//
[2012] WASAT 146
General information, not legal advice.
State Administrative Tribunal (WA)
2012-07-18
Ms J, Justice J
Original judgment source is linked above.
ACT : TAXATION ADMINISTRATION ACT 2003 (WA)
CITATION : CHAMBER OF COMMERCE AND INDUSTRY OF WESTERN AUSTRALIA (Inc) and COMMISSIONER OF STATE REVENUE
BETWEEN : CHAMBER OF COMMERCE AND INDUSTRY OF WESTERN AUSTRALIA (Inc)
Revenue Payroll tax Charitable organisation Whether entitled to exemption Chamber of Commerce and Industry Purpose of promotion of trade and industry generally Whether for the benefit of public
Payroll Tax Assessment Act 2002 (WA), s 40, s 40(2)(c), s 40(2)(m), s 40(2)(n), s 41, s 41(1)(a), s 41(2), s 41(2)(m)
Taxation and Administration Act 2003 (WA), s 54, Pt 4
A & S Ruffy Pty Ltd v Federal Commissioner of Taxation [1958] HCA 18; (1958) 98 CLR 637.
Aid/Watch Inc v Commissioner of Taxation [2010] HCA 42; (2010) 241 CLR 539.
Brookton Cooperative Society Ltd v Federal Commissioner of Taxation [1981] HCA 28; (1981) 147 CLR 441.
Canterbury Development Corporation v Charities Commission [2010] NZHC 331; [2010] 2 NZLR 707.
Central Bayside General Practice Association Ltd v Commissioner of State Revenue [2006] HCA 43; (2006) 228 CLR 168.
Commissioner of Income Tax v Federation of Indian Chambers of Commerce & Industries (1981) AIR 1408; 1987 SCR(3)489.
Commissioner of Income Tax v Indian Chambers of Commerce (1965) AIR 1281; 1965 SCR(1)565.
Commissioner of Inland Revenue v White and Others (1980) 55 TC 651.
Commissioner of Taxation (Cth) v Word Investments Ltd [2008] HCA 55; (2008) 236 CLR 204.
Commissioner of Taxation v Co-operative Bulk Handling Ltd [2010] FCAFC 155; (2010) 189 FCR 322.
Commissioner of Taxation v Triton Foundation [2005] FCA 1319; (2005) 147 FCR 362.
Commissioners for Special Purposes of Income Tax v Pemsel [1891] UKHL 1; [1891] AC 531.
Cronulla Sutherland Leagues Club Ltd v Commissioner of Taxation (1990) 23 FCR 82.
Crystal Palace Trustees v Minister of Town and Country Planning [1950] 2 All ER 857.
Federal Commissioner of Taxation v Word Investments Ltd [2007] FCAFC 171; (2007) 164 FCR 194.
Incorporated Council of Law Reporting of Queensland v Federal Commissioner of Taxation [1971] HCA 44; (1971) 125 CLR 659.
Indian Chamber of Commerce v CIT (1976) AIR 348; 1976 SCR(1)830.
Inland Revenue Commissioners v Oldham Training and Enterprise Council (1996) TC 231.
Inland Revenue Commissioners v Yorkshire Agricultural Society [1928] 1 KB 611.
Navy Health Ltd v Deputy Commissioner of Taxation [2007] FCA 931; (2007) 163 FCR 1.
Pleasants v AttorneyGeneral (1923) 39 TLR 675.
Re Queenstown Lakes Community Housing Trust [2011] NZHC 617; [2011] 3 NZLR 502.
Royal Agricultural Society of England v Wilson (1924) 9 TC 62.
Stratton v Simpson [1970] HCA 45; (1970) 125 CLR 138.
Tasmanian Electronic Commerce Centre Pty Ltd v Commissioner of Taxation [2005] FCA 439; (2005) 142 FCR 371.
Victorian Women Lawyers' Association Inc v Federal Commissioner of Taxation [2008] FCA 983; (2008) 170 FCR 318.
Williams' Trustees v Inland Revenue Commissioners [1947] UKHL 1; [1947] AC 447.
1 The Chamber of Commerce and Industry of Western Australia sought exemption from the payment of payroll tax on the basis that it came within the definition of a charitable body or organisation for the purposes of the Payroll Tax Assessment Act 2002 (WA). The Commissioner of State Revenue rejected the application for exemption, arguing that the main (or at least equally important) purpose for which the Chamber carried on its operations was to provide services to its members rather than any purpose which was directed to the benefit of the public generally.
2 The Tribunal examined the constitution of the Chamber, and the activities which it carried on. Having regard to the general law definition of charitable purpose, and taking an holistic view of the Constitution and activities of the organisation, the Tribunal concluded that the Chamber was carried on mainly for a purpose beneficial to the community in the sense included with one of the classifications of charitable purposes, and accordingly was entitled to exemption.
