A health promotion charity (HPC) is a type of charity registered with the Australian Charities and Not-for-profits Commission (ACNC) “whose principal purpose is to promote the prevention or the control of diseases in human beings”. An HPC is also eligible for endorsement by the Australian Taxation Office (ATO) as a deductible gift recipient (DGR).
A DGR is an entity endorsed to receive tax deductible gits.
Registered charities, regardless of their subtype, must satisfy certain requirements associated with the definition of a charity. The Charities Act 2013 (Cth) (Charities Act) codifies the definition of charity, which requires an entity to be:
- a not-for-profit;
- have all of its purposes as charitable purposes for the public benefit (or any non-charitable purposes incidental or ancillary to, and in furtherance or aid of, its charitable purpose(s));
- not have a disqualifying purpose; and
- not be an individual, political party or a government entity.
To be registered as an HPC, a charity must also:
- be an institution (a body created to conduct activities which is more than a mere fund);
- promote the prevention or control of disease in human beings; and
- have the promotion of the prevention or control of disease in human beings as its principal activity.
The definition of an HPC is a narrower requirement than the charity subtype of ‘advancing health’ under section 12 of the Charities Act. Whilst all HPCs must have a charitable purpose, it may not necessarily be the purpose of advancing health, and not all health-related charities will be HPCs. For example, charities registered under the purpose of advancing education may undertake the promotion of control of disease through education as their principle activity, such as organisations which promote safe sex in order to prevent sexually transmitted diseases. Other examples of HPCs include community health care providers, medical research organisations and organisations that seek to prevent human diseases by raising public awareness of such diseases.
What is recognised as a ‘disease’?
For the purposes of registration as an HPC, ‘disease’ is defined broadly and includes both physical and mental illnesses. Disease is defined under the Income Tax Assessment Act 1997 (Cth) as including “any mental or physical ailment, disorder, defect or morbid condition, whether of sudden onset or gradual development and whether of genetic or other origin”.
An HPC’s activities must be directed towards one or more identified disease (which affects humans), rather than a general health condition or symptom (e.g. high blood glucose level). However, where a condition or symptom, if left untreated, will degenerate into an identified disease, the ACNC may recognise focus on such a condition or symptom as sufficiently preventing or controlling a disease. For example, high blood glucose levels and type 2 diabetes or the use of tobacco and the link to cancer.
Whilst the ACNC notes, where possible, an organisation should identify the disease(s) for which it is promoting prevention or control, it acknowledges the definition of HPC does not restrict the number of diseases or groups of diseases which are relevant in such promotion. That is, it is possible to promote the prevention or control of a range of diseases rather than an organisation being required to focus on a single disease or group of diseases.
While disease can include physical illnesses such as Alzheimer’s disease, asthma, cancer, diabetes, AIDS, arthritis, heart disease, kidney disease, cerebral palsy, and multiple sclerosis, it can also include mental illnesses. Mental illnesses are recognised by the Australian Institute of Health and Welfare as clinically diagnosable disorders which significantly interfere with a person’s cognitive, emotional or social abilities, and can include anxiety disorders, affective disorders, psychotic disorders and substance use disorders.
The ACNC will consider any developments in medical and health research into existing, new or emerging definitions of diseases, where there is credible or plausible evidence.
What does promotion involve?
As mentioned, HPC activities have a potentially narrower remit than charities which have the purpose of ‘advancing health’. This is because HPCs are required to promote the prevention or control of disease(s), not just general health.
In order to ‘promote’ the prevention or control of disease(s), an HPC does not need to directly engage in activities which prevent or control, nor does the organisation need to demonstrate success in the measures they have taken in order to promote the prevention or control of the relevant disease(s) . Instead, promotion of prevention or control may include:
- the taking of action to reduce the spread of disease(s);
- public awareness-raising activities;
- medical research into management, prevention, causes and/or treatment of disease(s);
- managing and treating disease(s) and activities to alleviate suffering or distress caused by disease(s);
- developing or providing aids or equipment to help people suffering from disease(s); and
- education of carers of people with disease(s).
Fundraising efforts for prevention or control activities, such as the ones listed above, are likely to be considered promotion activities. For example, fundraising organisations which raise money for cancer research. However, it will be a question of degree and purpose of the fundraising.
There must be an evidenced, rational or plausible link between the promotional activity and the prevention or control of a disease.
Activities which are unlikely to be considered to constitute the promotion of prevention or control of a disease include:
- promoting healthy lifestyles in a general sense (e.g. healthy eating and regular exercise);
- promoting a particular type of exercise for general health benefits; and
- wellbeing programs or activities.
While the activities of preventing or controlling disease must be the main focus of an HPC, these do not need to be the only activities of the organisation. Overall, the link between what the organisation does and the prevention or control of disease must be clear.
To be recognised as the principal activity of an HPC, the activity need not account for more than 50% of the charity’s activities but rather it must take up a greater share of its time and money than each of its other activities. For example the principal activity might account for 40% and three other activities account for 20% each.
Generally administration will be considered ancillary to the achievement of the organisation’s principal activity and will not be taken into account.
When determining the principal activity, the ACNC will give consideration to various sources, including but not limited to an organisation’s activity description, governing document (e.g. its constitution), annual reports, financial reports, budget, staff time allocation, and website.
What tax concessions are health promotion charities entitled to?
Charities registered as an HPC are generally eligible to access the following Commonwealth tax concessions:
- income tax exemption;
- goods and services tax (GST) concessions;
- fringe benefit tax (FBT) exemption (rather than the FBT rebate); and
- deductible gift recipient (DGR) endorsement.
What if I want to know more?
How can we help?
If you believe your organisation is eligible for registration as an HPC, or if you would like help setting up an HPC, please get in touch with our specialist Charities + Social Sector lawyers.