The Productivity Commission has now released its draft Future Foundations for Giving Draft Report. The recommendations are both well considered and wide-ranging. We note and summarise five key draft recommendations that may be of interest to our clients:

  1. Basic Religious Charities

The concept of, and exemptions available to, Basic Religious Charities (‘BRC’) are proposed to be removed. Many religious institutions are intentionally structured as BRCs, so this change would significantly affect both their reporting and governance obligations.

We expect that religious institutions will wish to make submissions to the Productivity Commission on why the BRC category should remain.

  1. Changes to Deductible Gift Recipient endorsements

It is proposed that Deductible Gift Recipient (‘DGR’) status should be extended to most classes of charitable activities, with the exception of the following classes of charitable activities or subtypes:

  • primary, secondary, religious and other informal education activities, with an exception for activities that have a specific equity objective (such as activities undertaken by a Public Benevolent Institution (“PBI”));
  • the activities of childcare and aged care in the social welfare subtype (other than activities undertaken by a PBI); and
  • all activities in the subtype of advancing religion.

There are many winners resulting from this proposal, with the notable losers being school building funds. We recommend that our education clients with DGR endorsed school building funds in particular take note of this proposal and consider making submissions to the Productivity Commission.

The recommendation otherwise appears to preserve the status quo for religious charities and the “advancing education” subtype generally.

  1. Statutory definition of Public Benevolent Institutio

There is significant uncertainty around the scope of this category, with many in the sector taking issue with the ACNC’s recent Commissioner’s Interpretation Statement on Public Benevolent Institutions. Greater certainty in this space will be of great benefit to the sector and a statutory definition could potentially provide this certainty.

We expect that landing on a statutory definition will be difficult and hotly contested, and will therefore be of significant interest to our PBI clients.

  1. ACNC Test Case Funding

Unlike in the commercial context, charities are generally averse to incurring the costs of going to court to contest the government on uncertainties in the law. Test case funding would greatly assist the sector in both getting on with their good work (rather than pouring resources into complex and prolonged litigation) and in helping clarify ambiguity within the law.

  1. Binding Rulings

A binding ruling scheme from the ACNC would potentially provide charities (particularly those with novel activities and structures) with an avenue to seek greater certainty that they are appropriately registered and are entitled to tax concessions/endorsement.  We consider such a framework to be of great interest and benefit to the sector.

Submissions to the Productivity Commission close on Friday, 9 February 2024.

Please do not hesitate to contact our office if your charity would like support in making submissions to the Productivity Commission. Our specialist charity and not-for-profit team is well placed to assist.

This article was written  by Paul Neville.

Charity Shadow Directors and De Facto Directors

Directors or Management Committee Members are those who have responsibility for governance of a charity.

At the Christian Management Australia Annual Conference, Andrew Lind presented a paper on just who might be shadow directors and de-facto directors in charities.

That issue has particular relevance in light of recent charity law reforms, with the ACNC’s requirement for registered charities to declare responsible entities (or responsible persons); the duties they owe and the ACNC’s powers to remove them.


Who are shadow directors and de-facto directors?

Shadow directors and de-facto directors are people who are acting in the governance of the charity but who have not been formally appointed to a director/member of the board/management committee.

From a commercial perspective we can grasp a better understanding of de-facto and shadow directors by considering the following, pursuant to section 9 of the Corporations Act 2001 (Qld), the definition of a director also includes a person who is not validly elected as a director if the person:

    1. a) Acts in the position of a director (de-facto director); or
    2. b) The directors of the company act on instructions of the person’s instructions or wishes (shadow director).

This person will be subject to the same obligations and liabilities as a director would be exposed to.

The Australian Charities and Not for Profits Act 2001 (Cth) (“ACNC Act”) defines a director of a company (under the ACNC Act, a company is defined in the Act as a body corporate or any unincorporated association) as:

    1. a)  If a company is incorporated – a director of the company, or an individual who performs the duties of a director of the company; or
    2. b)  If the company is not incorporated – a member of management of the company, or an individual who performs the duties of such a member;

regardless of the name that is given to his or her position, or whether or not he or she is validly appointed.

In charity compliance it is important to consider the duties that a director or management member normally performs in their capacity in the position..

It is important to be mindful of this as the ACNC provides little or no guidance for not-for-profit organisations on the issue.

Please note that for the remainder of this article, any reference to director also refers to management member.


What are some examples of tasks that would qualify a person to be a de-facto or shadow director?

The law is clear that there is no single test for determining whether the duties a person carries classifies them as a de-facto or shadow director.

Recent case law from the commercial cases provides some tests for identifying when a person is acting as a director.

We refer to two cases notes below:


Case note 1: Grimaldi v Chameleon Mining NL

In Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6a case which went before the Federal Court of Australia, a consultant was held to be an officer of a company for reasons such as

    • he played a significant role in directing the company’s corporate strategy;
    • he made decisions which affected the company’s finances;
    • he and led several negotiations;
    • in several instances, he was involved in the day to day running of the company; and
    • he was also reasonably perceived by outsiders to be a director or senior officer of the company.