3 In October 2009, the Chamber of Commerce and Industry of Western Australia (Inc) (CCI), applied for an exemption from payroll tax for wages paid on the basis that it came within s 40(2)(c) of the Pay-roll Tax Assessment Act 2002 (WA) (PTA Act) in that it was an exempt public benevolent institution and the wages paid were paid for doing work of a public benevolent nature. In the alternative, CCI sought an exemption from the Commissioner of State Taxation under s 41 of the PTA Act on the basis that it is a charitable body or organisation.
4 By letter dated 10 June 2010, the Commissioner rejected the application for exemption on the basis that CCI was neither a public benevolent institution, nor a charitable organisation. CCI lodged a formal written objection to that decision under Pt 4 of the Taxation and Administration Act 2003 (WA) (TA Act) and also requested the Commissioner, pursuant to s 54 of the TA Act, to refund any payroll tax paid by CCI in the previous five years from the date of its application which was 9 October 2009.
5 Exactly one year later, the Commissioner disallowed the objection.
6 The CCI then sought a review by the Tribunal of the Commissioner's decision that it was not a charitable organisation. It did not seek a review of the Commissioner's conclusion that it was not a public benevolent institution.
7 The primary issue for determination is whether CCI is a 'charitable body or organisation' for the purposes of s 41 of the PTA Act.
8 It is common ground that, if it is a charitable body or organisation, CCI would be entitled to a notice given by the Commissioner under s 41(2) of the PTA Act exempting it from liability to pay payroll tax. The consequence of such a notice is that the exemption applies to wages paid or payable by CCI 'for doing work of the kind ordinarily performed in connection with a charitable purpose for which the body or organisation is established or carried on' s 40(2)(n) of the PTA Act. Accordingly, if the applicant is a charitable body or organisation, an issue arises as to whether wages to all employees of CCI are exempt, as the applicant contends, or whether only the wages of some employees, and if so which, are performed in connection with the charitable purpose, and thus attract the exemption.
9 A third question which arises if CCI is found to be a charitable body is whether the exemption should be granted in relation to the period of five years prior to the application or whether it should be limited to the year of the application.
charitable body or organisation means a body or organisation established or carried on for charitable purposes except -
(a) a body or organisation whose sole or principal purpose is the provision of tertiary education; or
(b) a college or other vocational education and training institution under the Vocational Education and Training Act 1996[.]
11 It is common ground between the parties that neither of the exceptions to that definition applies to CCI. The question is thus, whether CCI is 'established or carried on for charitable purposes'. To answer that question, resort must be had to the general law as it has developed in Australia from time to time - see Aid/Watch Inc v Commissioner of Taxation [2010] HCA 42; (2010) 241 CLR 539 (Aid/Watch) at [23] - [24]. The majority in Aid/Watch described the speech of Lord Macnaghten in Commissioners for Special Purposes of Income Tax v Pemsel [1891] UKHL 1; [1891] AC 531 (Pemsel) as 'the source of the modern classification of charitable trusts in four principal divisions, namely, trusts for the relief of poverty, for the advancement of education, for the advancement of religion and for other purposes beneficial to the community'. Their Honours observed that the case law may be expected to continue to develop to respond to changed circumstances see [18]. They also made it clear (at [48]) that there is no general doctrine in Australian law that excludes 'political objects' from charitable purposes.
12 It is the fourth division, namely, 'other purposes beneficial to the community' into which CCI submits it should be included.
13 The parties in these proceedings accepted that the word 'charitable' is to be given its technical legal meaning. In Central Bayside General Practice Association Ltd v Commissioner of State Revenue [2006] HCA 43; (2006) 228 CLR 168 at [18], Gleeson CJ, Heydon and Crennan JJ accepted that, in the absence of a contrary intention in a statute under consideration the word 'charitable' should be given its technical legal meaning, 'that is, as defined by Lord Macnaghten in Commissioners for Special Purposes of the Income Tax v Pemsel ... by reference to the spirit and intendment of the preamble of the Statute of Charitable Uses Act 1601'.
14 The preamble to the Charitable Uses Act 1601 (Imp) reads as follows:
[1] The relief of aged, impotent or poor people.
[2] The maintenance of sick and maimed soldiers and mariners.
[3] The maintenance of schools of learning, free schools and scholars in universities.
[4] The repair of bridges, ports, havens, causeways, churches, sea banks and highways.
[5] The education and preferment of orphans.
[6] The relief, stock or maintenance of houses or correction.
[7] Marriages of poor maids.
[8] The supportation aid and help for young tradesmen, handycraftsmen and persons decayed.
[9] The relief of redemption of prisoners or captives.
[10] The aid and ease of any poor inhabitants concerning payment of fifteens, setting out soldiers, and other taxes.
15 The relationship of the preamble to the four divisions of charitable purposes was explained by Barwick CJ in Incorporated Council of Law Reporting of Queensland v Federal Commissioner of Taxation [1971] HCA 44; (1971) 125 CLR 659 (Incorporated Council of Law Reporting) at [667] when he said:
The instances given in that preamble are not exhaustive. Charity is not limited to activities eiusdem generis with those instances, if indeed a genus is really to be found in them. But the preamble does give an indication and, it would seem, a definitive indication, of what will be charitable, whether in point of trust or of purpose. Lord Macnaghten in Pemsel's Case (1) extracted from this indication four heads or categories of charity of which the first three heads or categories are capable of more certain application than the last category, which is the one with which the Court must be concerned in this case.
