As a recap of the ACNC Charities Series so far:
- In Part 1 we discussed registration as a “charity” with the Australian Charities and Not-for-profits Commission (“ACNC”), and identified some of the taxation and other benefits of obtaining “charity” status.
- In Part 2 we explained the nature of Deductible Gift Recipients (“DGR”), why obtaining DGR status is attractive in encouraging larger and more frequent donations, and how a charity might become eligible to be endorsed as a DGR to issue tax-deductible receipts to potential donors.
- Part 3 we explored the nature and objectives of Public Benevolent Institutions, their place in the community in providing benevolent relief to people in need, and discussed how an institution might become endorsed as a PBI.
In Part 4, we will now discuss a further category of charities recognised by the ACNC: the Health Promotion Charity.
What are Health Promotion Charities?
A Health Promotion Charity (or “HPC”) is an organisation that is registered with the ACNC under the Health Promotion Charity charitable subtype (one of the fourteen different types of charities recognised by the ACNC). To be an HPC, the institution must be an “institution whose principal activity is to promote the prevention or the control of diseases in human beings.”[i]
The definition above shows that an entity seeking registration as a Health Promotion Charity:
- Must be ‘charitable’ in nature (i.e. be registered as a charity with the ACNC);
- Must be an ‘institution’;
- Must have a ‘principal purpose’;
- That principal purpose must be:
a. to promote the prevention of diseases; or
b. to promote the control of diseases;
- The institution must be targeted towards addressing a “disease”; and
- The disease(s) focussed on by the HPC must be diseases in humans.
Why Choose the HPC Structure?
Entities successfully registered as HPCs may be entitled to the following tax concessions:
- Relevant tax concessions available to all registered charities (income tax exemption; GST concessions; potential exemption on franking credits); and
- Fringe benefit tax exemptions.
Similar to Public Benevolent Institutions, Health Promotion Charities also have their own Deductible Gift Recipient (“DGR”) category. This means a registered HPC may be entitled to whole-of-entity DGR status and to provide to tax deductible receipts to its donors – which is a significant advantage in potentially encouraging larger and more frequent donations to the HPC.
Meeting the Eligibility Criteria
Institutions seeking to be registered as HPCs must meet the eligibility requirements of HPCs. These requirements are most clearly set out in the Commissioner’s Interpretation Statement: Health Promotion Charities[ii] and are discussed below.
The “charity” and “institution” aspects of this category are dealt with in our previous articles in this series.
1. Promotion of prevention or control of diseases in humans
The uniqueness of HPCs derives from its purpose of promoting the prevention or control of diseases in humans. Some notable points arising out of the Commissioner’s Interpretation Statement are outlined below:
- Definition of Disease: The ACNC interprets the definition of “disease” broadly, with reference to the Income Tax Assessment Act 1997 (Cth) and the case of Waubra Foundation and Commissioner of Australian Charities and Not-for-profits Commission.[iv] The starting point is that the definition “includes any mental or physical ailment, disorder, defect or morbid condition, whether of sudden onset or gradual development and whether of genetic or other origin”.[v] This can include mental health conditions.[vi] Furthermore, “disease” may also include conditions not yet recognised as being diseases if certain prerequisites are met.[vii]
- What is not a Disease: “Diseases” are more than just general health conditions or symptoms of disease,[viii] or injuries.[ix]
- “Promote” means “to further the growth, development or progress of; to encourage.”[x]
- “Prevention” means “to keep from occurring; to hinder.”[xi]
- “Control” means “to hold in check; to curb or restrain”.[xii]
- Diseases in humans: The disease must be diseases arising in humans (as opposed to those exclusive to animals, plant life or other living organisms).[xiii]
Importantly, it is promoting the prevention OR control of diseases in humans which must be the principal activity. This makes the permissible activities for HPC’s quite broad. Examples include:[xiv]
- raising public awareness about the symptoms of a disease
- raising public awareness about how to seek treatment for a disease
- raising public awareness about steps that can be taken to prevent a disease being contracted, such as via vaccination or good hygiene practices
- raising public awareness of the prevalence or risk of a disease
- research into prevention of disease
- research into identification and diagnosis of disease
- research into management and treatment of disease
- action to reduce the spread of disease, such as providing personal protective equipment
- diagnosing, managing and treating disease
- training carers and health professionals in methods of controlling disease
- fundraising for HPCs or other entities that promote the prevention or control of disease, or directly prevent or control disease, as their purpose
- providing support to sufferers of a disease to alleviate their distress and suffering.
2. Principal Activity
The prevention or control of diseases in humans must be the “principal activity” of the entity seeking registration as an HPC. This means ‘main’ or ‘predominate’.[xv] Paragraph 51 of the Commissioner’s Interpretation Statement is instructive:
An organisation’s principal activity does not need to take up the majority (meaning more than 50%) of its time and resources. The principal activity is the activity that takes up a greater share of the organisation’s time and money than each of its other activities. For example, an organisation could spend 40% of its time and money on one activity, 30% of its time and money on a second activity, and 30% of its time and money on a third activity. The activity that takes up 40% of the organisation’s time and money is its principal activity, even though it takes up less than 50% of its overall time and money.
This principal activity test is notably more flexible than the test applied for Public Benevolent Institutions, meaning that this category may be appropriate for charities looking to have a number of related activities which are not all strictly the prevention or control of diseases in humans but still obtain the benefits this category allows.
The ACNC will undertake a thorough assessment of the organisation’s activities to ensure that the entity has a principal activity of promoting the prevention or control of diseases in humans.
This article is general information only and is current only as at the time of publication. If you are considering or are in the process of establishing a charity and are wondering whether a Health Promotion Charity might be the right structure for you, Corney & Lind Lawyers can help. Contact our friendly team today on (07) 3252 0011 or email us at: enquiry@corneyandlind.com.au
_______________________
[i] See Australian Charities and Not-for-profits Act 2012 (Cth) s 25-5.
[ii] See a link to the Commissioner’s Interpretation Statement: Health Promotion Charities available here: https://www.acnc.gov.au/tools/guidance/commissioners-interpretation-statements/commissioners-interpretation-statement-health-promotion-charities
[iii] See ACNC Charities Part I for the requirements of “charity” status, and ACNC Charities Part III for the requirements of “institution” status.
[iv] [2017] AATA 2424. See Australian Charities and Not-for-profits Commission, ‘Commissioner’s Interpretation Statement: Health Promotion Charities’, Version 4, published 30 June 2023, at [24].
[v] Income Tax Assessment Act 1997 (Cth) s 34-20(3).
[vi] Australian Charities and Not-for-profits Commission, ‘Commissioner’s Interpretation Statement: Health Promotion Charities’, Version 4, published 30 June 2023, at [27].
[vii] Ibid, [30]-[34].
[viii] Ibid, at [28].
[ix] Ibid, at [37].
[x] Ibid, at [40].
[xi] Ibid, at [41].
[xii] Ibid, at [42].
[xiii] Ibid, at [38].
[xiv] Ibid, at [43].
[xv] Ibid, at [50].