In Grimaldi, the alleged director was not regarded by the board as a director, nor was he held out to be a director. He was only allowed to attend director board meetings on invitation by the board.

Further, he had no power to formally bind the company. In spite of this, the court held that he was clearly authorised on several occasions to perform functions that would lead a reasonable third party to believe the alleged director was acting as a director.

In their judgement, Justices Finn, Stone and Perram said the following:

We accept that the Board Members seem only to have allowed Mr Grimaldi’s attendance at Board meetings by invitation and did not appear to regard him as director as such. However, while they did not hold him out as a director eo nomine [by that name], they clearly authorised him on occasion to perform functions such as would lead a reasonable third party dealing with him to believe he was acting as a director…”[1]

This makes it clear that a person can still be held to be a director if they satisfy other criteria. This is even if a person only attends board meetings by invitation of the board, does not have a right to vote at board meetings and is not perceived by members of that board meeting to be a director.

One of the tests (and certainly not the only test) applied in this judgement to determine whether a person is a shadow director or de-facto director, is whether a reasonable third party dealing with the person would believe the person to be a director of the company. Ask people, who they perceive to be directors of your Charity?

“Even though not authorised to be a director, Mr Grimaldi was either given, or had arrogated to himself with the acquiescence of at least the two executive directors… functions in the affairs of [the Company] which would properly be expected to be performed by a director of that corporation given its circumstances. Given the extent and the significance of those functions, he so acted in the position of a director to warrant the imposition on him of the liabilities, statutory and fiduciary, of a director.[2]

Here, the Court held that Mr Grimaldi was either given the ability to carry out tasks that would normally be expected of a director, or had claimed that ability with the passive inaction of other directors. Mr Grimaldi was therefore acting as a director.


Case note 2: Shafron v Australian Securities and Investments Commission

In Shafron v Australian Securities and Investments Commission [2012] HCA 18, a case which went before the High Court of Australia, a consultant was held to be an officer of a company, for reasons such as that he had advised the board on substantive matters, was one of three most senior executives, and had assisted in deriving proposals for separating its subsidiaries exposed to asbestos claims from rest of the group.

In the judgment, Chief Justice French, and Justices Gummow, Hayne, Crennan, Kiefel and Bell said:

“…the Court of Appeal did not decide that making a real contribution to a decision was sufficient to constitute participation in making that decision. Rather, the Court’s focus was upon what was necessary to constitute participation… Participation in any decision of a corporation does not make a person an “officer” – the decisions in which the person participates must have the significance for the business of the corporation…”[3]

Notably, the court held in Shafron that it is not the participation in any decision of a corporation that makes an alleged director an officer, but it is the decisions in which the person participates in. These decisions must have significance for the business of the company.


Conclusions and Practical Steps

In considering how broad “responsibility entity” is, registered charities need to be aware that a person need not be recognized as a director by their own formally appointed board.

As long as that person is performing significant functions that a reasonable outside person would perceive a director to perform, that person could be held to be liable as a director.

Charities will also need to consider whether their insurance which covers directors and officers also extends to these people.

Another important consideration would be for charities to see if there is any such person perceived by third parties to be a director and if such a person carries out tasks that are significant to the governance of the charity.

Clear role definition is important in the charity to differentiate such persons from directors. Such actions are imperative in ensuring charity compliance, and mitigating the risk that your charity is removed from the ACNC register due to a breach of the ACNC Governance Standards.

If you feel that you or your members of your company or charity may be at risk of falling under the definition of a director, specific legal advice will need to be taken in determining whether the ACNC Act has been breached. You may also need advice about implementing good governance principles and policies that allow for your members to be protected, or prevented as the case may be, from actively making director or management committee member decisions.


For more information regarding Shadow Directors and De-Facto Directors

If you require guidance for your not-for-profit organisation, please contact our client engagement team or call us on (07) 3252 0011 to book an appointment with one of our specialist NFP & Charity Lawyers today.

Covid-19 impact on Small Businesses in Australia  

The international COVID-19 Pandemic has had a significant impact on the operations and financial viability of many small businesses. Small businesses make up a large percentage of businesses in Australia and are a vital part of the economy. In response to the challenges posed, the Australian Government has introduced insolvency reforms to provide aid and assistance during this difficult and uncertain time.  


Previous Insolvency Framework  

As the most sweeping insolvency reforms in the last 30 years, the changes provide flexibility for small businesses seeking to restructure or wind down. [1] These changes are welcomed, as the approach outlined in Part 5.3A of the Corporations Act 2001(Cth) have been particularly complicated and expensive.  


2021 Insolvency Reforms  

Taking effect on 1 January 2021, The Corporations Amendment (Corporation Insolvency Reforms) Act 2020 (Cth) includes (but not limited to) the following changes:  

    • Debt Restructuring Options for Small Business  
    • Simplified Liquidation Procedure 


What small businesses are included in the reforms?  

Pursuant to the reforms, a small business is defined as:  

    • Incorporated Small Business (with company structure) 
    • Liabilities less than $1 million  

We commend these reforms as these changes maximize control during the difficult process of debt restructuring and conclusion of small businesses. 


