Navigating the Politics of Charity: Reflections on Aid/Watch Inc V Federal Commissioner of Taxation

By Chia, Joyce; Harding, Matthew et al. | Melbourne University Law Review, August 2011 | Go to article overview

Navigating the Politics of Charity: Reflections on Aid/Watch Inc V Federal Commissioner of Taxation


Chia, Joyce, Harding, Matthew, O'Connell, Ann, Melbourne University Law Review


[This article analyses the decision of the High Court in Aid/Watch Inc v Federal Commissioner of Taxation, in which a majority of the Court ruled that an organisation was not necessarily excluded from charitable status because it had a main or dominant political purpose. The article reflects upon the benefits of the decision, especially its infusion of public law principles into charity law, before discussing the uncertainties generated by the decision. It is argued that, ultimately, the decision exposes a hole in the heart of charity law--the absence of a coherent conception of charity. The article concludes with suggestions as to what a coherent conception of charity might look like, and how it might help solve perennial puzzles in charity law.]

CONTENTS

I    Introduction
II   The Legal Context
     A The Significance and Meaning of Charity
     B The Political Purposes Doctrine
     C The Treatment of Advocacy Overseas
III  The Case against the Political Purposes Doctrine
     A A Specious Doctrine
     B Competing Rights and Values
     C The Political Process
     D The Function of Charity
IV   Aid/Watch in the Courts
     A The Factual Context
     B The Facts and Issues
     C The AAT Decision
     D Aid/Watch in the Full Federal Court
     E Aid/Watch in the High Court
     F The High Court Decision
V    Reflection 1: Celebration
     A Freedom of Expression
     B Public Law
VI   Reflection 2: Deflation
VII  Reflection 3: The Hole in the Heart
     A The 'Demarcation' Debate
     B The 'Popular versus Legal' Debate
     C The 'Public Benefit' Debate
     D The Ideological Debate
VIII Conclusion
IX   Postscript

I INTRODUCTION

On 1 December 2010, a majority of the High Court held in Aid/Watch Inc v Federal Commissioner of Taxation ('Aid/Watch') (1) that an organisation was not necessarily excluded from charitable status (or its resulting tax concessions) because it had a main or dominant political purpose. This decision has two obvious effects: advocacy organisations are now eligible for charitable status, including for tax purposes; and charities can engage more openly and actively in advocacy. The Aid/Watch decision has therefore, and rightly, been celebrated by the charitable sector. (2) The decision should also be celebrated for another reason: its infusion of public law principles into charity law.

Yet the decision seems to raise more questions than it answers, and ultimately, it exposes the hole in the heart of charity law--the absence of a coherent and contemporary conception of the purpose and role of charity. This article concludes by examining some of the puzzles of the legal concept of charity, and by suggesting how a coherent conception, and the infusion of public law principles, might assist in the development of charity law post-Aid/Watch.

The article begins by explaining the legal context, focusing on the political purposes doctrine that Aid/Watch rejected and the debate concerning that doctrine. It then analyses the different decisions in the Aid/Watch litigation, before providing three different reflections on Aid/Watch: celebration, deflation, and speculation on the future evolution of charity law.

II THE LEGAL CONTEXT

A The Significance and Meaning of Charity

Whether an organisation is a 'charity' at law (that is, has charitable status) is principally important for two reasons. (3) First, 'charitable' trusts are valid while other trusts for purposes are generally not, (4) and there are other privileges that facilitate the validity of charitable trusts. (5) Second, and practically more important today, charitable status grants access to a range of tax concessions, such as exemptions from income tax; concessions in relation to goods and services tax ('GST'); and rebates in respect of fringe benefits tax ('FBT'). (6) The organisation must, however, be 'endorsed' by the Australian Taxation Office ('ATO'). (7) Income tax deductions for donors and exemptions from FBT are also relevant to charities, but in general these charities must be 'public benevolent institutions' or otherwise specified in the legislation. …

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