16 Incorporated Council of Law Reporting concerned an organisation whose substantial purpose was the production of law reports. Having concluded that the production of law reports is beneficial to the community, Barwick CJ continued (at 669):
Yet it must be considered whether that benefit is charitable in the Elizabethan sense. Out of certain of the instances given in the preamble to the Act of 1601[,] a broad concept emerges of the kind of object of public utility which will satisfy the quality of charity. Any notion that that concept is of an eleemosynary nature is seen to be untenable by some of those very instances themselves, e.g. the repair of bridges, havens, causeways, seabanks and highways and the setting out of soldiers. Further, these instances seem to regard the provision of some of the indispensables of a settled community as charitable. The ability to move from place to place and to do so without let of rivers and streams, protection of the land from the ravage of the sea, security against enemies, are fundamentals of the society seen to be within the concept of charitable public benefit as much as assistance to the needy and as education of the generations. ...
17 In determining whether a body is 'established or carried on for charitable purposes' it is necessary to look not only to circumstances existing at the time of incorporation, but also at the activities of the body at the time when its charitable status is to be determined Brookton Cooperative Society Ltd v Federal Commissioner of Taxation [1981] HCA 28; (1981) 147 CLR 441 (Brookton Cooperative Society per Mason J at 450 451. Mason J remarked that the assessment of the activities of the company at the relevant time is required because 'the purpose for which a company is established may change in the course of time and ... with the change of purpose there may come a change in status ...'. He also noted that the Court in A & S Ruffy Pty Ltd v Federal Commissioner of Taxation [1958] HCA 18; (1958) 98 CLR 637 explicitly rejected the suggestion that the objects of a business were to be gathered solely from the objects clause in the memorandum.
18 Observations to the same effect were made by Lockhart J in Cronulla Sutherland Leagues Club Ltd v Commissioner of Taxation (1990) 23 FCR 82 (Cronulla Sutherland Leagues) at 89 dealing with s 23(g)(iii) of the Income Tax Assessment Act 1936 (Cth) which exempted income of a notforprofit organisation which was established for a specified purpose. His Honour said:
Section 23(g)(iii) is concerned with the periodic or recurrent, not the static, with the purposes of the relevant body in the year of income. It is relevant, however, to look at the objects or purposes for which the body was incorporated including the objects clauses in the memorandum of association, also any subsequent activities of the body which may throw light on its activities in the relevant year of income. A society, association or club is not a stationary entity. It may change its activities and perhaps its purposes during its life which together make up the body itself and enable the questions posed by the subparagraph to be answered in the year of income, namely, the identification of the objects or purposes for which the body is established.
19 A body may be a charitable body if its main purpose is charitable even though it may have other purposes which are merely concomitant or incidental to that purpose Stratton v Simpson [1970] HCA 45; (1970) 125 CLR 138 at 159 160. If, however, the non-charitable purpose is not merely incidental or ancillary to the main charitable purpose, the institution will not be charitable. (see also Tasmanian Electronic Commerce Centre Pty Ltd v Commissioner of Taxation [2005] FCA 439; (2005) 142 FCR 371 (Tasmanian Electronic at 385, and Commissioner of Taxation v Triton Foundation [2005] FCA 1319; (2005) 147 FCR 362 (Triton Foundation) at 370.
20 Jessup J explained the description of ancillary objects in Navy Health Ltd v Deputy Commissioner of Taxation [2007] FCA 931; (2007) 163 FCR 1 at [65] when he said:
When the courts have described objects of an institution as ancillary, incidental or concomitant to a main object, they have not meant that the lesser object was merely a minor one in quantitative terms. Rather, they have required that object not be of substance in its own right, but only to be something which tends to assist, or which naturally goes with, the achievement of the main object. Thus in Salvation Army, it was held that trading in the inevitable produce of a training farm established for delinquent boys did not mean the lands in question were not used exclusively for charitable purposes. Thus in Yorkshire Agricultural Society the receipt of private benefits by members free admission to shows, access to reading rooms, reduced fees for analysis of manures and foodstuffs, special railway facilities, and the like were held not to disqualify the society from being regarded as charitable.
21 In Commissioner of Taxation (Cth) v Word Investments Ltd [2008] HCA 55; (2008) 236 CLR 204 (Word Investments), the High Court upheld the decision of the Full Federal Court (Federal Commissioner of Taxation v Word Investments Ltd [2007] FCAFC 171; (2007) 164 FCR 194) that a company which carried on a commercial/financial business and investment activities was a charitable organisation. The majority stated (at [26]):
The activities of Word in raising funds by commercial means are not intrinsically charitable, but they are charitable in character because they were carried out in furtherance of a charitable purpose.
