And regular scrutiny of annual reports will also be carried out to ensure that ongoing registration – and therefore entitlement to exemption from paying tax – is valid.
Currently there are no rules in Jersey about what exactly constitutes a ‘charity’ and no checks are made about what they do or how they spend the money that they make.
They have to write to the Comptroller of Income Tax to be considered for tax relief and need to register with the Jersey Financial Services Commission.
However, Jersey’s new Charity Commissioner, John Mills, who was appointed in July following a States decision in 2014 to set up the new body, has now announced more detailed plans for a new charities test. All organisations are required to apply for registration by the end of 2018.
Organisations will have to prove that they are run for charitable purposes and do not have other non-charitable purposes, save where they are ‘purely ancillary or incidental’. They will also need to show that they provide a public benefit.
Assistant Chief Minister Paul Routier, who has political oversight of the project, said it was too early to say if there would be some organisations currently known as charities which would not pass the test and therefore not qualify for tax relief after the end of next year.
‘It is too early to say. We have no idea until the commissioner gets applications in,’ he said.
But he added that ultimately the major overhaul of the system would be good for Jersey.
‘What it will do is give the whole of the community the reassurance that the charities that are collecting money from the public are using their funds correctly for what they say they are. At the moment there is absolutely no judgment about that at all.’
Mr Mills will personally decide on every application, which will be free for organisations to make, and those who are successful will have their details uploaded onto a public website. They will also be required to submit an annual return, which again will be scrutinised to ensure registration remains justified.
A website is currently being developed and work is under way to set up a tribunal to hear appeals against the commissioner’s decisions.
Next month Mr Mills plans to publish draft guidance and rules about the test and registration process, which will be consulted upon.
He said: ‘This will address how I shall approach decision-making on applications for registration and set out the main principles and factors that will need to be brought to bear in my interpreting various provisions of the law.
‘I shall follow this up in early 2018 with further consultation on some other aspects of guidance that I am required to prepare.’