A charitable services institution (CSI) is a lesser known category of deductible gift recipient (DGR) and a useful option to consider for organisations which may not quite fall within the public benevolent institution, health promotion charity, or harm prevention charity definitions.
What is a charitable services institution (CSI)?
A CSI is an organisation:
- registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC); and
- which would be a public benevolent institution, except it undertakes activities promoting the prevention or control of:
- diseases in human beings (i.e. health promotion activities); and/or
- behaviour harmful or abusive to human beings (i.e. harm prevention activities),
but neither the health promotion activities nor harm prevention activities are the organisation’s main activity.
CSIs do not fall into the DGR categories of public benevolent institution, health promotion charity or harm prevention charity. This means they undertake secondary services being either promoting the prevention or control of diseases in human beings, or promoting the prevention or control of behaviours harmful or abusive to human beings. CSIs undertake these activities, but crucially do not do so as their main activity.
While a CSI may have a main purpose of benevolent relief, due to its health promotion activities and/or harm prevention activities, it will not be eligible to be a public benevolent institution if these activities constitute a secondary purpose and are not incidental or ancillary to its main benevolent purpose.
In addition, as CSIs undertake health promotion activities and/or harm prevention activities (but not as their main activity) they are prevented from satisfying the criteria for a health promotion charity or harm prevention charity.
To gain a deeper understanding of the requirements for registration as a health promotion charity and harm prevention charity you can read our previous articles, 'Deductible Gift Recipient Series: Health Promotion Charities' and 'DGR series - Register of Harm Prevention Charities'.
Examples of eligible and ineligible CSI activities are available on the CSI webpage of the Australian Taxation Office.
How can an organisation be registered as a charitable services institution?
The vast majority of DGR categories, including CSIs, must be registered as charities with the ACNC. Unlike the application processes for public benevolent institution and health promotion charity, registration as a CSI is not a streamlined, single application process.
Instead, an organisation must apply to the ACNC for registration as a charity. Once approved, the organisation must separately apply to the ATO for registration as a CSI. This will include completing a CSI specific schedule as part of the application. As part of this application to the ATO, the organisation will need to provide details of its health promotion activities, harm prevention activities and public benevolence (as applicable).
What tax concessions are charitable services institution entitled to?
Charities registered as a CSI are generally eligible to access the following Commonwealth tax concessions:
- income tax exemption;
- goods and services tax (GST) concessions;
- fringe benefit tax (FBT) rebate (rather than the FBT exemption available to public benevolent institutions and health promotion charities); and
- DGR endorsement.
What is a registered charity?
A charity is a not-for-profit entity established and operated for a charitable purpose. The concept of “charity” or “charitable” as understood in its everyday meaning is usually different to its legal meaning. The Charities Act 2013 (Cth) codifies the definition of charity and defines a charity as an entity which:
- is not for profit;
- has all of its purposes as charitable purposes for the public benefit (or any non-charitable purposes are incidental or ancillary to, and in aid of its charitable purpose(s));
- does not have a disqualifying purpose; and
- is not an individual, political party or a government entity.
In addition to the above, to be registered as a charity, the entity must satisfy certain other requirements, including having an Australian Business Number (ABN), and not already being registered as a charity with the ACNC.
To gain a deeper understanding of charity registration requirements, you can read our article ‘What is a charity?’.
What is DGR endorsement?
Organisations (or funds) with DGR endorsement are permitted to receive gifts of money or property from donors and issue a tax deductible receipt. This means donors are able to claim a tax deduction for the amount of their donation. To be eligible for DGR endorsement, the entity’s purposes or activities must align with one of over 50 DGR categories and must meet the associated eligibility requirements.
While most categories of DGR endorsement are administered by the ATO, certain categories of DGR currently require an entity to be listed on a particular register maintained and administered by other Government departments.
To gain a deeper understanding of DGR endorsement, you can read our article ‘Could your organisation be endorsed as a deductible gift recipient?’
How can we help?
If you believe your organisation may be eligible for endorsement as a DGR under the category of CSI, or you would like assistance establishing a CSI, please get in touch with our specialist Charities + Social Sector Lawyers.