The Duties Act 2000 (the Act) provides an exemption from duty for the following transactions:
- a transfer of dutiable property to a corporation or body of persons established for a religious, charitable or educational purpose
- a declaration of trust over dutiable property to be held on trust for a corporation or body of persons established for a religious, charitable or educational purpose (s45)
- a declaration of trust over non-dutiable or unidentified property to be held on trust solely for a charitable purpose or a corporation or body of persons established for a charitable purpose (s38(3))
- an application for registration or transfer of registration of certain types of vehicles registered in the name of, or to be registered in the name of, among others, a charitable, benevolent or religious institution (s233D).
The land transfer duty exemption for friendly societies in section 45 of the Act was removed with effect from 4 December 2024.
What does charitable mean?
The term charitable is not defined in the Act. The courts have decided that, for the purposes of the Act, charitable has a technical, legal meaning. Generally, this means 2 elements must be satisfied:
- The purpose must fall within one of the following 4 heads of charity:
- relief of poverty
- advancement of education
- advancement of religion, or
- other purposes beneficial to the community.
- The purpose must be for the benefit of the public in general or an appreciable section of the public.
In determining whether an organisation satisfies these 2 elements, it is necessary to examine both its stated purposes, as set out in its constitution or memorandum of association, and its actual activities.
Exempt organisations
To qualify for charitable status, an organisation’s purposes must be predominantly charitable.
Additionally, the organisation must have been established and be maintained for that charitable purpose, without any possibility of distribution of its profit for the private benefit of its owners or members during its operation or at wind-up.
Accordingly, besides setting out its objects and activities, a charitable organisation’s constitution or memorandum of association should contain:
- a clause expressly prohibiting the distribution of any surplus funds, whether income or capital, to its members
- a wind-up clause which provides that in the event of a wind-up, surplus assets will be passed on to another charitable organisation and will not be distributed to any members of either the original or substitute charitable organisation.
