Charities for the Benefit of Employees: Why Trusts for the Benefit of Employees Fail the Public Benefit Test

UNSW Law Research 2009-45

Tax Research (eJournal), Vol. 5, No. 1, pp. 59-70, 2007

20 Pages Posted: 16 Nov 2009

Multiple version iconThere are 2 versions of this paper

Date Written: November 15, 2009

Abstract

Charities are granted significant financial benefits through the exemption from income tax and deductibility of donations under the provisions of the Income Tax Assessment Act, 1997 (Cth). The concept of what is a charity or a charitable purpose which is a fundamental requirement of the income tax exemption is not defined in any taxation legislation and must be found in the common law. The courts have concluded that a charitable purpose includes charities for the benefit and assistance of the sick. An organization that has been established for the benefit of employees and former employees who are suffering work related illnesses would therefore have a charitable purpose. There is however the further requirement that the entity’s objectives must be for the benefit of the public. This article analyses the requirement of public benefit for a charitable purpose as it relates to an entity established for the benefit of employees and former employees of a large corporation. It discusses the rationale for the public benefit requirement and how the courts have applied this criterion to trusts for the benefit of employees and former employees. In conclusion it examines alternative approaches to the current application of the public benefit test.

Keywords: taxation, public benefit test

Suggested Citation

Martin, Fiona Anne, Charities for the Benefit of Employees: Why Trusts for the Benefit of Employees Fail the Public Benefit Test (November 15, 2009). UNSW Law Research 2009-45, Tax Research (eJournal), Vol. 5, No. 1, pp. 59-70, 2007, Available at SSRN: https://ssrn.com/abstract=1506651

Fiona Anne Martin (Contact Author)

UNSW Business School ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia

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