitable purposes set out in the Australian Taxation Office Not for Profit Guidelines may be considered charitable if they can show some degree of contribution to public welfare. 

As a result of the case (11 May 2011) the ATO has issued Draft Ruling TR 2011/D2 and a Decision Impact Statement, setting out its views in relation to the Aid/Watch case. The Decision Impact Statement and Draft Ruling have an important effect on the future or proposed activities of charities and on some organisations not previously considered to be 'charitable'. An article recently posted to Mondaq by Gadens Lawyers discusses these ramifications and the effect of the new draft ruling and impact statement.

Related links to text of Decision Impact Statement; Draft Ruling TR 2011/D2.

To keep up to date with Tax Laws including ATO Rulings, why not inquire about TimeBase's Point-in-Time Tax Service, just one of a range of Australian Legislation services provided by TimeBase.