22 It is thus necessary to have regard to the main or dominant purpose (or to use the expression of the trial judge in Word Investments, the 'institution's essential object') for which CCI is established and carried on. That involves an examination of its constitution, and of the activities which it carries out under that constitution.
Can the promotion of commerce be a charitable purpose?
23 The applicant described its central and dominant purpose as being 'to make it easier to do business', through pursuing a competitive and responsible free enterprise economy. Elsewhere in its submissions, CCI described its main or dominant purpose as 'the charitable purpose of promotion of industry and commerce in Western Australia and Australia'. The latter, more generic, description of purpose is probably the preferable formulation for the purpose of assessing whether the purpose is charitable.
24 The applicant drew support for its contention that a chamber of commerce should be characterised as charitable from three decisions on the Supreme Court of India - Commissioner of Income Tax v Indian Chambers of Commerce (1965) AIR 1281; 1965 SCR(1)565; Commissioner of Income Tax v Federation of Indian Chambers of Commerce & Industries (1981) AIR 1408; 1987 SCR(3)489; Indian Chamber of Commerce v CIT (1976) AIR 348; 1976 SCR(1)830. Because the relevant statutory provision under consideration in those cases defined charitable purpose to include 'the advancement of any other object of general purpose utility', and because the objects of the organisations under consideration were in each case relatively narrow, the Indian cases are not, in my opinion, particularly helpful in resolving the question before me.
25 The Commissioner's position is that the main purpose of CCI's enterprise is the provision of support and services to individual members to help them carry on, improve or build their businesses. In the alternative, the Commissioner submits that even if the main purpose of CCI is the provision of support and services to businesses generally, any flowon of benefits that may be passed to the public are 'indiscriminate and too remote to render the purpose for the public's benefit'. The Commissioner acknowledges that it has been recognised that the promotion of industry or commerce in general can be a public purpose of a charitable nature, so long as it is for the benefit of the public or a considerable section of the public and not for the purpose of furthering the interests of individuals engaged in trade, industry or commerce.
26 It was therefore not in dispute that the purpose of promotion of industry or commerce in general can be a charitable purpose. There are a number of decided cases where that has been recognised see, for example, Tasmanian Electronic at [38] (a company whose main object was to provide research and development facilities to help the Tasmanian business community to adopt electronic commerce and to compete in the international market place); Inland Revenue Commissioners v Yorkshire Agricultural Society [1928] 1 KB 611 (Yorkshire Agricultural Society) at 623, 625 (a society formed for the general improvement of agriculture found to be a charity); Re Pleasants v AttorneyGeneral (1923) 39 TLR 675 (where the 'improvement of horticulture and good housewifery' was found to be charitable); Royal Agricultural Society of England v Wilson (1924) 9 TC 62 (where it was accepted that a society whose object was the general advancement of English agriculture was a charity); Crystal Palace Trustees v Minister of Town and Country Planning [1950] 2 All ER 857 at 859 (where the statutory object of promotion of industry or commerce in general was held to be a public purpose of a charitable nature within the fourth class of charitable purposes referred to in Pemsel); Commissioner of Inland Revenue v White and Others (1980) 55 TC 651 when Fox J held that the object of preserving and improving craftsmanship was charitable, through the means requested to achieve this end included the provision to craftsmen of particular benefits; Triton Foundation where Kenny J accepted that the 'promotion of a culture of innovation and entrepreneurship' involved the promotion of an aspect of commerce and was thus capable of being a charitable object 'and indeed it is within the spirit and intendment of the preamble to the Statute of Elizabeth' - [31] - [32]
27 The Commissioner argues that Tasmanian Electronic and Triton Foundation need to be read in the context of the limited objects which each of the respective bodies pursued, and the manner in which they pursued those objects. I accept that, in characterising the purpose of an organisation, it is necessary to pay close regard to the particular objects of the organisation, and to the activities which it carries on to achieve those objects. In considering the activities of an organisation, the relevant question is as to the ultimate purpose for which the activities are pursued. The need to have regard to those matters does not, however, detract from the conclusion that Tasmanian Electronic and Triton Foundation support the proposition that the promotion of an aspect of trade and commerce, or indeed trade and commerce generally, is capable of being a charitable purpose falling within the fourth class referred to in Pemsell.
28 If, therefore, CCI is established and carries on its operations for the main or dominant purpose of promotion of industry and commerce in Western Australia, and I am satisfied that it would be a charitable organisation for the purposes of the PTA Act. If, however, it is established and carried on for the purpose of benefiting its members, it will not be a charitable organisation.
29 The fact that benefit may accrue to the members of an organisation does not necessarily mean that the organisation is not being carried on for a charitable purpose. In Commissioner of Taxation v Co-operative Bulk Handling Ltd [2010] FCAFC 155; (2010) 189 FCR 322 (Co-operative Bulk Handling) at [100], Mansfield and McKerracher JJ cited with approval the observation of Atkin LJ in Yorkshire Agricultural Society where his Lordship said at [631]:
There can be no doubt that a society formed for the purpose merely of benefiting its own members, though it may be to the public advantage that its members should be benefited by being educated or having their aesthetic tastes improved or whatever the object may be, would not be for a charitable purpose, and if it were a substantial part of the object that it should benefit its members I should think that it would not be established for a charitable purpose only. But, on the other hand, if the benefit given to its members is only given to them with a view of giving encouragement and carrying out the main purpose which is a charitable purpose, then I think the mere fact that the members are benefited in the course of promoting the charitable purpose would not prevent the society being established for charitable purposes only.
