Making profits for a good cause - High Court decision a relief for charities

On 3 December 2008 the High Court handed down a landmark decision for the charitable sector in Australia.

The decision in Commissioner of Taxation of the Commonwealth v Word Investments Limited finally defeats the Commissioner's long campaign to deny Word Investments income tax exemption because its activities were too much concerned with making money.

The Commissioner took that position even though Word gave nearly all its money to other charities. The decision removes a potential source of worry for those charities which run profitable operations in support of their other operations or donations to other charities.

The decision also has positive ramifications for charities that expend money on charitable activities overseas.

Author: Oliver Shtein