DGR/tax-exempt endorsed entities should undertake a review of founding documents

By James Patto and Joanne Dunne

A recent case has underlined the importance of a regular review of founding documents to ensure that those documents continue to meet your not-for-profit organisation’s objectives and accurately reflect the activities that the organisation is carrying out.

The Full Federal Court decision in Commissioner of Taxation v Cancer and Bowel Research Association Inc. as trustee for the Cancer and Bowel Research Trust [2013] FCAFC 140 confirmed that when the Australian Taxation Office (ATO) is considering whether to revoke an endorsement for a tax exemption, it must consider the founding documents of the entity concerned in their form at the time it is making that revocation determination.

In the case, (which was an appeal by the Commissioner from the decision in the Administrative Appeals Tribunal reported at [2013] AATA 336), the Full Federal Court confirmed that the ATO was not able to revoke the endorsement based on past events or events that were no longer subsisting. Rather, it had to first make a revocation decision considering the facts and documents in existence at the time the revocation decision was being considered…

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