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18 Jul 13 Charitable fund raiser is a "public benevolent institution" for FBT purposes - The Hunger Project

The Federal Court (Perram J) has held that The Hunger Project Australia ("the applicant"), a charitable organisation that is part of a worldwide collaboration of organisations operating under the name "The Hunger Project", is a "public benevolent institution" within the meaning of s 57A(1) of the Fringe Benefits Tax Assessment Act 1986.

It was not in dispute that the applicant’s purposes are charitable. However, the applicant is principally a fund raising entity and it is the other members of The Hunger Project in the developing world which perform the charitable activities directed at the relief of hunger. The Commissioner argued, unsuccessfully, that an organisation which carries out charitable activities indirectly as a fund raiser cannot qualify as a "public benevolent institution" for FBT purposes.

In support of its case, the applicant relied on the High Court decision in FCT v Word Investments [2008] HCA 55, which concerned the expression "charitable institution",. The Commissioner argued that Word had no relevance to the interpretation of "public benevolent institution", and should therefore be distinguished. Perram J rejected the Commissioner's arguments in this regard, saying at para 124:

"I do not accept that either of these matters provides a good reason to distinguish Word Investments from the present situation. It is true that it was concerned with charitable institutions rather than with public benevolent institutions but the High Court’s reasoning at 225...did not turn on any of those technical matters. It was instead simply the observation that it was difficult to discern the redeeming features of an approach which focussed entirely on the form an organisation took rather than its substance. If the law is affronted by the proposition that a charitable institution might lose its exempt status for its fund raising activities if they be devolved into a separate entity (and Word Investments holds that it is) I cannot see why it would be any less affronted if a public benevolent institution lost exempt status for its fund raising activities by doing the same thing. There is no relevant difference."

The Hunger Project Australia v FCT [2013] FCA 693 (17 July 2013).


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