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A public benevolent institution (PBI) is a particular type of charity that has additional tax benefits to those available to other charities. They are entitled to the fringe benefits tax (FBT) exemption on the first $31,177 of grossed up fringe benefits per staff member per year. Most charities are only entitled to an FBT rebate.

PBI status can also provide the organisation with the possibility of obtaining deductible gift recipient (DGR) status for the whole of the entity. This means that any donations that the public makes to the organisation are tax deductible to the donor. Until recently, the ATO was of the view that DGR status was not available if the PBI’s charitable activities related to people overseas. However, it has now changed this view and accordingly a PBI can now assist people living outside Australia.

Qualifying as a PBI

Given the tax benefits available, many charities seek PBI endorsement from the Australian Charities and Not-for-profits Commission (ACNC). To assist charities to consider whether they are actually eligible for PBI status, the ACNC has issued a draft Commissioner’s Interpretation Statement on PBIs. We have summarised the key aspects of the draft statement below. Although only in draft, the ACNC appears to be applying the principles outlined in the Statement.

Commissioner’s Interpretation Statement for PBIs (Draft)

For ACNC purposes, a PBI is a charitable institution with a main purpose of providing benevolent relief to people in need. Accordingly, a PBI must be “public”, benevolent and an institution.

Public: In considering whether an entity is “public” for the purposes of being a PBI, the class of individuals that the entity benefits must be reasonably extensive. Other factors that might be relevant include receipt of public funds, public control and accountability and connection with government.

Benevolent: A PBI must have benevolent relief as its main purpose. There are several points to consider in relation to providing benevolent relief.
bulletThe relief must be directed to people in need, not just the broader general community.
bulletThe PBI must have a main purpose of providing benevolent relief as opposed to prevention. An organisation whose main purpose is the prevention of needs arising may well be charitable but it will not be a PBI.
bulletA PBI can relieve needs other than just poverty. Accordingly the fact that an organisation charges a fee does not necessarily preclude it from being a PBI.
bulletPoverty and distress that is relieved must be of such seriousness as will arouse community compassion.
bulletA PBI must assist people. An organisation that relieves the suffering of animals is not a PBI.
bulletIf an entity has other purposes that are not benevolent, it will be ineligible to be a PBI unless those purposes are ancillary or incidental to the main benevolent purpose.
bulletAn organisation can still be a PBI where it does not itself provide relief, but does so via related or associated entities or through agents and contractors.
bulletA PBI can provide relief to people outside Australia.

Institution: A PBI must be an “institution”. A PBI can have any legal structure, as long as it has its own distinct identity. It must have concrete plans to operate in the foreseeable future.


In determining eligibility as a PBI, the ACNC will use a “substance over form” approach but will take into account a range of indicators, such as governing documents, responsible persons, policies and procedures, operational plan, annual report, financials statements or budget, relationship with other organisations, website and activities. The focus overall however, should be an organisation’s purposes rather than its activities in isolation.

The ACNC will look for clear mechanisms for delivering the benevolent relief. Where the relief is being provided wholly or partly by other entities, there should be a relationship of collaboration and a common public benevolent purpose.

Action to consider

If your charity is registered as a PBI, we recommend that you review the ACNC’s draft Statement and ensure that you are meeting the PBI requirements. We would be happy to undertake a compliance review of your organisation.

If your organisation is not currently a PBI but you believe it could qualify or you would like more information, please contact us to discuss this option with you. We have helped many organisations in the establishment of PBIs and successfully registering them with the ACNC.



Joshua Morse

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