The first case, heard in the Federal Court, involved the agricultural resources promotion organisation Cooperative Bulk Handing (CBH). The Court arrived at the finding that CBH, as a society or association, was entitled to retain its exemption from income tax, despite the significant scale of its commercial operations.

The Court emphasised that conducting business in a ‘commercially efficient and profitable manner’ does not, in itself, prevent an entity from complying with its constitution stipulates is it not to distribute profits to its members.

While it was acknowledged that CBH members do benefits from the activities of CBH (in that, the surplus of the activities reduced the cost of other services the organisation provides) the members did not benefit simply because of their ‘individual’ membership.

The second case, heard in the High Court, involved the organisation AID/WATCH. The Court arrived at the finding that despite the political communication and lobbying activities of certain not-for-profits, they can nevertheless be considered charitable institutions, and therefore qualify for tax exemption.

In a five to two majority decision, the Court ruled that AID/WATCH – an organisation concerned with promoting effectiveness in foreign aid by way of political advocacy and lobbying – was a charitable institution.
The Court expressly held that there is no general doctrine which prevents charitable organisations from undertaking ‘political activity’.

The AID/WATCH decision is significant as it has overturned more than a century of case law which established that political purposes disqualify an organisation from being endorsed as charitable.