Australian Council For Overseas Aid v. F.C. of T.

Judges:
Connor ACJ

Court:
Supreme Court of the Australian Capital Territory

Judgment date: Judgment handed down 3 December 1980.

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Connor A.C.J.

This is an appeal from the Taxation Board of Review by a taxpayer, the Australian Council For Overseas Aid, against the Commissioner for Taxation who assessed the taxpayer for a total pay-roll tax of $8,456.68 in respect of the years 1973 to 1977. The only issue in the appeal is whether the appellant is a public benevolent institution within the meaning of sec. 13(b) of the Pay-roll Tax (Territories) Assessment Act 1971 as amended.

The constitution of the taxpayer contained a preamble and a list of purposes as follows:

``PREAMBLE

1. Recognising the urgent and expanding needs of peoples in many parts of the world, and particularly in emerging nations where far-reaching transformation of economic and social life is taking place, and the contribution which non-government organisations can make in sharing Australian resources for the development of these people and nations, a group of Australian non-government organisations which are concerned with international development and overseas aid, including refugee and migrant service, and related activities, have agreed, without prejudice to each organisation's own independence, to establish an association to be known as the Australian Council For Overseas Aid, hereinafter referred to as ACFOA.

PURPOSES

2. (i) To provide for consultation and

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co-operation between members concerning their work at home and abroad.

• (ii) To provide for consultation and co-operation with the Australian and State Governments and the United Nations and its specialised agencies in the field of overseas aid, both at home and abroad.
• (iii) To represent the interests of members and to make common representations on their behalf to the Australian and State Governments, other National Governments, the United Nations and its specialised agencies, and to other domestic and international organisations.
• (iv) To enter into arrangements with Governments within Australia, other National Governments and international or other agencies for the investigation or furtherance of activities within the purposes of the Council.
• (v) To bring the needs for, and the purposes and results of, overseas aid before member organisations, the Australian community and Governments.
• (vi) To prepare and disseminate information on aid activities and issues of international development, including refugee and migrant service, and related activities.
• (vii) To foster research into aid activities and issues of international development including refugee and migrant service, and related activities, and in particular the economic and social implications of various kinds of aid.
• (viii) To provide information concerning projects within the ambit of the interests of ACFOA to member organisations and other bodies.
• (ix) To develop relationships with the International Council of Voluntary Agencies and with organisations with similar aims in other countries.''

The members of the Board made a careful, detailed and comprehensive analysis of the structure and activities of the taxpayer. I agree with the statement in the reasons given by the Chairman, Mr. H.P. Stevens, that ``the facts show that the taxpayer did not (or only to a minor extent) itself relieve the poverty, etc., of any person directly''. The other two members of the Board took the same view. Mr. J.R. Harrowell put the matter thus:

``Counsel for ACFOA argued that there were four main activities of the taxpayer during the period in question: (1) co-operation and co-ordination of the member organisations; (2) liaison with government; (3) development education; (4) direct aid. The fact that ACFOA was not incorporated and it acted under a set of rules it chose to call `a constitution' is, in my opinion, not of prime importance in this reference. The Commissioner has chosen it to be liable to pay-roll tax and neither party has chosen to shift the responsibility elsewhere. I accept the position in this instance that ACFOA was a body in its own right and not just part of its members' organisations.

To return to counsel's arguments I have no difficulty in accepting that ACFOA was engaged in the activities listed under (1), (2) and (3).

In Australia we have the position where there are many charitable organisations ready to help human suffering here and overseas. With some of these bodies it is a day after day ongoing task. When a major disaster arises overseas and public financial support is wanted, I can well see that it would be foolish for, say, some twelve organisations competing for public donations. In my view the formation of ACFOA was a logical step to stop such a situation arising. By accepting that ACFOA was engaged in the activities covered by (1), (2) and (3) I believe that I am saying that the description `benevolent' in its wide meaning applies to the taxpayer. However, based on my understanding of present authorities on the interpretation of that word in the context of this country's laws relating to revenue, I must consider category (4) - direct aid. In my opinion it is under that heading where the issue must be determined.

On the accounting evidence before the Board the taxpayer made no distributions

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during the relevant years in the form of direct aid. What donations it may have received from the public were used within its own organisation.''