30 Lord Hanworth MR (at 622 - 623) and Lawrence LJ (at 637 - 638) made observations to the same effect.
31 The fact that an organisation derives profit from its operations does not, of itself, deprive the organisation of the status of a charitable institution Incorporated Council of Law Reporting at 669 670.
32 There are decisions in which charitable status has been declined in relation to bodies which provide private benefits notwithstanding having an express object that might broadly be considered charitable. In Inland Revenue Commissioners v Oldham Training and Enterprise Council (1996) TC 231 (Oldham TEC), a company limited by guarantee had two main objects. The first was to promote vocational education and training and retraining of the public, which was accepted as being charitable. The second was to promote industry, and enterprise for the benefit of the public in or around Oldham. An ancillary third subsidiary object was to develop, secure and provide training and other support services and advice to or for new and small local businesses. The company provided certain enterprise services such as information and advice to business, and a business startup service which provided training and a cash allowance for people starting new businesses who satisfied four criteria. Lightman J concluded that the existence of these objects, in so far as they conferred freedom to provide private benefits, regardless of the motive for the likely beneficial consequences for employment, must disqualify the company from having charitable status. The benefits to the community conferred by the company's activities were considered too remote.
33 A similar conclusion was reached in Canterbury Development Corporation v Charities Commission [2010] NZHC 331; [2010] 2 NZLR 707 (Canterbury Development Corporation). That case concerned whether Canterbury Development Corporation (CDC) was a charitable entity for the purposes of the Charities Act 2005 (NZ). The case must, of course, be read in the context of the statutory definitions which applied. Relevantly, however, the question arose as to whether CDC was established and maintained for charitable purposes. CDC provided assistance to businesses which satisfied certain criteria. Assistance was provided in the form of startup money and advice and support. Charitable status was denied on the basis that the pursuit of CDC's objects was focused on the development of individual businesses, rather than public benefit of the type recognised in Triton Foundation and Tasmanian Electronic. Relying on Oldham TEC, Ronald Young J concluded that any public benefit from CDC's purpose and operation was too remote to establish CDC as a charity. Rather, he concluded, its primary purpose was the assistance of individual businesses.
34 A third case where a similar conclusion was reached is Re Queenstown Lakes Community Housing Trust [2011] NZHC 617; [2011] 3 NZLR 502 (Queenstown Lakes) where a trust had been established to promote or provide housing to households that contributed, or would contribute, to the social, economic, and environmental wellbeing of those living in the Queenstown area. To be eligible to participate in the trust's shared ownership program, applicants were required to meet five specified criteria. Mackenzie J referred to the decision of Ronald Young J in Canterbury Development Corporation, and then contrasted that decision with the Australian decisions in Tasmanian Electronic and Triton Foundation. At [67] [68] he said:
[67] In both of these cases the proposition that assistance to business and industry can provide a public benefit which the law recognises as charitable was accepted. That proposition is clearly correct. The leading authorities are Inland Revenue Commissioners v Yorkshire Agriculture Society and Crystal Palace Trustees v Minister of Town and Country Planning. However, it is not the case that every assistance to business and industry which does provide a public benefit will be charitable. The question is whether the particular form in which that assistance is provided falls within the fourth head of charity. The fact that the assistance is provided by means of assistance to individual businesses may preclude a finding of charity. Thus in Yorkshire Agriculture Society, a purpose of the promotion of agriculture generally as opposed to benefiting those engaged in agriculture, was held charitable. Accordingly, I do not consider that the first sentence in the citation from Tasmanian Electronic is to be taken as authority for the proposition that the fact that assistance to business and industry is provided in a way by which individual businesses benefit can never be a disqualifying factor. The way in which the assistance is provided is an essential aspect of the inquiry into whether the purpose is charitable or not. In both Triton and Tasmanian Electronic, the assistance to individual businesses was provided in the form of advice and assistance with specific aspects of the business. In Canterbury Development Corporation, the pursuit of the objects was focused on the development of individual businesses, done in the hope and belief that their economic success would be reflected in the economic well-being of the Canterbury region. That distinction between these authorities is crucial.
[68] Those three cases are concerned with the promotion of business as a potentially charitable purpose under the fourth head. The present case is not. I have however felt it appropriate to discuss those cases because they demonstrate a wider proposition which is relevant to this case. Those cases show that, in a case involving assistance to business and industry which does confer a public benefit, the existence of that public benefit will not be sufficient to render the provision of assistance generally charitable per se. It will generally not be charitable if the assistance is provided to individual businesses in such a way that the benefit to the industry is derived through the individual businesses. That principle applies more widely. Any other form of public benefit which is capable of being charitable will not generally be charitable if the public benefit is achieved by means of assistance provided to individuals.