If you require any assistance with managing or winding down your small business, please feel free to contact our office and speak with a  Business Development Officer  on (07) 3252 0011 to discuss your matter today.


Other Related Articles



[1] Media Release – Insolvency Reforms Pass Parliament  


Preserving Charitable Assets within Charitable Purposes


Cy Pres (pronounced Sigh Pray) is not a phrase you hear often, and yet applications to the Court for a Cy Pres Order are increasingly common.

Cy Pres is a phrase we have adopted from the French meaning, “as near as possible” to the original intention. (Don’t believe us? Check it out!)

Most people are familiar with the concept of a trust – usually established when one person or entity (settlor / donor) gives money to another person (the trustee), and directs that they use it for a specific purpose (the terms of the trust) or for the benefit of a specific person or entity (a beneficiary).

A trust is a charitable trust when it is established for charitable purposes (objects).

A Charitable trust can be defined as, “A purpose trust that is directed to exclusively charitable purposes (Leahy v A-G (NSW) (1959) 101 CLR 611) and that exhibits public benefit (Attorney-General (NSW) v Perpetual Trustee Co Ltd (1940) 63 CLR 209).” (Encyclopaedic Australian Legal Dictionary, Lexis Advance)

A charitable trust may be quite general (for example for the relief of poverty) or highly specific (for example the care of the aged in a specific geographic region).

Charitable trusts need not have any vesting date, and may exist in perpetuity.

Things change. Charities cease to exist and sometimes specific charitable trust obligations become impossible to perform.

For example care facilities run by charities are sometimes sold to for-profit operators. These changes may make the original intended performance of the terms of the charitable trust impossible or impractical.

Sometimes the terms of the charitable trust have an express power of amendment but often they don’t (especially when the charitable trust is embedded in a Will, known as a testamentary charitable trust).

The law favours charities and seeks to save / uphold charitable trusts. And so, in such cases there is an ability to apply to the Court for an Order from the Court to apply the trust property “Cy Pres”, or as near as possible to the original charitable intent of the trust.

Section 105 of the Trusts Act 1973 (Qld) provides that the Supreme Court of Queensland may make orders allowing the trust property to be applied Cy Pres , including in circumstances where The original (charitable) purposes cannot be carried out, or can not be carried out according to the directions given.

In fact, the trustee of a charitable trust is under an obligation, where the terms of a trust cannot be carried out, to apply to the Court for an Order to enable property to be applied Cy Pres, or be at risk of personal liability by acting in breach of trust.

In Queensland, a Cy Pres application usually made by the trustee of a trust, application may also potentially be made:

    • by the Attorney-General or person authorised by the Attorney-General;

    • by the charity, or any trustee of the trust; and

    • by any person interested in the due administration of the trust.
      (Source: s 106(2) of the Trusts Act 1973 (Qld))

Here at Corney & Lind Lawyers, we have recently had the privilege of assisting a client with several Cy Pres applications in the Supreme Court in 2018 which have all resulted in successful orders being granted in the terms sought the preservation and protection of charitable assets within charitable purposes.

His Honour Justice Bond observed that he’d seen very few such applications over the course of his practice, and yet he had dealt with a number in the month prior to the hearing of these applications!

Although many decisions made as a result of applications for Cy Pres orders are not published by the Court, a brief look at the range of published decisions shows that there are a variety of applications coming before the Court for a wide variety of reasons.

These applications can be complex, but with a wealth of experience in both litigation and charity law, the specialist charity and NFP law team here at Corney & Lind Lawyers are well placed to advise and represent applicants in Cy Pres matters.

ACNC Charities Part III: Public Benevolent Institutions



This article (Part III) will outline what Public Benevolent Institutions (“PBI“) are, prerequisites for entities seeking to become PBIs, and some of the advantages of becoming PBIs.

In Part I of this series, an entity meeting the Australian Charities and Not-for-profits Commission’s (‘ACNC’) prerequisites can register with the ACNC as a charity, leading to entitlement to a range of tax exemptions and concessions if registered successfully.

In Part II, we outlined that many ACNC-registered charities might also choose to apply for Deductible Gift Recipient (‘DGR’) status for their entire entity or a particular arm of their entity’s functions – enabling donors to deduct these donations from their personal income for tax purposes (which often encourages more frequent and substantial donations from donors).

However, very specific charities meeting stringent threshold requirements might choose to apply to the ACNC for Public Benevolent Institution (“PBI”) status.


What are Public Benevolent Institutions? 

A Public Benevolent Institution is one of the 14 subtypes of charities recognized by the ACNC under section 25-5 of the Australian Charities and Not-for-Profits Commission Act 2012 (Cth) as being eligible for registration as a charity. PBIs differ from other charitable subtypes in that their main purpose is to relieve the poverty, sickness, disability, destitution, suffering, misfortune, helplessness and/or distress of people in need. [i] Put simply – PBIs provide “benevolent relief to people in need”.[ii]

Typical examples of PBIs might include:[iii]

    • Entities that provide housing assistance to people suffering from poverty;

    • Entities providing support services for people with a disability;

    • Particular types of aged-care services – normally situations where aged-care services are provided on a not-for-profit basis; and

    • Hospitals meeting PBI prerequisites.


