The Federal Court has held that the Australian arm of a world-wide organisation operating out of the United States that aims at ending world hunger was a “public benevolent institution” (PBI) for the purposes of s 57A(1) of the FBTAA – with the result, that the provision of benefits to one of its employees was “exempt benefits” for FBT purposes. This was the case, notwithstanding that the Australian arm of the organisation was just mainly involved in fund raising activities, and not in providing aid directly to those in need.
- The taxpayer is a member of a worldwide collaboration of organisations operating under the name “The Hunger Project” whose principal aim is the relief of hunger.
- The taxpayer raises funds in Australia for this purpose.
- In November 2010, the taxpayer applied to the Commissioner for endorsement as a PBI under s 123C of the FBTAA and was refused.
- Its objection against the decision was disallowed essentially on the grounds that although its principal aim is to provide relief from hunger, its activities indicated this was achieved by the provision of funding for overseas projects which did not involve the direct provision of relief in order to qualify as a PBI.
In allowing the taxpayer’s appeal, the Federal Court found it was not in dispute that the taxpayer’s purposes were charitable. Moreover, it found the taxpayer could qualify as a PBI even if it did not engage directly in charitable activities itself and was instead, primarily engaged in fund raising activities for those charitable purposes. In doing so, the Court relied heavily on the decision of the High Court in FCT v Word Investments (2008) 70 ATR 225 in which the Court found that the taxpayer was a charitable institution even though its activities were confined to raising funds from commercial activities for purposes of evangelism by related organisations.
(The Hunger Project Australia v FCT [2013] FCA 693, Federal Court, Perram J, 17 July 2013.)
[LTN 137, 18/7/13]