35 In his statement of issues, facts and contentions, the Commissioner undertook a detailed analysis of organisations which might be broadly described as predecessors to CCI, going back to the early 20th century. Having regard to the observations of Mason J in Brookton Cooperative Society and Lockhart J in Cronulla Sutherland Leagues set out above, and given that CCI was formed in 1992, I do not consider that an analysis of the previously existing bodies is particularly helpful to the assessment of the purposes for which CCI was established and carries on its activities. Nor do I find it particularly helpful to rely, as the applicant suggested I should, on the contents of a book tendered by the applicant entitled 'The CCI Story'. The relevant examination is of the objects and activities of CCI in the years in respect of which exemption from payroll tax is sought.
36 The parties between them tendered bundles of documents comprising, in total, around 4,000 pages. In addition, the applicant called as a witness, Mr John Nicolaou, who was employed by CCI as the 'Member Service and Advocacy and Chief Economist'. Mr Nicolaou is also an Executive Officer of CCI's governing policy body, the General Council. As already mentioned, the applicant also tendered a book entitled 'The CCI Story' from which it invited the Tribunal to assess CCI's history and purposes.
37 CCI is a non-profit associated incorporated under the Associations Incorporation Act 1987 (WA). It was established in January 1992 through an amalgamation of the Confederation of Western Australia Industry (CWAI) and the Western Australian Chamber of Commerce and Industry (WACCI).
38 Upon its formation in 1992, CCI's objects were set out in cl 3 of its Constitution and Rules. Clause 3 at that time read:
(a) to promote Western Australian industry and the trade and commerce and economic development of Western Australia and in particular to promote the development of the agricultural, pastoral, horticultural, viticultural, manufacturing or industrial resources of Australia, particularly those of Western Australia;
(b) to provide for Western Australian industry trade and commerce the means of formulating and making known its common purposes and of action in regard to industrial, commercial, economic, fiscal, labour, social, educational, 1egal and technical matters;
(c) to promote, develop and protect the interests of all or any persons, firms, partnerships, companies, corporations, joint ventures and associations engaged in industry and commerce;
(d) to secure to the members of the Chamber all the advantages of unity of action;
(e) to form and encourage the formation of Associations of employers or persons, firms, companies and corporations within industries or groups of industries;
(f) to foster the maximum development of the free enterprise system;
(g) to promote and develop high standards in education and training in Western Australia, and for such purposes to institute lectures and classes, to hold examinations and to award scholarships and prizes;
(h) to consider, promote or oppose Commonwealth or State legislation, regulations and policies and the by-laws, regulations and policies of 1ocal governing bodies and other corporations directly or indirectly affecting commercial interests and for such purposes to take such steps or proceedings as may be expedient;
(i) to undertake by arbitration or otherwise the settlement of disputes between parties willing to refer to, and abide by, the decision of the Chamber; and
(j) to receive and decide references on matters of usage and custom dispute.
39 In 2000, there were some amendments to the applicant's objects most of which were not material for present purposes. A new object was, however, inserted as paragraph (k) which read:
(k) to provide services to persons engaged in industry, trade and commerce.
40 Clause 4, which contains CCI's powers, was also amended by replacing a power to undertake by arbitration or otherwise the settlement of disputes between members or members and other parties, a power 'to undertake by arbitration, mediation or otherwise the settlement of disputes'. An additional power was added by new paragraph (u) which read:
(u) for or without reward or consideration to provide services to persons engaged in industry, trade and commerce in Western Australia or elsewhere;
41 In 2001, cl 3 was deleted and replaced with a new objects clause which reads:
(1) To promote Western Australian and Australian industry, trade and commerce and economic development;
(2) To promote the development of the agricultural, pastoral, horticultural, viticultural, manufacturing and industrial resources of Australia;
(3) To provide for industry, trade and commerce the means of formulating and making known its common purposes and the means of action in regard to industrial, commercial, economic, fiscal, labour, social, educational, legal and technical matters;
(4) To promote, develop and protect the interests of all or any persons engaged in industry, trade and commerce;
(5) To secure to the members of the Chamber all the advantages of unity of action;
(6) To form and encourage the formation of Associations of employers or persons within industries or groups of industries;
(7) To foster the maximum development of the free enterprise system;
(8) To promote and develop high standards in education and training;
(9) To consider, promote or oppose Commonwealth or State legislation, regulations and policies and the bylaws, regulations and policies of local governing bodies and other corporations directly or indirectly affecting commercial interests;
(10) To undertake by arbitration, mediation or otherwise the settlement of disputes;
(l1) To receive and decide references on matters of usage and custom dispute; and
(12) To provide services to persons engaged in industry, trade and commerce.
42 The objects clause has remained unchanged since that time and was therefore the objects clause applicable throughout the period during which CCI seeks exemption from payroll tax. I will return to the context in which the amendment of the objects clause took place later in these reasons.
