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11 May 1111 Decision Impact Statement - Aid/Watch

The ATO has issued a Decision Impact Statement in relation to the High Court decision in Aid/Watch Incorporated v FCT [2010] HCA 42; 2010 ATC 20-227; 77 ATR 195.

The case concerned whether the so-called "political activities" principle, having its origins in UK law from 1917, had the result that Aid/Watch should not be endorsed as a charitable institution under s 50-5, Item 1.1 of the ITAA 1997. The High Court decided that in Australia, there is no general doctrine which excludes from charitable purposes "political objects".

The High Court (by majority) held that the concern of and attempts by Aid/Watch to promote the effectiveness of aid delivery was clearly aimed at the relief of poverty and that the promotion and generation by lawful means of public debate about matters affecting the better use of and delivery of Australian aid was a matter falling within the fourth head in Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531, i.e., purposes beneficial to the community.

The Decision Impact Statement states that the majority did not go so far as to say or decide that generating public debate about any or every government activity or policy, or the absence of a policy on a particular subject matter, would fall within the fourth Pemsel head: see paragraph 48 of the reasons for judgment of the majority. Therefore, whether the generation of public debate about a particular government activity or policy that lies beyond existing heads of charity can be a charitable purpose will be a matter to be considered on a case by case basis.

The ATO recognises that the views expressed in TR 2005/21, and in particular parts of paragraphs 100 to 127, are contrary to the views expressed by the High Court. TR 2005/21 will be withdrawn, and a draft revised public ruling will be published shortly.


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