Decision impact statement

Victorian Women Lawyers Association Inc v Commissioner of Taxation

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Court Citation(s):
[2008] FCA 983
(2008) 250 ALR 516
2008 ATC 20-035
70 ATR 138

Venue: Federal Court of Australia
Venue Reference No: VID 1369, 1370, 1371 of 2006 and VID 728, 729, 730 of 2007
Judge Name: French J.
Judgment date: 27 June 2008
Appeals on foot:
No.

Impacted Advice

Relevant Rulings/Determinations:

• TR 2005/21
• TD 93/190

Subject References:
Income Tax
Charitable institution
Association for the advancement of women in legal profession
Purposes beneficial to the public
Community services purposes
Political or lobbying purposes

Précis

The Victorian Women Lawyers' Association ("VWLA") sought income tax exemption on the basis that it was a charitable institution established for purposes beneficial to the community or alternatively as an association established for community service purposes.

Brief summary of facts

The VWLA was an incorporated not for profit association. It lodged tax returns for the 1997 to 2001 income years claiming income tax exempt status or alternatively that certain items of its income were not assessable.

Its general objects are:

(a)

to provide a common meeting ground for women lawyers;

(b)

to foster the continuing education and development of women lawyers in all matters of legal interest;

(c)

to encourage and provide for the entry of women into the legal profession and their advancement within the legal profession;

(d)

to work towards the reform of the law;

(e)

to participate as a body in matters of interest to the legal profession;

(f)

to promote the understanding and support of women's legal and human rights; and

(g)

such other objects as the Association may in General Meeting decide.

It also adopted the following purposes of the Australian Women Lawyers Association:

(a)

to achieve justice and equality for all women;

(b)

further understanding of and support for the legal rights of all women;

(c)

identify, highlight and eradicate discrimination against all women in law and in the legal system;

(d)

advance equality for women in the legal profession; and

(e)

create and enhance awareness of women's contribution to the practice and development of the law

The activities of the VWLA including seminars, social functions, publication of a quarterly magazine and production of flexible work practice guidelines, were mainly for the advancement and benefit of women lawyers. It also undertook some activities aimed at advancing women's rights generally and contributed to debate on law reform issues.

Issues decided by the court or tribunal

French J was prepared to take judicial notice of the disadvantage of women practitioners in the legal profession (paragraph 116). His Honour also accepted that the existence of sex discrimination laws in Australia is indicative of a longstanding social norm that attaches public benefit to the removal of barriers to the advancement of women in all fields of human endeavour (paragraph 122).

The Commissioner had argued that the VWLA was not a charitable institution because its purposes were not those which are 'beneficial to the community', rather its main objects were for the private advancement of women within the legal profession. However, his Honour concluded that the VWLA's primary purpose of advancing women in the legal profession in Victoria was a purpose 'beneficial to the community', particularly having regard to the social norms reflected in the sex discrimination laws (paragraphs 147 and 148).

His Honour did not consider it necessary to reach a concluded position about whether the VWLA was an association established for community service purposes (paragraphs 163 and 164).

The Incorporated Council of Law Reporting of the State of Queensland v Commissioner of Taxation (1971) 125 CLR 659

Tax Office view of Decision

The Court followed established jurisprudence regarding what constitutes a "charitable institution".

It also took judicial notice of the disadvantage of women in society and of women practitioners in the legal profession and noted the statutory indications of community recognition of gender based discrimination to conclude that an association established to remove these barriers and increase opportunities was for purposes beneficial to the public.

Having reached this conclusion it was open to the Court to make a finding of fact on the evidence that the association was established for this purpose, taking into account the VWLA's objects and activities.

The decision does not represent a real expansion of the law governing charitable institutions. In light of the findings of fact, it is not inconsistent with the Tax Office view in TR 2005/21 that member benefits will be consistent with charity where the member benefits are no more than incidental or ancillary to the purpose of benefiting the community. Nor is it inconsistent with the view in TR 2005/21 that if an institution's purpose is otherwise charitable its status is not affected by political or lobbying activities which are incidental to the charitable end. In this regard it is to be noted that while the VWLA was an advocate for change, during the income years under consideration they engaged in a range of practical activities directed at the principal purpose of removing barriers and increasing the opportunities for participation by, and advancement of, women in the legal profession in Victoria.

It is also considered appropriate to bear in mind that the question of exemption is one that calls for the application of the relevant law having regard to the objects and activities during each income year. In this case, the finding of charitable purpose is premised on the existence of the particular problem for the legal profession of the substantial under-representation of women, especially in senior positions. This may prove to be an historical phenomenon with on-going change to the profession and the composition of the judiciary. Also, if the association's priorities change, it may evolve into a different organisation in terms of its central focus and this could potentially affect the characterisation of its objects for determining eligibility for exemption. Other organisations that seek exemption on the basis of charitable objects beneficial to the community also need to be aware that changing circumstances may affect their status under the taxation law over time.

