The Not-for-profit and charity legal landscape has many associated buzzwords; one of the most prevalent phrases being “DGR status”. DGR status is a concept that is particularly attractive to charities that rely solely or partly on donations from organisations or members of the public to fund its operations, but not every charity is eligible to obtain DGR status. This article will identify what DGR status is, different types of DGR status, the eligibility requirements for obtaining DGR status, and the benefits of a charity obtaining DGR status.

What is “Deductible Gift Recipient Status”?

Deductible Gift Recipient (‘DGR’) status describes the Australian Taxation Office’s (‘ATO’) endorsement of a particular entity as a Deductible Gift Recipient. The primary benefit of being endorsed as a DGR is that DGR status enables donors who make donations to the DGR to claim those donations against their income tax, which often incentivises donors to make larger or more frequent donations to the entity.

Entities that are applying for DGR status can either apply for:

  1. Whole-entity DGR status (where the entity in its entirety and all its operations fit within a specified DGR category); or
  • Partial-entity DGR status (where the entity in its entirety does not fit into a specified DGR category, but a distinct fund, authority or institution that it operates does).

Donors can only claim income tax deductions on donations they have made to a DGR, or the DGR-endorsed fund/authority/institution operated by the entity. For example, if a non-DGR charity operates a DGR-endorsed building fund, any donations made to the charity in general will not be tax-deductible; however, any donations made specifically to the building fund will be tax-deductible.

At the time of writing, there are approximately 52 different types of DGR categories endorsed by the ATO for which an entity may register, each classified into the below groups:

  • Health
  • Education
  • Research
  • Welfare and Rights
  • Defence
  • Environment
  • The family
  • International affairs
  • Sports and recreation
  • Cultural organisations
  • Fire and emergency services
  • Ancillary funds

An additional four categories are regulated and granted endorsement by other governmental departments. These include:

  • Cultural Organisations
  • Environmental organisations
  • Harm prevention charities
  • Overseas aid funds

Eligibility Requirements for Deductible Gift Recipient Status

Any entity applying for DGR status must comply with the eligibility requirements of the particular category under which it is seeking DGR status. Furthermore, as of December 2021, funds, authorities or institutions seeking DGR status must also satisfy the broad eligibility requirements by being either:[i]

  • A charity registered with the ACNC (read more about ACNC charity registration here )
  • An Australian Government agency; or
  • Operated by a registered charity or an Australian government agency.

NB: This does not extend to ancillary funds or entities listed specifically as DGRs under taxation law.

DGRs must be operated and established in Australia, although its purposes and beneficiaries can lie internationally for some categories. However, some DGRs, such as public funds for providing religious instruction in government schools or an Australian war memorial fund, must have purposes and beneficiaries contained exclusively within Australia.

Some DGR categories will also require an entity, as a prerequisite to being granted DGR status under that category, to obtain pre-approval from particular government departments (e.g. overseas aid funds require pre-approval from the Department of Foreign Affairs and Trade).

Gift Funds

Where an entity does not have full-entity DGR status but instead seeks to obtain DGR status for a particular fund, authority or institution it operates, the entity must maintain a gift fund to be used only for that fund’s/authority’s/institution’s primary purpose. All money or gifts donated to the entity for the purposes anticipated by the gift fund must be made to that gift fund, and no other types of money or property can be held by the gift fund.

Furthermore, upon the DGR fund/authority/institution winding up or having its DGR status revoked, the entity will be compelled to transfer all remaining assets to another DGR fund/authority/institution. If the DGR fund/entity was a registered charity, the remaining assets held by the fund/entity may need to be transferred to another charity (DGR fund, authority or institution) with similar charitable purposes.[ii]

Revocation of Deductible Gift Recipient Status

The ATO may revoke DGR status of an entity if:

  • The fund/entity no longer has entitlement to be endorsed as a DGR;
  • The fund/entity fails to provide documents or information as requested by the ATO; or
  • The fund/entity fails to provide specified information on its receipts for tax-deductible gifts and contributions.[iii]

If a change in the structure or operations of the DGR will have the effect of making the DGR ineligible for DGR status, the DGR bears the responsibility to report its ineligibility to the ATO. Failure to do so may result in the ATO taking legal action against the DGR. If you are seeking advice regarding applying for DGR status or reviewing your entity to ensure it complies with its DGR obligations, the NFP and Charity team at Corney & Lind Lawyers can help. Our experienced lawyers will assess your entity’s circumstances and help guide you through the process. Contact our friendly team on (07) 3252 0011 or email us at

This article was written by Jackson Litzow 

[i] Australian Charities and Not-for-profits Commission, ‘Deductible Gift Recipients and the ACNC’, Deductible Gift Recipients and the ACNC (Webpage, 3 November 2022) <>.

