Key Takeaways:
- The ACNC has this week released a Decision Impact Statement (7 July 2025), confirming that the Commissioner’s Interpretation Statement (CIS) on the definition of Public Benevolent Institutions (PBI) will be updated to address the recent Equality Australia Full Federal Court case.
- The Court recently sided with the Australian Charities and Not-for-profits Commission (ACNC) that Equality Australia Ltd (Equality Australia) was not a PBI.
- The Court decision affirms that to be a PBI there must be ‘direct relief’, either by the organisation or through project partners.
- To qualify as a PBI, charities must demonstrate more than just a mere theoretical connection between their activities and benevolent relief, and show actual direct relief.
- The decision reinforces the ACNC’s existing approach to assessing PBI eligibility through a holistic analysis of an organisation’s purposes and activities.
- The decision is important because registration with the ACNC as a PBI is a ‘gateway’ to endorsement by the Australian Taxation Office as a Deductible Gift Recipient (DGR) and the fringe benefits tax (FBT) exemption and salary sacrifice arrangements to attract staff.
Background
Equality Australia, a registered charity under the subtype ‘advancing public debate’, applied to the ACNC to be registered as a PBI. The organisation’s charitable work was centred on advocacy aimed at law reform and social change to relieve the distress experienced by people in the LGBTIQ+ community.
The ACNC refused to register Equality Australia, stating that it failed to meet the criteria of direct benevolent relief required for PBI status.
Administrative Appeals Tribunal Review
Equality Australia sought review of the ACNC’s decision in the Administrative Appeals Tribunal (Tribunal). The Tribunal rightly found that LGBTIQ+ individuals are a class of people in need of benevolent relief as they experience distress due to, among other things, structural discrimination.
However, while Equality Australia’s advocacy work aimed to address the issues affecting the LGBTIQ+ community, the majority of the Tribunal found that any direct support provided to individuals was incidental to the primary focus of Equality Australia on advocacy and policy reform.
The Tribunal accepted that a PBI need not provide relief directly, however, they concluded that Equality Australia’s core focus on advocacy and policy reform lacked a sufficient connection to benevolent relief. In their view, the organisation’s activities were too far removed from traditional concepts of direct benevolent relief to satisfy the requirements for PBI status.
Court Appeal
Equality Australia appealed the decision of the Tribunal to the Full Court of the Federal Court of Australia. The Court had to consider two key legal questions:
- Did the Tribunal misconstrue the ordinary meaning of a PBI by requiring a ‘sufficiency of connection’ (ie. directness) between the activities and benevolent ends?; and
- Was the Tribunal's decision unreasonable?
This “directness” requirement has been controversial through the decades, since the requirement was strictly applied by the Australian Taxation Office and then loosened by the ACNC and the Court pursuant to the Hunger Project cases. The Court upheld the findings of the Tribunal, concluding that intermediaries can be used as a delivery mechanism, however the applicant’s advocacy activities lacked sufficient connection to the relief of distress and whether there was direct relief was a matter of fact and degree, not mere theoretical or abstract connection.
ACNC's Decision Impact Statement
The ACNC views PBI eligibility determinations as a factual enquiry which requires a holistic evaluation of an organisation’s purposes, activities, and connection with benevolent need. Where an organisation engages in advocacy, campaigning, and education to address benevolent need, it must still be able to demonstrate that its activities are sufficiently connected to actual benevolent relief and not simply logically or theoretically connected.
The ACNC has announced in its Decision Impact Statement dated 7 July 2025 that it will update the CIS to reflect the decision of the Court. This guidance will assist charities to understand the legal threshold and requirements for a PBI subtype status conferral.
How we can help?
The Court decision and subsequent ACNC analysis shows that matching an organisation’s charitable purpose with its Constitution and activities must be undertaken from a holistic perspective and meet certain criteria and the specific requirements of each individual charity and DGR category.
What this analysis may show, is that there may be other options for organisations involved in advocacy. We have recently advised on the registration of similar types of entities as Harm Prevention Charities or Health Promotion Charities, which also allows for DGR endorsement. While the Court sided against Equality Australia, the political solution is that it was announced in the 2025-2026 Federal Budget that the list of specifically listed DGRs in Tax Legislation will be updated to include Equality Australia.
If you’d like to explore the registration of a charity or obtain advice on the various ‘gateways’ to DGR endorsement, including PBI, health promotion, environmental, cultural or harm prevention, or even seek a specific DGR listing, please contact Dan Saunders, Senior Associate or Jonathan Teh, Principal directly. We would be happy to provide more detailed advice tailored to your circumstances and objectives or to assist with the establishment of your charity. This Alert was written by Dan Saunders with assistance from Lachlan Morrison.
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