Advantages of Becoming a Public Benevolent Institution 

Public Benevolent Institutions have an extensive range of taxation benefits potentially available to them. These can include:

    • All Commonwealth taxation benefits generally available to charities (such as income tax exemption, refunds of franking credits, and GST concessions for charities);

    • DGR endorsement and a DGR category specifically for PBIs (provided that the PBI meets the requirements for DGR endorsement – see Part II); and

    • Fringe Benefits Tax exemptions.


Prerequisites of Becoming a Public Benevolent Institution 

Because of the substantial benefits and tax exemptions/concessions available to Public Benevolent Institutions, the threshold requirements for any entity to obtain PBI status are significantly higher than for obtaining other types of charitable statuses. An entity will only be granted PBI status once registered by the ACNC as a PBI.

Registration requires an entity to:

1) be a charity (according to the legal meaning of “charity”);

2) be an institution;

3) have benevolent relief as its main purpose; and

4) provide the benevolent relief to people in need.

In considering whether the organisation will meet the PBI registration requirements, the ACNC will consider material such as the entity’s governing documents, financial statements, operational plans and activities amongst other things.


1. Entity is a “Charity”: 

See Part I as to what it means for an entity to be legally recognized and registered as a “charity” with the ACNC.


2. Entity is an “Institution”: 

The entity seeking PBI status must be an “institution” – this normally being “an establishment, organisation, or association, instituted for the promotion of some object, especially one of public utility, religious, charitable, educational etc”.[iv]

An “institution” can be an entity such as a corporation, trust or unincorporated association with its own separate identity, that:[v]

    • Either:
        • Has its own activities or provides its own services;

        • Participates in a relationship of collaboration with other entities that is organized and conducted for / promotes benevolent relief; or

        • Engages other people or entities to engage in activities on its behalf;

    • And:
        • Is not merely a fund; or

        • Does not simply manage trust property that is used for benevolent purposes.

    • And:
        • “Brings into being the charitable purposes and intentions of its founders.”[vi]


3. Benevolent Relief as the entity’s Main Purpose:

The charity must have, as its main purpose, to provide “benevolent” relief to people in need. This is not necessarily limited to providing financial relief, but rather also extends to other types of relief (relief from sickness, disability, destitution, suffering, misfortune or helplessness, poverty or distress).[vii] The PBI can have additional purposes, provided that these purposes are “ancillary” or “incidental” to the main benevolent purpose.

Benevolent purposes are exclusively human needs (such as relieving human poverty, human health, human suffering etc.), and these human needs can exist overseas. However, this means that any organisation that provides relief to the suffering of animals will unlikely be registrable as a PBI.[viii]

Furthermore, the ACNC indicates that the level of distress suffered by the people in need that the entity seeks to relieve will also be relevant to the ACNC’s assessment of whether the entity is registrable as a PBI. The ACNC describes the requisite level of distress suffered by the disadvantaged people as needing to be:[ix]

    • Significant enough (and the circumstances difficult enough) to arouse compassion in people in the community;[x]

    • Beyond the suffering experienced as part of “ordinary daily life” (which are distresses that a person would normally be able to get through themselves after enough time has passed);[xi] and

    • Concrete enough – aimed at helping people who are recognisably in need of benevolence.


4. Provide the Benevolent relief to people in need

The services provided by the PBI must be relieving the poverty/distress suffered by the people in need – not merely providing services to people in need.

Benevolent relief can be provided by the PBI directly to the people in need or through associated entities.[xii] In the case of the latter, the ACNC consider whether the entity’s activities are organized and conducted for the purpose of relieving the poverty or distress of people in need.[xiii]

The relief that the Public Benevolent Institution provides must also be specific and tailored to a particular group of people who are recognised to be in need – it cannot be provided to the broader general community, as it is assumed that people in the broader community are not in need of “benevolent relief”.[xiv]


If you are investigating whether your charity would best operate as a Public Benevolent Institution, the friendly team at Corney & Lind Lawyers can help. Contact us today on (07) 3252 0011 or email us at


Related Articles



[i] Perpetual Trustee Co Ltd v FC of T (1931) 45 CLR 224.

[ii] Australian Charities and Not-for-profits Commission (‘ACNC’), ‘Commissioner’s interpretation Statement: Public Benevolent Institutions’ CIS 2016/03 (Interpretation Statement, accessed 3 November 2022) <>.

[iii] ACNC, ‘Examples of Public Benevolent Institutions’, Public Benevolent Institutions and the ACNC (Factsheet, Accessed 19 September 2022) <>; Australian Taxation Office, ‘Public Benevolent Institution’, Types of Charities (Webpage, 12 October 2016) <>.

[iv] Shorter Oxford English Dictionary; Young Men’s Christian Association of Melbourne v FC of T (1926) 37 CLR 351.