[ii] Australian Taxation Office, ‘Deductible gift recipient eligibility’, Rules and tests for DGR endorsement (Webpage, 13 October 2021) <>.

[iii] Australian Taxation Office, ‘Revoking endorsement’, Revoking endorsement (Webpage, 04 August 2022) <’s,specified%20information%20on%20its%20receipts.>.

Humanity’s intrinsic sense of benevolence is often the primary motivator that inspires people to donate to, or even start up, Charities and Not-for-Profit organisations (‘NFPs’). There are many structuring options for entities seeking to provide benefit to the public – each differing in its reporting and regulatory obligations and eligibility for tax exemptions.

The bullseye model (below) is a useful conceptual tool when considering the regulatory requirements and taxation exemptions of particular types of not-for-profit entities. As one moves towards the centre of the bullseye, reporting obligations on the entity become more extensive – but as a tradeoff, the entity is eligible for greater tax concessions.

Those looking to set up a not-for-profit entity will inevitably arrive at the decision as to whether they wish to register their organisation as a charity with the Australian Charities and Not-for-Profits Commission (‘ACNC’). This article outlines what charitable status is, and some of the benefits obtainable by an entity if they are successful in registering their charity with the ACNC.

What is a “Charity Status”?

An organisation is colloquially said to obtain “charity status” upon its registration with the ACNC as a “charity”. The ACNC will apply the definition provided in section 5 of the Charities Act 2013 (Cth) (the ‘Charities Act’) in determining whether the entity seeking registration is in fact a “charity”.

An entity will be a “charity” and registrable with the ACNC if:

  1. It is a not-for-profit entity;
  2. All its purposes are “charitable purposes” that are for the public benefit – or are purposes that are incidental or ancillary to, and in furtherance or in aid of, the “charitable purposes” of the entity;
  3. The entity has no “disqualifying purposes”; and
  4. The entity is not an individual, political party or government entity.


1.Not for Profit

An entity will be not-for-profit where the organisation does not operate for profit, personal gain or other benefit to particular people – such as members or shareholders.[i] Whilst there are limited situations where the entity can provide benefit to a member, this must only occur in circumstances where the benefit is provided whilst the organisation is genuinely carrying out its purposes. A general prohibition on operating for the profit of members should be reflected in the charity’s governing document (such as its constitution or rules).

2. Charitable Purposes and “Public Benefit”

The entity must have exclusively charitable purposes or purposes that are incidental to the carrying out of charitable purposes. Such as the different types of relief that charities provide is highly diverse, so too are the different types of charitable purposes recognized by the ACNC and Charities Act. Overall, there are 14 different types of recognized charitable purposes, some of which include:

  • Advancing education;
  • Advancing religion;
  • Advancing health;
  • Promoting/protecting human rights;
  • Advancing human rights;
  • Advancing culture.

These purposes must also be of public benefit, and the purpose must direct a benefit to the general public or a sufficient section of the general public.[ii] It is unlikely that an organisation that passes on a benefit to a very small portion and demographic of the public will be registrable as a “charity”.

3. No “Disqualifying Purposes”

The organisation cannot be founded for a “disqualifying purpose” as defined by the Charities Act. This means it cannot operate for the purpose(s) of:

  • Engaging/promoting unlawful activities or activities against public policy; or
  • Promoting/opposing a political party or candidate.

Benefits of ACNC Registration

In most circumstances, ACNC registration is highly desirable for charities due to the abundance of benefits it provides. The types of benefits available to a charity will depend on the charity’s designated “subtype”, and might include:[iii]

1) Taxation Benefits:

  • The ability to apply to the Australian Taxation Office (‘ATO’) for tax concessions/exemptions (such as income tax exemptions and GST concessions) and particular kinds of deductible gift recipient (‘DGR’) status available only to ACNC-registered charities;
  • For Public Benevolent Institutions, Health Promotion Charities or charities for the advancement of religion – further tax benefits available only to these types of institutions;
  • Potential eligibility for further financial benefits and tax exemptions provided under Commonwealth law, such as:
    • Mobility allowances;
    • Family tax benefits or double orphan pensions;
    • Fringe benefit tax exemptions.

2) Regulatory benefits (where the entity is also registered with the Australian Securities and Investments Commission (‘ASIC’) and is a Company Limited by Guarantee):

  • Reporting is required only to the ACNC instead of both the ACNC and ASIC, meaning that ASIC filing and annual review fees are not payable and the need for a directors’ report to be prepared (which can reduce costs in the event of an audit) is no longer applicable;
  • The ACNC also assesses reporting size thresholds based upon revenue only (without consideration of DGR status), meaning an entity that may have been classified as a “medium” sized entity under the Corporations Act 2001 (Cth) and would have hence required audit and review might instead be classified as “small” under the Australian Charities and Not-for-profits Commission Act 2012 (Cth) and therefore not required to undertake audit or review.