43 Any person can apply to be a member of CCI by lodging an application with the Chief Executive Officer. By cl 5.1(4), the Board may 'from time to time at its absolute discretion direct that a member, or a class of member, is entitled to the benefit of different services of the Chamber than any other member or class of member'. Membership is available in five categories, being ordinary members, associate members, honorary members, affiliated members and nonservice members. The last category was added by amendment in 2008. Nonservice members are not entitled to any of the services of the Chamber, are not entitled to be elected or appointed to the General Council, the Board or any Policy Forum and have no voting rights (cl 5.7).
44 All members, other than honorary or nonservice members, pay subscriptions to CCI each financial year. A failure to pay subscriptions can result in loss of entitlement to services of CCI, reclassification as a nonservice member, or termination of membership (cl 6.1(5)). Fees are rendered by CCI for certain services provided to members.
45 The Rules provide for the establishment of a General Council comprising 14 elected persons, up to four persons appointed from among members by the elected members of the General Council, and one Policy Forum appointed member from each Policy Forum, together with the immediate past president of CCI. The role of the General Council is set out in cl 8.1 of the Rules which reads:
It shall be the duty of the General Council to establish the public policy framework and the policy priorities of the Chamber and to coordinate the activities of the Policy Forums as far as possible to secure unanimity of purpose and action on all matters within the objects and powers of the Chamber. The General Council may subject to these Rules do all things necessary to attain the objects or exercise the powers of the Chamber subject to the powers of the Board.
46 The General Council has power to establish Policy Forums 'to consider and deal with any business of the General Council'. To be eligible for appointment as a member of a Policy Forum, a person must have a special interest or expertise in the relevant subject area of concern of the particular Policy Forum (cl 9(3)).
47 Mr Nicolaou explained that there was a restructure of Policy Forums (which are apparently more commonly referred to as Member Forums) in October 2009. That resulted in the establishment of six forums, the operations of which he described as follows:
The forum's key priorities for 2011 as stated on the CCI Website include:
The forum's key priorities for 2011 as stated on the CCI Website include:
The forum's key priorities for 2011 as stated on the CCI Website include:
The forum's key priorities for 2011 as stated on the CCI Website include:
48 Management of the affairs of CCI is the exclusive responsibility of the Board. The President of the General Council is the Chairperson of the Board, and a further six Directors are appointed from the members of the General Council from time to time (Rules cl 10).
49 It is the responsibility of the Board to approve the mission and objectives of the Chamber, an annual strategic plan, a budget and business plan at least annually, and the appointment of a Chief Executive Officer. It also has the role of overseeing the financial affairs of the organisation.
50 Mr Nicolaou stressed the importance of the advocacy and policy roles of CCI. He said that 'While CCI provides a range of services to business, its core function and reason for being has and always will be the pursuit of free enterprise. CCI does this through its policy and advocacy teams that are focused on core business issues such as industrial relations, occupational health and safety and workers compensation, economics, business policy, health and community, and education and training'.
51 Mr Nicolaou said that CCI has one of the largest policy and advocacy teams outside of Government which enables it to be responsive to issues which emerge such as Government announcements, inquiries and reviews. CCI's policy and advocacy activities are organised under one General Manager group. The advocacy team comprises 13 staff dedicated to policy and advocacy activities. Mr Nicolaou said, however, that advocacy and policy roles form a significant part of the work of a further 20 staff in various areas of CCI's operations.
52 Mr Nicolaou asserted that the individual interests of members, or even a majority of members, does not determine CCI's policy position. He agreed with the respondent's assertion in its statement of issues, facts and contentions where it was said:
The subject matter of the applicant's policy work arises from a number of sources including current member concerns, statutory review of legislation, invitations to submit views to Ministers, Government departments and Parliamentary committees, and initiatives suggested by the applicant's Board, Councils and Committees.
53 Mr Nicolaou illustrated his contention that an assessment of what is to the economic benefit of trade and commerce generally takes precedence over individual members' views by reference to CCI's position on extended trading hours. In 1998 and 1999, CCI promoted deregulation as part of a government review of retail trading hours, a position which resulted in approximately 200 retailers resigning their membership of CCI because they disagreed with the position advocated by CCI.
54 Mr Nicolaou also pointed to CCI's position as a foundation member of the Australian Chamber of Commerce and Industry (ACCI) which he described as 'Australia's peak business association' established to speak at a national and international level on behalf of State and Territory Chambers of Commerce. CCI provides financial support to ACCI.
55 He identified approximately 120 discussion papers, submissions and policy papers prepared by CCI on a wide range of issues between 2006 and 2012. He noted that CCI was particularly active in communicating on business issues through the media.
56 In addition to the various Member Forums or Policy Forums, referred to above, Mr Nicolaou explained that CCI also had a number of committees to deal with various areas of interest. His description of those committees and their roles was as follows:
57 Mr Nicolaou said that both of the predecessor organisations of CCI were largely dependent upon members' subscriptions for funding. That was the model inherited by CCI in 1992, which continued to operate in the early years of CCI's activities. Subscription paid by members entitled them to unlimited services. This resulted, Mr Nicolaou said, in limited funds being available to pursue the advocacy and policy activities which produced no revenue.
