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The Administrative Appeals Tribunal has upheld the ACNC’s decision to refuse to register three companies as charities.

The Tribunal found the applicant companies were established for the purpose of duplicating and taking over the fundraising activities of the charity, Cancer and Bowel Research Association Inc (CBRA Inc) and the trusts it administers. This was because funds raised by CBRA Inc would be required to repay a debt to the Australian Taxation Office (ATO).

It found each applicant was formed to seek to terminate or substantially reduce CBRA Inc’s liability to the ATO by taking over its functions and donor lists, leaving it with insufficient assets to pay the liability. The three applicants were Cancer & Bowel Research Australia Ltd, Breast Cancer Australia Ltd and Kids Cancer Research Australia Ltd. Each applicant was incorporated as a company limited by guarantee in 2017. It was intended that the applicants would raise funds in respect of different types of cancer.

The applicants were refused registration on the basis that they each had a purpose, among others, of providing private benefits to people involved in their operations. The ACNC Commissioner upheld that decision on objection.

The Tribunal found that in deciding whether each applicant was eligible for registration as a charity, the ACNC Commissioner was obliged to consider the circumstances in which each applicant was formed, not just their recorded purposes. It found that the circumstances indicated the applicants did not have solely charitable purposes (or ancillary purposes) as required under the definition of “charity” in the Charities Act 2013 (Cth) (the Charities Act).

The Tribunal also observed that the purpose of avoiding or limiting the tax liability of CBRA Inc may well be a disqualifying purpose, as defined in the Charities Act, for being contrary to public policy.

While the Tribunal affirmed the ACNC Commissioner’s decision to refuse to register the applicants as charities, it found that the applicants were not eligible on a different basis. The Tribunal’s decision was based on evidence about the establishment of the applicant companies that came out at the hearing and was not before the ACNC Commissioner.

ACNC Commissioner Dr Gary Johns said the Tribunal’s finding that the ACNC should take into account any relevant circumstances in which the applicants were incorporated supports the ACNC’s approach to determining an organisation’s purpose.

“Apart from an organisation’s governing documents, we look at other types of evidence, including the organisation’s activities and reports, to determine whether an applicant has a charitable purpose,” Dr Johns said.

The Tribunal handed down its decision in October. Read the ACNC Decision Impact Statement: Cancer & Bowel Research Australia Ltd.