3) Other benefits

The ability to publicly display registration publicly and provide your details on the ACNC website, which can assist in attracting potential partners and donations for the charity.

If you are looking to register your not-for-profit entity with the ACNC and to maximise the taxation and other benefits available to your organisation, the Not-for-Profit and Charity team at Corney & Lind Lawyers can help. Our experienced lawyers can assist you in all aspects of the process – from structuring and setting up your entity through to ACNC registration and preparation of taxation concession applications. Give our team a call on (07) 3252 0011 or email us at

This article was written by Jackson Litzow 

[i] Australian Charities and Not-for-profits Commission, ‘Benefits of Registration’, Why Register (Webpage, 7 September 2022) <>.

[ii] Australian Charities and Not-for-profits Commission, ‘What is ‘public benefit’’, Public Benefit (Webpage, 3 November 2022) <

[iii] Australian Charities and Not-for-profits Commission, ‘What is a not-for-profit’, NOT-FOR-PROFIT (Webpage, 7 September 2022)

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Optus…. Medibank… Canva… Latitude….what do all of these companies all have in common?

Over the last 3 or 4 years, each of the above companies have seen their customers’ private information become compromised after monumental data security breaches. Whilst some of these breaches have been more high-profile or have received more media attention than some of the others, what remains indisputable is the loss of trust from each of their respective consumer bases following their private information falling into the hands of unknown hackers with indiscernible (and potentially malicious) intentions.

How is this relevant for my church or small business?

These data breaches now spark some important questions:

What does this mean for churches and businesses? 

What about smaller entities (and even basic religious charities)?  

The members of your church congregation may want to ensure that their private and sensitive information is safe in the hands of these aforementioned companies, but they will also want to ensure that these details are also safe in the hands of their own church!  This is particularly the case when being on a church database has implications for the categorisation of religious affiliation.

The Federal Government’s agreement in principle to the proposals of the Attorney General’s Privacy Act Review Report have reinforced a need for small businesses and religious institutions to consider the effectiveness of their current systems (or lack thereof) in collecting and protecting the personal and sensitive information they hold, use and/or disclose. In addition to future-proofing your church or business from everchanging privacy laws, designing your operational systems with privacy in mind provides greater confidence to congregants and customers that their private information is secure and reinforces your commitment to serving their best interests.

What is “Privacy by Design”?

The Office of the Australian Information Commissioner provides useful guidance on Privacy by Design. Privacy by Design is the process of “embedding good privacy practices into the design specifications of technologies, business practices and physical infrastructures.[i] An example of Privacy by Design in action might be completing privacy impact assessments when seeking to collect private information to assist in designing a church or small business’ privacy collection processes.

The importance of Privacy by Design is highlighted by The Australian Privacy Foundation, who reiterates a concept which may be self-obvious based upon the widespread responses to the recent corporate data breaches: “Australians value privacy. They expect that their rights to privacy be recognised and protected.”[ii]

Considering that personal information includes anything that identifies a person – including sounds, images, data and fingerprints (to name but a few methods) – there are numerous ways in an ever-increasing technological age in which privacy expectations might be abused and in which people might feel violated by how their personal information is treated. This remains a truism, even if the privacy law reforms struggle to be, or are never, fully implemented.

Potential Upcoming Reforms: The Privacy Act Review Report and Proposed Reform of the Privacy Act 1988 (Cth)

In 2019, the Department of the Attorney General commenced a review into the Privacy Act 1988 (Cth) – the predominant piece of legislation governing privacy protection obligations of Australian businesses and not-for-profit entities – to ensure the Act’s provisions and protections remained fit for purpose.

The review culminated in the release of the Privacy Act Review Report 2022 (the “Privacy Report”), in which a number of recommendations were put forth to amend the Privacy Act – the aim being to increase the Act’s regulatory effectiveness and to bring the Act more closely into line with the expectations of the community.[iii]

Are small churches and small businesses exempt from the Privacy Act?

Normally, small businesses are exempt from the obligations imposed by the Privacy Act by virtue of the “Small Business Exemption”.[iv] This is because the Privacy Act does not currently apply to persons or entities who are “small business operators” (i.e. persons or entities that carry on exclusively one or more “small business[es]”). Where a business has an annual turnover of less than $3 million and does not fall within a specific exception under the Privacy Act, that business will likely be a “small business” and exempt from Privacy Act obligations (although, if you operate a business that is not a small business and also operate a small business then this exemption may not apply).