[v] ACNC, ‘Public Benevolent Institutions and the ACNC’, Factsheets (Factsheet, accessed 3 November 2022) <>.

[vi] ACNC, ‘Commissioner’s interpretation Statement: Public Benevolent Institutions’ CIS 2016/03 (Interpretation Statement, accessed 3 November 2022) <>.

[vii] ACNC, ‘Commissioner’s interpretation Statement: Public Benevolent Institutions’ CIS 2016/03 (Interpretation Statement, accessed 3 November 2022) <>, cl 5.1.1.

[viii] FC of T v Royal Society for the Prevention of Cruelty to Animals, Queensland Inc 92 ATC 4441.

[ix] ACNC, ‘What is a ‘main purpose of benevolent relief’?’ Public Benevolent Institutions and the ACNC (Factsheet, Accessed 21 September 2022) <>.

[x] Pay-roll Tax, Commissioner of (Vic) v The Cairnmillar Institute (1990) 90 ATC 4752.

[xi] ACNC, ‘Commissioner’s interpretation Statement: Public Benevolent Institutions’ CIS 2016/03 (Interpretation Statement, accessed 3 November 2022) <>.

[xii] FC of T v The Hunger Project Australia [2014] FCAFC 69.

[xiii] ACNC, ‘Does my charity have to provide benevolent relief directly?’, Public Benevolent Institutions and the ACNC (Factsheet, Accessed 19 September 2022) <>; Australian Taxation Office, ‘Public Benevolent Institution’, Types of Charities (Webpage, 12 October 2016) <>.

[xiv] Australian Council of Social Service Inc v Commissioner of Pay-roll Tax (1985) 1 NSWLR 5

New ACNC Guidance on Related Party Transactions for Charities

We noted in November 2021 that the ACNC has been increasingly interested in related party transactions. This should not be a surprise because ensuring that charities follow best practice when managing conflicts of interest bolsters public confidence in the sector

The ACNC has now published further guidance for charities about how to handle related party transactions.


What is a related party transaction?

Put simply, related party transaction occurs when something of value (i.e. resources, services, obligations etc.) passes from a charity to a related party (i.e. a person or entity connected to the charity or with influence over the charity).


What does the guidance cover?

The new ACNC guidance helpfully provides:

    1. Guidance on what constitutes a related party;
    2. Examples of related party transactions;
    3. A template register for recording related party transactions;
    4. Guidance on related party disclosures for financial statements; and
    5. Guidance or links for guidance for Basic Religious Charities, Ancillary Funds, and Companies.


Why does it matter?

It is important to remember that governors (whether they be called the board, management team, management committee, or directors etc.) of charities have positive obligations under the ACNC governance standards to act in the charity’s best interests. This includes:

    • not misusing their position;

    • using the charity’s resources wisely; and

    • disclosing and managing conflicts.

It goes without saying that a charity’s reputation is central to its ability to attract the public confidence (whether that be in the form of donations or volunteers) needed to do the good work that it was set-up to do. Effectively and transparently managing conflicts is a key part of building and maintaining that public confidence.


Practical ways to manage related party transactions

Having the right policies, procedures, and tools in place will help your charity make good decisions regarding conflicts of interest and related party transactions. The ACNC guidance and templates are a good place to start. However, in our experience, tailored training and policies are often needed to help put the principles in action.

Please contact us on (07) 3252 0011 if your Board would like training on identifying and managing related party transactions, or if you require advice on updating your charity’s policies to deal with related party transactions.

Case Note for Member Disputes in Incorporated Associations: Singh & Ors v Brisbane Sikh Temple (Gurdwara) Inc [2022] QSC 151


The recent Supreme Court of Queensland decision of Singh & Ors v Brisbane Sikh Temple (Gurdwara) Inc [2022] QSC 151 involved an application for the appointment of a receiver over an incorporated association in relation to a membership dispute between factions of members in an incorporated association.



The Respondent was an incorporated association, and the applicants were members of the respondent.

In 2021, the applicants brought an application for an urgent interlocutory injunction, seeking to restrain the respondent from considering or resolving upon the election of the management committee at the Respondent’s annual general meeting.

It was alleged in the course of the case history that the respondent’s management committee rejected 2,151 number of membership applications for the respondent in about August 2021.

In February 2022, the Honourable Justice Kelly declared that the management committee’s decision in August 2021 to reject the 2,151 applications for membership to be void and of no effect. The Honourable Justice Kelly also directed the management committee to consider the rejected applications in accordance with the respondent’s Constitution and according to law. (To read our case note on this February judgement, visit Singh v Brisbane Sikh Temple).

In April 2022, the Honourable Justice Jackson made consent orders which required the management committee to use its best endeavours and take all reasonable steps to cause the respondent to comply with the orders made by the Honourable Justice Kelly in 25 February 2022 .

The consent orders created a timetable for:

    • the management committee to reconsider in accordance with the respondent’s Constitution and according to law the 2,151 applications previously rejected by it;

    • the management committee to hold a meeting which would formally vote to accept or reject the reconsidered rejected applications; and

    • the respondent to take reasonable steps to notify each successful applicant that their application had been accepted and to notify each unsuccessful applicant that their application had been rejected.

