There are a number of benefits of registering your corporation as a charity with the Australian Charities and Not-for-profits Commission (ACNC), including tax concessions.
The ACNC can only register charities. Charity has a special legal meaning which can include a wide range of not-for-profits, such as corporations. An individual cannot be a charity.
A charity is a not-for-profit that:
- has a charitable purpose that is for the benefit of the public
- has no disqualifying purposes (such as to promote unlawful activities)
- is not a political party or government body
- meets other ACNC rules for registration.
To register your corporation as a charity you need to apply to the ACNC. Registering a charity can be complicated. The ACNC applies the law, including the ACNC Act and the Charities Act 2013 (Cth) in deciding who can be registered.
1. Make sure all of your corporation’s details are correct
Check your corporation’s Australian Business Number (ABN), Indigenous Corporation Number (ICN), name, document access address and the names and contact details of all responsible people (directors, officers). Your organisation needs an ABN to register with the ACNC. If it doesn’t have an ABN, you can apply for an ABN online.
In addition, the directors of your corporation will need to have a director identification number (director ID). They can apply for their director ID before they are appointed.
2. Be clear about your corporation’s charitable purpose
Your corporation’s purpose or purposes means what you want to do (object/goal/aim), not how you will do it. For example, ‘the purpose of Orange corporation is to reduce the incidence of chronic diseases amongst Aboriginal peoples in West community' (what you want to do). It is not ‘the purpose of Orange organisation is to run a community centre’.
3. Look at the list of subtypes on the ACNC website and choose one or more
When the ACNC registers a corporation, we register it as a ‘subtype’ of charity, which reflects its charitable purpose or purposes (see 2 above).
When you apply to register as a charity, you need to select a subtype (or subtypes). We will use your organisation’s purpose or purposes to work out if your organisation is entitled to be registered as a charity under a particular subtype.
For example, if your charity’s purpose is to address Indigenous disadvantage it could be carrying out a range of activities which may come within the subtype of ‘advancing social or public welfare’. You may prefer to select more than one subtype that describes your corporation’s purpose. Every corporation is different and a number of subtypes could apply.
|My corporation…||May* be charitable under one or more subtype|
|provides employment opportunities to poor/disadvantaged Aboriginal people by operating an arts centre||
|runs structured public workshops promoting a better understanding of Torres Strait Islander culture and encouraging inter-cultural dialogue||
|holds or manages native title or traditional Indigenous ownership rights in land||
*must still meet all other requirements for registration as a charity.
For a corporation to be a ‘public benevolent institution’ or ‘health promotion charity’, it will need to meet the specific requirements under each of those subtypes.
4. Review your rule book
Make sure your corporation’s rule book is as clear as possible in setting out what its charitable purpose/object is. It is not necessary to use the language of ‘Indigenous disadvantage’ in your corporation’s rule book and other materials as long as its purpose is clear.
If you want to include your corporation’s activities in your rule book, make it clear that the activities are how you will be achieving your corporation’s purpose/object. (See the examples in the table above)
Not-for-profit and winding up clauses
Make sure you add a not-for-profit clause and winding-up clause to your corporation’s rule book, or it cannot be registered with the ACNC as a charity. The not-for-profit clause sets out how funds and property must be used, and the winding-up clause sets out what must happen if your corporation ‘winds up’ (is closed).
Example clauses your corporation can choose to use
- Application of funds and property
- All funds or property of the corporation must be used to carry out the corporation’s objectives.
- No portion of the funds and property of the corporation may be paid or distributed to any member of the corporation.
- Nothing in rule 14.1(2) is intended to prevent:
- The payment in good faith of reasonable wages to a member who is an employee of the corporation (having regard to the circumstances of the corporation and the qualifications, role and responsibilities of the member as an employee), or
- Reasonable payment in good faith to a member for a contract for goods or services provided by that member (having regard to the market costs for obtaining similar goods or services in the area where the goods or services are to be provided).
- Distribution of surplus assets
- The distribution of surplus assets must not be made to any member or to any person to be held on trust for any member
- The distribution of surplus assets must be made to a charitable organisation or charitable organisations, or applied for similar charitable purposes.
Deductible gift recipient (DGR) endorsement
If you want your corporation to be able to receive tax deductible donations (which people who donate can claim at tax time) your corporation will also have to meet all of the Australian Taxation Office’s (ATO's) requirements for DGR endorsement, as well as having an appropriate DGR rule in your rule book.
For an example rule, see ORIC’s information sheet – Deductible gift recipient fund [PDF].
Changing the rule book
If you are going to amend (change) your rule book, make sure you follow the rules in it when you do this. For example, you may put in a rule that any changes to the rule book can only be made during a special general meeting or can only be made with a certain number of members present.
5. Make sure your corporation meets the public benefit test
To be registered as a charity, an organisation’s charitable purposes must benefit the public. The Charities Act sets out what public benefit is and applies a ‘public benefit test’. There are a number of ways Indigenous corporations can meet this public benefit requirement.
Presumed public benefit
Public benefit is presumed for some charitable purposes unless there is clear evidence that the purpose is not for the benefit of the public. For example, organisations seeking to address Indigenous disadvantage can be registered as having the purpose of advancing social and public welfare and the public benefit would be presumed.
If your corporation helps many people, not just Aboriginal and Torres Strait Islander peoples, then you might need to demonstrate how your corporation meets the public benefit requirement. This will depend on your corporation’s purpose.
Native title and traditional ownership
If the corporation ‘receives, holds or manages’ benefits related to native title or traditional Indigenous rights of ownership, occupation, use or enjoyment of land, it is treated as being for the public benefit, even if that purpose is limited to the benefit of Aboriginal and Torres Strait Islander individuals who are related as a result of being part of a communal native title claimant or holding group.
6. Date of birth for Responsible Person (director)
The ACNC registration form asks for the date of birth of all Responsible People (directors, officers). Their date of birth is used to identify the Responsible Person if they call the ACNC about their charity. We know that some of your corporation’s directors may not know their date of birth, but you will still need to provide a date. We recommend you use a date the director uses for other government agencies or something they will remember.
Contact ACNC for information about who can register as a charity, the registration process, and ongoing obligations to the ACNC. The ACNC has Aboriginal Liaison Officers who are available on the phone to help.
Contact ORIC for information about incorporating (registering) an Aboriginal and Torres Strait Islander corporation, running a corporation, compliance with the CATSI Act or deregistering a corporation.