However, the Government has recently “agree[d] in-principle” with the Privacy Report’s recommendation to remove the Small Business Exemption.[v] This proposal, if actioned, would mean that small business operators would have duties under the Privacy Act governing how they use, protect and secure the personal and sensitive information with which they come into contact. Such changes would be particularly relevant to small religious organisations, as the information that these entities often hold about the “religious beliefs or affiliations” of persons is likely to be “sensitive information” to which the Act attaches significant privacy obligations.

The Government has outlined that prior to any legislative reform there will likely be a further period of consultation with small businesses to examine the impacts of any proposed removal of the exemption. Whilst there is no draft legislation yet proposed which scopes the extent of any changes to the Privacy Act, nor has there been an indication of when we are likely to see any such legislation, the Government’s initial responses mark the commencement of a valuable opportunity for small businesses to start considering whether their privacy policies and data protection mechanisms are up to standard.

A Cyber Expert’s Opinion

To assist small businesses in the consideration of their data privacy and information security procedures, we asked Brett Randall, founder of technology consultancy group Fractl with over 20 years’ experience in technology management, for his insights into some common questions small businesses and churches might have.

Q. What is a Privacy Impact Assessment, and how can it assist small organisations in upholding privacy obligations?

A. “Generally, before a new information-related project starts, such as the roll-out of a new Church Management System, a privacy impact assessment should be conducted. As the title suggests, this assesses what the impact of this system on the privacy of the individuals affected will be and determines if there are any gaps between what the law requires, and what the project or system delivers. When conducted properly, it offers a high level of assurance to organisations that they have met their privacy obligations and are effectively protecting their constituents and stakeholders. The Office of the Australian Information Commissioner outlines the ten recommended steps to undertake a PIA, which all organisations should go through ideally prior to, but even after, a new system is implemented.[vi]

Q. What is the first thing you would suggest to an organisation that has already collected personal information?

A. “Start with this very easy exercise: write down what systems you might have people’s data in, what types of information you are storing, and, for each system, who has access to it. Now, think about if there is any data you don’t actually need to keep. Note this down, and work to minimise the data you are storing, as well as who has access to it. The less you have, the less that can be lost.”

Q. Should organisations prepare and maintain a publicly accessible Privacy Policy? If so, why?

A. “Absolutely! Even for organisations exempt from the Privacy Act, their members and stakeholders engaging with them will want to know what information is kept, how/where/why it is kept, and what their avenues are if they require assistance. A privacy policy link on the bottom of your website is the standard place that people look when they want to know how you protect their information. While there are templates available, the best policy is one tailored to your actual processes, policies and systems. It’s an easy step that helps provide confidence to others.”

Q. What does “best practice” privacy look like for churches and similar religious institutions?

A. “We must remember that privacy exists as a right and a law, so that people feel, and are, safe. For churches, nonprofits and other religious institutions, a commonality within their missions is to help people live their lives to the full – safely, effectively, and with opportunities to grow. In the era we’re in, a privacy breach isn’t just an inconvenience – it can literally lead to life-threatening situations, as well as significant life-altering events such as identity theft, bankruptcy, and fraud in the name of the impacted individuals. Best practice privacy looks like a leadership who takes privacy seriously, educates themselves on it, and interweaves good privacy practices throughout their organisations.”

Q. What should an organisation do if they find out that the security or privacy of sensitive or personal information in their possession has been compromised?

A. “Most churches don’t have the capacity to keep technology and legal people on-staff for these possible events. So, look for people you trust now who you can start talking to about security and privacy, so that you can start to make some positive adjustments as well as know who to turn to if there is ever a compromise. In most breaches, technology experts are required to ascertain the extent of the breach, and legal and risk experts determine how to report it, and to whom, to minimise harm both to the individuals affected as well as to your organisation.”

If your organisation is seeking to understand its privacy requirements, or if you are looking to review your current privacy policies and systems, let the experienced team at Corney & Lind Lawyers assist you. Give us a call today on (07) 3252 0011 or send us an enquiry by filling out our online form available here.


About the Authors:

Tim Whincop, Director, Corney & Lind Lawyers

Jackson Litzow, Lawyer, Corney & Lind Lawyers

Brett Randall, Founder, Fractl


[i]Privacy By Design’ can be found here:

[ii] Australian Privacy Charter, December 1994.

[iii] The Privacy Act Review Report (2022) can be found here:

[iv] See Privacy Act 1988 (Cth) s 6D.

[v] See in particular page 6 of the Government Response: Privacy Act Review Report (2023) available here:; and Proposal 6.1 of the Privacy Act Review Report (2022).

[vi] The ten steps can be found here:

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


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[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.