The Court found it unnecessary to provide a concluded answer to the question whether the VWLA qualified for exemption as having been established for community service purposes (not being political purposes or lobbying purposes). The comments by His Honour on this issue are clearly obiter. Nevertheless, with respect, we agree with His Honour that the provisions were intended to extend to a range of service organisations that would not qualify as charitable institutions. It is also agreed that the concepts of political purposes and lobbying purposes are not to be construed narrowly.

Administrative Treatment

The decision in this case will be considered in determining the status of other similar organisations claiming exemption as a charitable institution. However, the outcome in each case will depend on the particular facts and circumstances. Whether an organisation is to be characterised as a charitable institution on the ground that it exists for purposes beneficial to the community is to be decided based on an examination of its objects and activities.

Taxpayers who are uncertain whether their particular circumstances qualify for exemption and require greater certainty may apply for a private ruling. Taxpayers are reminded that charities must apply for exemption and be endorsed by the Commissioner in order to become exempt. To apply for endorsement you should complete and forward an Application for endorsement as a tax concession charity or income tax exempt fund. The application forms and instructions may be obtained from the website at http://www.ato.gov.au/nonprofit/ under 'Forms & instructions', 'Endorsement' or by phoning the information line on 1 300 130 248.

Implications on current Public Rulings & Determinations

It is proposed to amend TR 2005/21 to include reference to this decision.

Implications on Law Administration Practice Statements

None

Legislative References:
Income Tax Assessment Act 1936
23(e)
23(g)(v)

Income Tax Assessment Act 1997
50-1

Evidence Act 1995 (Cth)
144

Sex Discrimination Act 1984 (Cth)
3
4A(1)
14

Case References:
Barby v Perpetual Trustee Co Ltd
58 CLR 316
11 ALJ 306
[1937] HCA 64

Bowman v Secular Society Ltd
[1917] AC 406
[1915] 2 Ch 447

Central Bayside General Practice Association Ltd v Commissioner of State Revenue
2006 ATC 4610
229 ALR 1
63 ATR 220

Chesterman v Federal Commissioner of Taxation
37 CLR 317
32 ALR 9
[1926] AC 128

Gattellaro v Westpac Banking Corporation
78 ALJR 394
[2004] HCA 6
204 ALR 258

Commissioners for Special Purposes of Income Tax v Pemsel
[1891] AC 531

Commissioner of Taxation v The Triton Foundation
147 FCR 362
2005 ATC 4891
60 ATR 451

Commissioner of Taxation v Word Investments Ltd
2007 ATC 5164
164 FCR 194
[2007] FCAFC 171
243 ALR 44

Cronulla Sutherland Leagues Club Ltd v Commissioner of Taxation
90 ATC 4215
23 FCR 82
21 ATR 300

Douglas v Commissioner of Taxation
77 FCR 112
36 ATR 532
97 ATC 4722

Gattellaro v Westpac Banking Corporation
[2004] HCA 6
78 ALJR 394
204 ALR 258

Halpin v Seear
[1977] Ch Com Rep

Incorporated Council of Law Reporting of the State of Queensland v Federal Commissioner of Taxation
[1971] HCA 44
125 CLR 659
2 ATR 515
71 ATC 4206

National Council of Women of Tasmania v Federal Commissioner of Taxation
38 ATR 1174
98 ATC 2124

Navy Health Ltd v Deputy Federal Commissioner of Taxation
2007 ATC 4568
68 ATR 215

Public Trustee v Attorney-General
(1997) 42 NSWLR 600

Re Belcher
[1950] VLR 11
[1950] ALR 152
24 ALJ 124

Re Blyth
[1997] 2 Qd R 567

Re Inman
[1965] VR 238

Re Lowin
[1965] NSWR 1624

Re Weave
[1963] VR 257

Royal Australian College of Surgeons v Federal Commissioner of Taxation
[1943] HCA 34
68 CLR 436
[1943] ALR 377

Royal North Shore Hospital of Sydney v Attorney-General (NSW)
[1938] HCA 39
60 CLR 396

Scottish Burial Reform and Cremation Society Ltd v Glasgow City Corporation
[1968] AC 138
[1967] 3 All ER 215

Taylor v Taylor
[1910] HCA 4
10 CLR 218
16 ALR 129

The Incorporated Council of Law Reporting of the State of Queensland v Commissioner of Taxation
[1971] HCA 44
125 CLR 659
2 ATR 515
71 ATC 4206

Other References:
TD 93/190
Dal Pont G. 'Charity Law in Australia and New Zealand' (Oxford University Press, 2000)