Explanatory Memorandum
(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)General outline and financial impact
Definition of charity
The Charities Bill 2013 and the Charities (Consequential Amendments and Transitional Provisions) Bill 2013 introduce a definition of charity and charitable purpose for the purposes of all Commonwealth legislation.
The Government announced in the 2011-12 Budget that it would introduce a statutory definition of charity based on the 2001 Report of the Inquiry into the Definition of Charity and Related Organisations , also taking into account later judicial decisions.
The meaning of charity and charitable purpose has not previously been comprehensively defined in statute for the purposes of Commonwealth law. The meaning has been largely determined based on over 400 years of common law. The statutory definition generally preserves the common law principles by introducing a statutory framework based on those principles but incorporating minor modifications to modernise and provide greater clarity and certainty about the meaning of charity and charitable purpose.
Date of effect: The definition applies from 1 January 2014.
Proposal announced: The introduction of a statutory definition of charity was announced by the then Assistant Treasurer and the then Minister for Human Services and Social Inclusion's Joint Media Release No. 077 of 10 May 2011. The Assistant Treasurer announced the start date of 1 January 2014 in Media Release No. 045 of 8 April 2013.
Financial impact: Unquantifiable but small revenue cost impact.
Human rights implications: This Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 3.
Compliance cost impact: The introduction of a statutory definition of charity is not expected to have any significant compliance cost impacts, apart from some minor transitional costs for some entities which may need to revise their registration subtype with the Australian Charities and Not-for-profits Commission because the Bill lists more specific categories of charitable purposes. Entities will have 18 months to revise their registrations. The Bill should reduce compliance costs over the medium to long term.