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28 Jun 11 Cycling association is a charitable institution but not DGR – Bicycle Victoria

The Administrative Appeals Tribunal has decided that Bicycle Victoria Incorporated is entitled to be endorsed as an entity exempt from income tax under s 50-105 and s 50-110 ITAA 1997 and as a charitable institution under s 176-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). On the other hand, it is not entitled to be endorsed as a deductible gift recipient (DGR) for the operation of a fund, authority or institution under s 30-120(a) ITAA 1997 and is not entitled to be endorsed as a health promotion charity under s 123D of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).

Bicycle Victoria is an incorporated association. It currently has approximately 45,000 members. Bicycle Victoria applied to the Commissioner to be endorsed as:

  1. a DGR for the operation of a fund, authority or institution under s 30-120(a) ITAA 1997
  2. an income tax exempt charity under s 50-110 ITAA 1997 on the basis it is a charitable institution as described in item 1.1 of the Table in s 50-5
  3. a health promotion charity under s 123D FBTAA, and
  4. a charitable institution under s 176-1 GST Act.

Following an exhaustive survey of the case law on the concept of the charitable institution, the Tribunal made the following findings.

On the evidence, Bicycle Victoria’s purpose is a purpose of promoting cycling in all its forms and for the overall purpose of promoting fitness. That is a purpose that has been recognised as charitable. Therefore, Bicycle Victoria is a charitable institution. Provided it meets the other criteria prescribed in the provisions, this means that it is entitled to be endorsed as an entity exempt from income tax under s 50-105 ITAA 1997 and as a charitable institution under s 176-1 GST Act.

However, it is not a charitable institution whose principal activity is to promote the prevention or control of diseases in human beings. It is not entitled to be endorsed as a DGR for the operation of a fund, authority or institution under s 30-120(a) ITAA 1997 or as a health promotion charity under s 123D FBTAA.

Re Bicycle Victoria Inc and FCT [2011] AATA 444 (Administrative Appeals Tribunal, Deputy President S A Forgie, 24 June 2011)