Counsel for the Commissioner, in the hearing before me, conceded that the members of the taxpayer were predominantly givers of aid to poor persons overseas and thus predominantly public benevolent institutions. Even in the cases where the members were not public benevolent institutions it seems that the taxpayer serviced them only in respect of their activities which were involved in aid for poor people overseas.

I agree with the findings made by the members of the Board that the educational activities of the Board that the educational activities of the taxpayer were a major part of its activities. It seems to me, however, that those educational activities were very much orientated towards making members of the Australian community aware of the need for overseas aid to poor persons and stirring the conscience of the public to the plight of those persons. In these circumstances I think that the taxpayer's educational activities were closely associated with stimulating fund raising by its members. Had such activities been carried out directly by the members themselves, rather than indirectly by the taxpayer, I think it plain that those activities would have been regarded as being carried out by the members in the course of their benevolent activities.

On the basis principally of a decision of the High Court in
Perpetual Trustee Company Limited v. F.C. of T. (1931) 45 C.L.R. 224 the Board took the view that the taxpayer was not a public benevolent institution because it did not itself directly provide funds for the relief of poverty overseas. In that case the High Court was concerned with whether the Royal Naval House, Sydney was a benevolent institution within the meaning of the Estate Duty Assessment Act 1914. There was no question but that this institution was directly supplying the services. The question in the case was whether those services were of a kind such as to qualify the taxpayer who provided them as a public benevolent institution. It was in that context that the now well known tests for what is a public benevolent institution were propounded i.e. ``an institution organised for the relief of poverty, sickness, destitution, or helplessness'' by Starke J. at p. 232 and ``I am unable to place upon the expression `public benevolent institution' in the exemption a meaning wide enough to include organisations which do not promote the relief of poverty, suffering, distress or misfortune'' - per Dixon J. at pp. 233-234.

The question in the case under appeal is rather whether an institution may be ``organised for'' the relief of poverty, in the words of Starke J., or whether it may ``promote the relief of poverty and etc.'' in the words of Dixon J., even though it does not make funds or services directly available to the objects of the benevolence.

It seems that in these days overseas aid may often involve quite intricate dealings with governments at home and abroad as well as with various semi-government and other institutions both here and overseas. Difficult matters in the area of trade and transport may crop up in the course of giving aid. It would thus be surprising if a public benevolent institution could perform its role without having to rely upon various agencies. If a public benevolent institution used an agency which was itself an independent commercial organisation conducting an independent business in which it served for reward a public benevolent institution only as it would serve any of its other customers, then plainly enough such an agency would not itself be a benevolent institution. The position here, however, is that the taxpayer has in effect been set up as a co-ordinating and educating agency by public institutions which are themselves in the main public benevolent institutions in order to perform tasks which they themselves could perform without losing their identity as such. The taxpayer is not a separate institution or organisation carrying on an independent business in the course of which it serves persons other than its members. It appears to me that the taxpayer and its members should be looked at as a whole enterprise which is predominantly benevolent and of which the taxpayer is an integral part. The fact that the taxpayer does not constitute the whole of the activity does not appear to me to be critical. In his practical arrangement and division of function it seems that nearly everything

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which the taxpayer does is done in the course of and for the furtherance of the relief of poverty even though it is done in conjunction with other institutions. I do not see anything in the Perpetual Trustee case (supra) which runs counter to the proposition that an institution may promote or be organised for the relief of poverty even though it performs only one of a number of several steps in the benevolent process, provided it is clear that the relation of that institution to the other institutions involved in the process is such as to show they have a common benevolent purpose, albeit they contribute to it in different ways.

For the reasons I have indicated I think that is the case here; and consequently I think that the taxpayer should properly be regarded as a public benevolent institution. It carries on no independent business. It serves only the members who agreed to bring it into existence. They are, as conceded by counsel for the Commissioner, in the main public benevolent institutions and in cases where they are not it is only in their benevolent aspects that the taxpayer is involved with them.

I would therefore allow the appeal. I order that the decision and order of the Taxation Board of Review No. 1 be set aside. I order that the assessment of pay-roll tax be set aside. I declare that in respect of the period from 1 July 1972 to 30 June 1977, the appellant was a public benevolent institution within the meaning of the Pay-roll Tax (Territories) Assessment Act 1971, as amended. I order that the appellant's costs of and incidental to this appeal be taxed and paid by the respondent.