Entities that Manage and Maintain Native Title: Can They Be Exempt from Tax as Charitable Trusts?

Abstract

Section 50-5 item 1.1 of the Income Tax Assessment Act, 1997 provides that the income of charitable institutions is exempt from income tax. There is no definition of "charity" in the Income Tax Assessment Act, 1997 and the courts and the Australian Taxation Office have relied on the common law for guidance on this issue. The original conception of "charity" and "charitable" for the purposes of income tax exemption was established in 1891 by Lord Macnaghten in Commissioner for Special Purposes of Income Tax vs. Pemsel (Pemsel's case). In addition to this the English and Australian courts have considered that for a purpose to be charitable it must be founded for the benefit of the public or a significant section of the public (with the exception of charities for the relief of poverty). This article considers the application of the common law definition of charity to entities that maintain native title on behalf of Australian indigenous people. It concludes that in order to gain charitable status entities established for the benefit of indigenous people and their rights to native title must also be of benefit to the public. The current application of the law is that an organisation cannot attain charitable status if the beneficiaries are linked through a personal relationship such as family. This may have serious consequences for holders of native title who are part of the same tribal grouping.

Keywords: Native title, charity, charitable institutions, income tax