As you may be aware, the legislature of Jamaica has recently passed a Charities Act. No such act existed before. The Act is intended to provide a comprehensive regime for registration, monitoring, and tax treatment of charities.
Summary of Provisions
- For an organisation to be registered under the new regime, it will need to fulfil certain requirements including, inter alia, that it must fit the definition of a “charitable organization”. In that it must be either
- a charitable trust, or
- an incorporated or unincorporated institution that (a) is established exclusively for a charitable purpose, (b) is intended to and does operate for the public benefit; and (c) no part of its net income or assets enures to the personal benefit of any governing board member or settler of the charity, or of any other private individual.
- “Charitable purpose” is defined in the form of a list of 13 purposes, when exercised for the public benefit. These include the prevention or relief of poverty; the advancement of education; the advancement of religion; the advancement of health or saving of lives; the advancement of good citizenship or community development; the advancement of the arts, culture, heritage, or science; the advancement of amateur sport; the advancement of human rights, conflict resolution, or reconciliation; and the relief of those in need because of youth, advanced age, ill-health, disability, financial hardship or other disadvantage. The Minister of Finance can add other purposes to the list that are analogous to the current listed purposes.
- “Public benefit” is defined to include benefits available to members of the public at large or to members of the public determined by reference to a specified geographic area.
- The Act establishes an Authority which will consider applications for charitable status and monitor charities and may also suspend or revoke charitable status for certain breaches. Effective December 24, 2013, the Department of Cooperatives and Friendly Societies (DCFS) was designated as this Authority.
- The Companies Office of Jamaica was designated as the Registrar of Charitable Organisations.
- Registered charities will have an explicit list of duties, including reporting obligations to the Authority and the new Registrar of Charities and a duty to keep financial and corporate records.
- Each of the governing board members (i.e. the directors or trustees and the secretary) of a charity must be a fit and proper person. This means that such persons must not have been convicted of an offence involving dishonesty or be an undischarged bankrupt, and must be, in the Authority’s assessment, a person of sound probity, able to exercise competence, diligence and sound judgment in fulfilling his or her responsibilities.
Practical Immediate Consequences.
- All charitable organisations must register under the Act. This includes charitable organisations that were previously approved for charitable status by Tax Administration Jamaica (TAJ). If an existing approved charity applies within 6 months of the Act coming into force (approximately June 24, 2014), until the application is granted or denied, it will be treated as a registered charity for the purposes of the Charities Act and the various tax acts, subject to any expiry of its previous approval. However, if the application is not made within 6 months, charitable status will be lost until the organisation successfully applies to be registered under the new Charities Act.
- Applications for registration are to be made to the DCFS and not to the TAJ as had been the case previously.
- When an application for registration is being made the directors or other governing members of the charitable entity must satisfy the DCFS that they are ‘fit and proper’ persons.
- If approval is granted, no requirement to make separate applications for tax waivers/exemptions in respect of customs duty, general consumption tax, income tax, property tax, stamp duty, and transfer tax etc. These exemptions will now be automatic.
- Approval will be for a limited period and therefore renewable periodically.
- Registered charities shall state that they are a registered charitable organisation on all notices, advertisements, letters, bills, invoices and other documents issued by the charity.
Charities will be required to periodically file corporate information and financial statements with the DCFS in order to maintain approved charitable status.