Royal Australasian College of Surgeons v Federal Commissioner of Taxation
68 CLR 436(Judgment by: Starke J)
Royal Australasian College of Surgeons
v Federal Commissioner of Taxation
Judges:
Latham CJ
Rich J
Starke JMcTiernan J
Williams J
Subject References:
Taxation and revenue
Income tax
Assessment
Exemptions for scientific institutions
Legislative References:
Income Tax Assessment Act 1936 No 27 - s 23(e)
Judgment date: 5 November 1943
Melbourne
Judgment by:
Starke J
SCase stated pursuant to the provisions of the Income Tax Assessment Act 1936-1941.
The Royal Australasian College of Surgeons is registered as a company pursuant to the provisions of the Companies Act 1928 of Victoria. It was assessed to income tax for the financial year 1940-1941 based on income derived during the year ended 31st January 1940. But it claimed the benefit of s. 23 of the Act, which exempts from income tax the income of a religious, scientific, charitable or public educational institution. The case states the following question:
Is the income of the appellant exempt from income tax as being the income of a scientific, charitable or public educational institution within the meaning of s. 23 (e) of the Income Tax Assessment Act 1936-1941?
Several cases were cited and a number of relevant decisions are collected in Konstam on The Law of Income Tax, 6th ed. (1933), p. 302, note j. It was rightly conceded that the College was an institution. The substantial question is whether the College is a body for the advancement of professional objects and interests or for "something higher and larger," namely, the promotion of science in the advancement of surgical knowledge and practice.
The College would not be the less a scientific institution because it does not confine its activities to abstract or speculative science but applies scientific knowledge and practice to the advancement of surgery: See Inland Revenue Commissioners v Forrest [F11] , at p. 353. It would seem that if the College be not a scientific institution then for much the same reason it would not be a charitable or a public educational institution, but it is unnecessary in the view I take of the case to resolve this question. And I rather think that the question we have to determine is one of fact (Inland Revenue Commissioners v Forrest [F12] ,; Inland Revenue Commissioners v Yorkshire Agricultural Society [F13] , at pp. 625, 634; Usher's Wiltshire Brewery Ltd v Bruce [F14] , at p. 466), but all the relevant facts are stated in the case and may perhaps be regarded as raising a mixed question of law and fact proper to be stated for the opinion of this Court pursuant to s. 198 of the Act.
The College is a limited company, but its income and property is applicable solely towards the promotion of its objects and no portion thereof is payable directly or indirectly by way of dividend, bonus or otherwise by way of profits to its members: See Companies Act 1928 (Vict.), s. 27. The objects of the College as stated in its memorandum of association are partly for the promotion of professional interests and partly for the promotion of surgical knowledge and practice. Thus, for example, object (a) is to cultivate and maintain the highest principles of surgical practice and ethics, whilst (d) is to promote research in surgery. The objects of the College are therefore of a mixed character and the memorandum does not make it clear which are its main or dominating characteristics. The activities of the College must therefore be examined.
If it be found that those activities are mainly or predominantly directed towards the promotion or advancement of scientific knowledge or, in other words, the advancement of surgical knowledge and practice, then the authorities make it clear that a finding that the College is a scientific institution is in point of law correct (Commissioners of Inland Revenue v Forrest [F15] ; Inland Revenue Commissioners v Aberdeen Medico-Chirurgical Society [F16] ; Inland Revenue Commissioners v Yorkshire Agricultural Society [F17] , at p. 631). The members of the College are called fellows. The College cannot confer degrees in surgery, nor can it admit its fellows or any other persons to practice as surgeons or as medical practitioners. Some of the fellows are foundation members, and others are admitted after examination by the College to ensure that its fellows have "sound training in the basic principles of surgery" and should be capable of performing operations competently. The fact that fellowship of the College is confined to those who have attained eminence or skill in the practice of surgery "does not militate against the object of the institution being the advancement" of surgical knowledge; "they are really the only persons possessing the knowledge and practical experience requisite for the efficient promotion of that object" (Inland Revenue Commissioners v Forrest [F18] ). But the examination of surgeons for fellowship is not by any means the sole activity of the College. They are set forth at large in the case. The College holds periodical conferences of surgeons for the discussion and study of surgical matters and the dissemination of knowledge of surgery. It publishes and distributes to its members a periodical known as the "Australian and New Zealand Journal of Surgery", containing original articles on various branches of professional knowledge, case reports and resumes of foreign professional publications, reviews of professional books and so forth. It also maintains a library in which are collected numerous works on surgery and current surgical literature for the use of its fellows. It has arranged for the collection and collation of records of clinical cases occurring in hospital and private practice. It has also arranged for the establishment of a school at the Prince Henry Hospital, Melbourne, for post-graduate surgical education, research and investigational work, but the actual commencement of this school has been postponed for the present owing to the outbreak of the war. It has accepted a bequest of some PD60,000, one-half of the income whereof is to be applied for research work, and the other half for assisting young graduates of exceptional ability and promise in post-graduate work.
The activities of the College may benefit its fellows, but the facts related speak for themselves and establish that the College is doing "something higher and larger" than the mere promotion of professional interests. It is actively engaged in the promotion and advancement of science in the advancement of surgical knowledge and practice. And that, I think, is the main and prevailing and the characteristic nature of the activities of the College. As Lord Watson observed in Inland Revenue Commissioners v Forrest [F19] , "I do not doubt that membership" of the College "is accompanied with a certain amount of prestige which may prove to be of service to the member in his professional career; but I believe that the same result would attend membership of any society which effectively promoted a branch of science intimately connected with the profession or business in which the member was engaged."
In short, in my opinion, on the facts stated in the case the Royal Australasian College of Surgeons is a scientific institution, and the question stated should be answered accordingly.