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AID/WATCH INCORPORATED v COMMISSIONER OF TAXATION

Today the High Court held that an organisation invo lved in promoting and campaigning for
effective foreign aid policies through the generati on of public debate was a charitable institution for
the purpose of tax exemptions and concessions.
Aid/Watch Incorporated is an organisation concerned with promoting the effectiveness of
Australian and multinational aid provided in foreig n countries by means which include investment
programs, projects and policies. In October 2006, the Commissioner of Taxation revoked
Aid/Watch’s endorsements as a charitable institutio n for the purposes of income tax, fringe benefits
tax and GST.
In 2008, the Administrative Appeals Tribunal set as ide the Commissioner’s decision and
determined that Aid/Watch was a charitable institut ion notwithstanding that it sought to influence
government policy through its activities. The Full Court of the Federal Court allowed an appeal by
the Commissioner, holding that because Aid/Watch’s activities necessarily involved a criticism of
government activities and policies, its main purpos e was a political purpose and it could not
therefore be categorised as a charitable institutio n.

The High Court by majority allowed Aid/Watch’s appe al from the Full Court’s decision, and
restored the decision of the AAT. The Court referr ed to authorities establishing that free
communication on matters of government and politics is an indispensable incident of the system of
representative and responsible government establish ed by the Constitution. The Court stated that
the generation by lawful means of public debate con cerning the efficiency of foreign aid directed to
the relief of poverty is itself a purpose beneficia l to the community. It held that in Australia ther e is
no broad general rule excluding “political objects” from charitable purposes, and that because
Aid/Watch’s activities contribute to the public wel fare, it was entitled to be regarded as a charitable
institution.
 This statement is not intended to be a substitute f or the reasons of the High Court or to be used in
any later consideration of the Court’s reasons.

1 December 2010