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Tax Laws Amendment (Public Benefit Test) Bill 2010

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(Circulated by authority of Senator N Xenophon)















Tax Laws Amendment (Public Benefit Test) Bill 2010



The purpose of this Bill is to insert a public benefit test into the Income Tax Assessment Act 1997 which will require religious and charitable institutions seeking tax exemption to demonstrate public benefit through its aims and activities.


This Bill follows allegations from former members of the Church of Scientology about coerced abortions, false imprisonment, breaches of Occupational Health and Safety laws, stalking, harassment and extortion, to name but a few.


Given this, the tax exempt status of the Church of Scientology should be subject to a Public Benefit Test as to whether or not it is appropriate that it is afforded taxpayer support.


Similarly, any and all organisations which receive tax exempt status should be subject to this test.


This will ensure that all organisations claiming charitable status under the Income Tax Assessment Act are indeed charitable.


Indeed, the application of a Public Benefit Test is not a new approach to organisations seeking tax exemptions.


In the United Kingdom, a Charity Commission has been in place since 2006 and has as one of its roles the responsibility to administer the Public Benefit Test.


Under this Bill, a Public Benefit Test would include the following key principles:

  • There must be an identifiable benefit arising from the aims and activities of an entity;
  • The benefit must be balanced against any detriment or harm; and,
  • The benefit must be to the public or a significant section of the public, and not merely to individuals with a material connection to the entity.


Importantly, any public benefit the charity provides must outweigh any harm it causes.


Broadly, charitable purposes can be considered to be the prevention or relief of poverty, the advancement of health or the saving of lives, the advancement of citizenship or community development, the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity, etc., while examples of things that might be evidenced to be detrimental or harmful might include something that is damaging to the environment, something that is dangerous or damaging to mental or physical health, something that encourages or promotes violence or hatred towards others, or unlawfully restricting a person’s freedom.


Charities are granted tax exempt status on the assumption that their aims and activities are in the interest of the community and to the benefit of the public, however it has become apparent that some organisations may be abusing this privilege.


A Public Benefit Test would significantly mitigate the risk of this occurring.