The reconsideration process occurred in May 2022, with a number of applicants being rejected for various reasons. The applicants alleged various irregularities regarding the reconsideration process, and sought an order for the appointment of a receiver to the respondent to:

    • reconsider the rejected applications, approve or reject them in accordance with the respondent’s Constitution and according to law, and settle the register of members;

    • convene a general meeting to vote on the election of the management committee; and

    • make all decisions about the process and procedures to be adopted for the general meeting.

The Honourable Justice Applegarth summarised the applicants’ case as this:

The applicants have not sought directions under the Uniform Civil Procedure Rules 1999 (Qld) to enforce compliance with the 4 April orders or to cure alleged non-compliance with them. They have not commenced a proceeding that seeks as relief declarations that all or some of the management committee’s reconsideration decisions are void or of no effect. Instead, having consented to the reconsideration process order by Jackson J on 4 April 2022, they now seek to take the reconsideration process out of the hands of the management committee and place it in the hands of a court-appointed receiver.

Evidence was submitted that the appointment of a receiver would cost the respondent at least $200,000.


Selection of Relevant Law

In consideration the application before him for the appointment of a receiver, the Honourable Justice Applegarth turned to the decisions of National Australian Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 and Lamers v Arvind Pty Ltd [No 2] [2019] WASC 491.

In doing so, the Honourable Justice Applegarth made the following comments in the judgment:

Before the jurisdiction to appoint a receiver is exercised, the Court must be satisfied that the case in favour of appointment is strong. 

The appointment of a receiver is a drastic remedy to be exercised with care and great caution.

Consistent with this approach, it has been said that “no court will make such an order unless convinced of its necessity”.


Findings of Note

The Honourable Justice Applegarth acknowledged that there were serious questions raised about the correctness or competence of decisions made by the management committee in the reconsideration process. Further, the Honourable Justice Applegarth noted the respondent’s secretary has responded to note few decisions are accepted by the secretary as having been wrong and are subject to recommendations to be made at the next meeting of the management committee to correct them and to accept an application.

However, the Honourable Justice Applegarth observed the respondent’s constitution had an appeal process for rejected membership, which could be appealed to a general meeting of the respondent. The Honourable Justice Applegarth observed that the appeal process had not been engaged with by many of the rejected applicants. On this point, the Honourable Justice Applegarth stated “In circumstances in which appeal rights have not been exercised, I am not convinced that it is appropriate to appoint a receiver.”

Ultimately, the Honourable Justice Applegarth held that the appointment of a receiver was not necessary, and found against the applicant. Summarising many of his findings, the Honourable Justice Applegarth stated:

The appointment of a receiver is a drastic remedy to be exercised with great caution. I am not convinced that such an order is necessary. I am not persuaded that it is just or convenient to appoint a receiver, given the substantial costs associated with such a process. I am not persuaded that it is just or convenient to appoint a receiver in circumstances in which no proceeding has been commenced that seeks orders setting aside all or some of the reconsideration decisions and which might resolve the facts that are in dispute before me. The appointment of a receiver would not determine the validity of the reconsideration decisions made by the management committee pursuant to the 4 April orders. It would involve different decisions being made without the management committee’s decisions having been set aside. It also would be a costly exercise.


Lessons Learned 

This decision highlights a few important considerations for members of an incorporated association in seeking to resolve a member dispute:

    • Seeking that the Court appoint a receiver should only be considered by members in drastic circumstances;

    • Unless the facts of the are particularly dire, it would be wise for incorporated associations and its members exhausting all internal and constitutional remedies before seeking the intervention of the court; and

    • The decision highlights yet again the reluctance of the Court to intervene in the internal decision making and management of incorporated associations.


Need assistance interpreting your Constitution?  

Managing Members should be aware of the provisions of their Constitution and the impact on decision making. If you have any concerns or questions about your Constitution, our experienced commercial lawyers are able to help clarify and provide expert legal advice.

Give us a call at 07 3252 0011 to discuss your situation and book in your appointment with a lawyer today.


Helpful Links

ATO Releases Decision Impact Statement on The Buddhist Society of WA v Commissioner of Taxation (No 2)

Case: The Buddhist Society of Western Australia Inc v Commissioner of Taxation (No 2) [2021] FCA 1363

Full text of the Decision Impact Statement is available here.


The Purpose of Decision Impact Statements 

Decision Impact statements are the response of a government entity to a change in the law that overturns that entity’s prior position on the point. In such cases, government entities need to ensure that their approach to implementing the law remains consistent with judicial reasoning and legislative intentions, whilst also being sufficiently transparent to allow prediction of what might constitute permissible versus impermissible activity.

One method of achieving such çonsistency is by the delivery of a Decision Impact Statement – a statement identifying how a decision in a case will affect a government department’s approach to implementation of the relevant law. Such a landmark case has arisen, with the ATO recently releasing its Decision Impact Statement in relation to the decision in Buddhist Society of Western Australia Inc v Commissioner of Taxation (No 2) [2021] FCA 1363 (hereafter referred to as “BSWA v The Commissioner”).


