The fight broke out four years ago, when the Commissioner of Taxation ruled that Aid/Watch wasn’t entitled to the tax exempt status enjoyed by charities because it engaged in political activity. 

Since then a series of courts have considered the matter, culminating in a decision today by the High Court that the group’s role in generating public debate about the efficiency of foreign aid is in fact beneficial to the community. 

It’s ruled that the group, therefore, is a charity and can operate tax-free. 

Aid/Watch supporters say the court has overturned age-old principles to endorse a contemporary view of charitable work. 

Ashley Hall reports. 

ASHLEY HALL: It’s the sort of decision many lawyers dream of. 

Headline-grabbing, wide-reaching and groundbreaking.

GIRI SIVARAMAN: I think it’s fantastic. I think the vision is quite remarkable. The court’s made a wide decision – one that allows charities to speak out fearlessly to generate public debate to push government to change on issues that are relevant to the work they do.

ASHLEY HALL: Giri Sivaraman is a senior associate with the law firm, Maurice Blackburn, which represented Aid/Watch in its legal battle. 

GIRI SIVARAMAN: It overturns 90 years of Australian law. It removes a political disqualification that appeared to exist in Australian law. What it also does is, not only removing that disqualification, but swinging the pendulum quite to other end in that it recognises that engaging in public debate is a public benefit in itself. 

ASHLEY HALL: In a nutshell, the case was about whether or not Aid/Watch could claim the tax free status enjoyed by charities. 

The Tax Office argued that Aid/Watch is a political organisation, not a charity, because it’s heavily engaged in lobbying. 

But Aid/Watch insisted that because it provides a benefit to the community by generating public debate about the efficiency of foreign aid, it is a charity. 

And five of the seven judges agreed. 

GARY LEE: I think it’s a big win for freedom of speech because it recognises that charities can engage in and generate public debate and can also advocate for change on issues that are relevant to the work they do.

ASHLEY HALL: Gary Lee is the co-director of Aid/Watch. He says the group fell foul of the previous federal government about five years ago when it criticised the way Australian aid money was being spent. 

GARY LEE: A couple of the instances that were raised during that period were some of the exposes that Aid/Watch did around the aid to areas affected by the tsunami, and then action we did outside the World Bank office. And they deemed that these were political activities and then moved to disqualify our charitable status.

ASHLEY HALL: What is the charitable status worth to a group like yours?

GARY LEE: It has had a significant impact in terms of our fundraising capacity, because it has limited our capacity to receive grants from charitable foundations.

ASHLEY HALL: The court’s decision comes as a welcome relief to many other non-governmental organisations.

MARC PURCELL: Well look, I think we’re very, very surprised and actually very, very pleased at the decision. 

ASHLEY HALL: Marc Purcell is the executive director of the Australian Council for International Development, the peak body for Australian aid and development NGOs. 

MARC PURCELL: Surprised because it really was a small non-government organisation – very much an underdog – challenging the Australian Taxation Office which is not for the faint hearted.

But it’s a very significant and important and welcome decision, because it has wide ramifications in bringing taxation into the 21st century when applied to charities in Australia.

ASHLEY HALL: So will the High Court ruling open the door to a tax-free future for all sorts of politically motivated organisations? 

Giri Sivaraman thinks not.

GIRI SIVARAMAN: There are still safeguards in place in terms of whether or not an organisation’s recognised as a charity. It still has to be acting in the public benefit. So obviously what it does is for the public benefit, and probably alleviates burden on government. So I don’t think it’s going to have that kind of effect.

ASHLEY HALL: There is, of course, always a chance the Federal Government could seek to get around the court’s decision by legislating to change the definition of a charity to exclude those groups involved in political work. 

While Marc Purcell believes that’s unlikely, Aid/Watch’s Gary Lee is unsure. 

GARY LEE: We’ll just have to wait and see. That could be one response, so we are awaiting for – I suppose, to see how the Australian Tax Office and the Government will respond to this decision.

ASHLEY HALL: And he’ll have to go on waiting. 

A spokesman for the Assistant Treasurer, Bill Shorten, says ‘Treasury and the Tax Office will now consider the decision, determine its impact and provide advice accordingly.’

MARK COLVIN: Ashley Hall.