Context: The Facts

The Buddhist Society of WA (“the Society”) was an entity with designated deductible gift recipient (“DGR”) status for the purposes of running the Dhammaloka Buddhist Centre Building Fund (“the Fund”). Specifically, the Fund was, under the Income Tax Assessment Act 1997 (Cth) (“ITAA Act”), to be “a public fund, established and maintained solely for providing money for the acquisition, construction, or maintenance of a building used, or to be used, as a school or college”. These types of funds are commonly referred to as “School Building Funds”.

However, in late 2019, the Commissioner of Taxation revoked the DGR status of the Society to operate the fund, perceiving that the buildings the subject of the fund were not being used as either a “school” or “college” as required by the ITAA Act. The Society appealed the decision of the Minister and, importantly, sought that the decision be judicially reviewed. The review was based on whether the Commissioner had applied the correct definition of the word “school” in undertaking the assessment of whether the buildings were being used for purposes compliant with the Tax Act.

Ultimately, it was held that the Commissioner had in fact erred in his understanding of the definition of “school”, and hence had made an error of law by applying an incorrect definition in his assessment of whether the buildings were operating as a “school”. Accordingly, the Commissioner was required to remake the decision according to the correct definition.


The ATO’s Response

The ATO’s assessed how the above decision would affect its approaches to School Building Fund DGR applications and accordingly issued its Decision Impact Statement – highlighting a variety of changes to its future approach.


1. Definition of “School” for the purposes of School/College Building Funds

Previously, the Commissioner’s approach to determining whether a building operated as a “school” involved a multi-element approach – involving both assessment of the common law’s definitions of the word, and consideration of Taxation Ruling 2013/2. The ATO considered:

    • Whether the ‘school’ fell within the ordinary meaning of the word “school” (as established by the leading cases of Cromer Golf; Commissioner of Taxation v The Leeuwin Sail Training Foundation Ltd; and Commissioner of Taxation v Australian Airlines Ltd) )(the “ordinary meaning test”); and
    • Whether the School had any of the relevant characteristics as identified in Taxation Ruling 2013/2, being that it had (hereinafter referred to as “the Taxation Ruling Factors”):
      • a set curriculum, instruction or training provided by suitably qualified persons;
      • the enrolment of students;
      • some form of assessment and correction; and/or
      • the creation of a qualification or status that is recognised outside of the organisation.

This approach was held to be incorrect, with the Judge in BSWA v The Commissioner identifying:

a. that neither Cromer Golf, nor other later cases which considered the definition of “school”, imposed on the definition of “school” any additional requirements beyond the word’s ordinary definition. Therefore, the definition of “school” was only to be determined by the ordinary meaning test;

b. the presence (or absence) of regular, ongoing and systematic instruction did not conclusively establish whether or not the entity was a school (the Commissioner had argued that the Society’s use of the building was not predominantly for regular/ongoing/systematic instruction, and this had contributed to the assessment that the Society’s buildings were not being used as a “school”); and

c. assessment of whether the Taxation Ruling Factors are present is not part of the test to establish whether a “school” exists (but can be considered by the Commissioner as part of applying the ordinary meaning test).

The ATO now adopts the Court’s views that the education provided by a “school” does not have to be “vocational as opposed to recreational”, and will accordingly shift its attention to the activities undertaken and whether it can be demonstrated that “instruction is being given in an activity or area of knowledge”.


2. Simplification of the meaning of “school”

The Court identified Cromer Golf as one of the key authorities (amongst others) in determining the ordinary meaning of “school” – a critical extract from the case outlining:

… that a school is ‘a place where people, whether young, adolescent or adult, assemble for the purpose of being instructed in some area of knowledge or of activity’ … [A] school is ‘an institution in which instruction of any kind is given’. [Barwick CJ in Cromer Golf]

The ATO has committed to updating Taxation Ruling 2013/2 in relation to the established meaning of “school”, and to consider Cromer when assessing both future applications and rejected applications to which Cromer may have applied.


3. ‘Overall Purpose’ approach to “use as a school”

The Commissioner also erred in its interpretation that for a building being “used, or to be used as a School” this hinged on an analysis of the total amount of time the building was used for school activities as opposed to non-school activities and for DGR status to be denied where non-school activity hours were predominant.

The Court, however, identified that the Commissioner should have turned its mind to a much wider set of principles, such as:

    • the overall purpose(s) for which the building was being established and maintained;
    • the importance of each activity carried out in the building with reference to the purpose of the building as a school;
    • connections between school and non-school activities; and
    • the extent to which both school and non-school activities support the purpose of the building as a school.

The ATO, in considering an application for DGR status for a School Building Fund, will now assess the overall purpose(s) for which the building was established and maintained, and the nature of the activities that support the overall purpose(s). The Commissioner will further consider the extent of school versus non-school related activities and how each may support these overall purpose(s).

If you have had an application for a School Building Fund been rejected, and you believe that this Decision Impact Statement may be beneficial to your chances of receiving a favourable outcome, the ATO has identified that you can lodge a request for review of your application via email to The friendly and experienced team at Corney & Lind Lawyers can also assist you in navigating this process. Give us a call on (07) 3252 0011 or email us at to see how we can help you.

DISCLAIMER: Corney & Lind Lawyers provides articles on its website for general and informative purposes only. Any articles on our website are not intended as, nor should they be taken as, constituting professional legal advice. If you have a problem that requires a legal opinion, Corney & Lind lawyers always recommends that you seek independent legal advice that is appropriately tailored to your circumstances from an appropriately qualified legal representative.

This article was written by Jackson Litzow, Simon Mason and Jessica Lipsett.

Public Ancillary Funds for Private Schools

Through careful structuring, schools can utilise a Public Ancillary Fund to provide much needed supplementary recurrent income to support operational expenses through fundraising.


1.  What is a Public Ancillary Fund?

Ancillary funds are funds which are entitled to deductible gift recipient (‘DGR’) endorsement, and are therefore entitled to receive donations which are tax deductible. These funds essentially operate as a tax deductible fundraising mechanism to distribute to other DGRs, and cannot engage in any other activities. In other words, ancillary funds collect donations and may distribute those donations to other suitability endorsed entities to do the charitable work.

Notably, ancillary funds fall within two categories:

    • Private ancillary funds – these allow private entities to establish and donate to a charitable trust of their own, without the seeking contributions from the public, for the purpose of disbursing funds to other DGRs.

    • Public ancillary funds (PAFs) – these funds are distinct from private ancillary funds in that they invite the public to contribute to the fund, and it is these funds which are generally utilised by schools to conduct their philanthropic fundraising.

There are strict rules regarding the administration of PAFs, including minimum annual distributions.[1]


2. Why would a School have a Public Ancillary Fund?  

There are 2 key benefits for a School establishing a PAF. These being:

1. Streamlined Donations

Schools will often have a number of key DGR Funds set up to support its operations, including:

    • Building Funds;

    • Scholarship Funds;

    • Libraries (often incorrectly referred to as ‘Library Funds”); and

    • Necessitous Circumstances Funds.

Each of these funds qualify for the receipt of distributions from PAFs. If structured effectively, the PAF can make donations to the relevant funds in the proportion determined by its trustees/governors from time to time, depending on the needs of the School. Accordingly, a PAF can become the single-point of advertised DGR donations from the public to a School, which can also reduce confusion from potential donors.


2. Self-Perpetuating Funding

The trustee of a PAF is required to implement an investment strategy for accumulated funds, and is only required to distribute a small percentage of funds in any given year (the minimum annual distribution requirement). As such, if a PAF attracts a significant amount of annual donations, and it is well administered, the PAF can grow into a self-perpetuating source of funding for a School.


3. Establishing a Fund and Ongoing Compliance

PAFs must be established via trust deed, with a corporate trustee. There are also rules concerning who qualifies as a ‘responsible person’ to operate the PAF (ie. directors of the corporate trustee).

Once the PAF has been established via trust deed, it will need to obtain relevant fundraising licences and be registered as a charity with the Australian Charities and Not-for-Profits Commission.

Responsible persons will also need to ensure ongoing compliance with the Taxation Administration (Public Ancillary Fund) Guidelines 2022.[2] This includes, amongst other things, ongoing public fundraising and meeting certain minimum annual distribution requirements.

The team at Corney & Lind are specialist Schools and Not-for-Profit solicitors. Please do not hesitate to contact us on (07) 3252 0011 if you need assistance with establishment or compliance matters concerning a Public Ancillary Fund.

The information in this article is general information only and does not constitute legal advice.



[1] See:

[2] See:

Federal Budget – ACNC to receive significant extra funding for field-based compliance review work

Deep in the 6 October 2020 Federal Budget papers is an announcement about significant extra funding for compliance review work by the ACNC over the next 3 years.


Australian Charities and Not-for-profits Commission Review Program Payments

The Government will provide $2.9 million over three years from 2020-21 [$0.5M in 20-21, and $1.2M in each of 21-22 & 22-23] to implement a program of field-based compliance reviews to intervene early where charities are at high risk of failing, to meet the obligations under the governance standards of the Australian Charities and Not-for-profits Commission (ACNC).

The review function will strengthen the ACNC’s ability to provide greater assurance to Government and the public that charities have appropriate governance structures in place and are using their income for charitable purposes, including when responding to natural disasters.

Source: (page 160)

All charities need to consider the steps they are taking to seek to ensure compliance with the ACNC Governance Standards, and think about what evidence will be provided to the ACNC when they come knocking.

Our charity law team regularly assists charities in understanding and applying the governance standards including the development of policies, processes and registers to encourage compliant good governance and provide a ready source of evidence to regulators like the ACNC about the steps being taken by the charity to comply. Our lawyers are also available for Board and senior staff training.

To find out more about the ACNC’s extra funding for compliance review or our charity law services click here or get in touch with our Client Engagement Team to book an appointment.