58 In 1997, CCI moved to a fee for service model that retained a membership base and annual subscriptions, but sought to impose a charge on many of its services, with the amount of the charge depending upon the form of service provided, the size of the company and membership status. The CCI Story reported that, in 1992, membership subscriptions represented about 80% of total income, but by 2001, subscriptions were down to less than 10% of total income. Most, though not all, services were available for a fee not only to CCI members, but also to nonmembers who would pay more than the discounted rate charged to CCI members.
59 The annual reports for the years ended 30 June 2005 to 2011 so far as they disclose the proportions of subscription versus service revenue were summarised by Mr Nicolaou in the following table:
60 Mr Nicolaou acknowledged in crossexamination that, in providing its services, CCI operated in a competitive market.
61 While the proportion of service revenue appears, on its face, to dwarf the subscription revenue, a very large proportion of the service revenue is derived through government funding of CCI's apprenticeship training programme through its subsidiary Apprenticeships Australia Pty Ltd. For example, of the $79,984,704.00 service revenue derived in 2011, Mr Nicolaou said that that included approximately $65 million derived through the apprenticeship scheme. That scheme involves apprentices being employed and trained by CCI but placed with external businesses. The business with whom the apprentice works then pays a fee to CCI for the apprentice's services. The wages paid by CCI (or its subsidiaries) to apprentices are exempt from payroll tax under s 40(1)(a) and s 40(2)(m) of the PTA Act.
62 CCI provides a wide range of services to its members, and to nonmembers. It conducts courses and events designed to impart business related information to participants. It provides a wide range of publications on various aspects of the Western Australian economy.
64 Mr Nicolaou said that the revenue generated from CCI's commercial activities and member subscriptions is used by CCI to fund its activities including advocacy and policy, and to further its core function of pursuing free enterprise and 'making it easier to do business'. He stressed that the principal focus of the business was the promotion of industry and commerce, and that the services provided to members, which were aligned to that principal purpose, simply provided funds which enable it to perform its advocacy and policy activities.
65 In November 2000, a document entitled 'Corporate Planning Background Paper History and Performance 1992 to 2000' was produced, apparently for CCI's internal planning purposes. The Commissioner placed considerable reliance on this document as being the foundation from which subsequent strategic plans were developed.
66 The document described CCI's role as a 'not for profit organisation, operating for and on behalf of its members, the businesses of Western Australia. Its role, reflected in its vision and mission statement, is to encourage and support business in WA and Australia'.
CCI is a responsible and professional business organisation dedicated to the establishment in Western Australia and Australia of a competitive, free enterprise economy in order to maximise the freedom and well-being of all individuals in our society.
69 The document then traces the history of the organisation from immediately before its formation through several periods up until 2000. It makes reference to planning which occurred in 1995 when a systematic review of CCI was undertaken. Two key performance indicators were adopted, being membership numbers and operating surplus.
70 In relation to the period 1996 to 1999, the document records:
Throughout the late '90s CCI made the transition away from the provision of employer-specific services subsidised by membership fees towards a fee-for-service approach. By 1999, Workplace Solutions offered a broader range of employee relations services to both members and nonmembers and CCI Legal Services was developed to service demand representation in unfair dismissal cases.
Unfair dismissal and workers' compensation continued as a focus for CCI lobbying activities. CCI's lobbying influence also extended to the national sphere during this period, both through its input as the second largest member of ACCI and in direct representations to Canberra. CCI was an active participant representing WA business on the Business Coalition for Tax Reform during 1998.
71 It is also recorded that, during that period, CCI's training and apprenticeship services developed into a key operation providing significant funding to the organisation.
72 In relation to the year 2000, the document states that 'the single greatest challenge confronting WA at this time was the need to revive the drive for essential economic reform and the implementation of national competition policy, but in its lobbying role, CCI's free enterprise philosophy and support for open and competitive markets received variable support, sometimes alienating businesses that felt they stood to benefit from a more protectionist environment. Ironically, the improved business environment, achieved in part as a result of CCI's in lobbying efforts, now impacted upon the significance of its policy work to some (particularly smaller) individual businesses, as well is their reliance upon the organisation's support services.'
73 There followed an outline of the different membership packages offered, and discussion as to the reasons for resignations from membership, and for new members joining. As to the latter, the document indicated that the main reasons for members joining was to access employee relations services, information services, and networking opportunities.
74 As to the importance of membership numbers, the document says 'as well as being a significant source of income for CCI, a large membership base also provides weight to CCI's lobbying efforts and a client base for CCI's userpay services'. It continues:
In maintaining the integrity of its policy stance, CCI must, necessarily, alienate those businesses that place their own self-interest above the interests of the broader community. Even so, support for CCI's lobbying role cannot be measured by this indicator when the benefits of successful lobbying are enjoyed by both member and non-member businesses alike.
75 The document concludes with 'key issues for consideration in the next planning phase'. Under that heading, the document says:
Between 1995 and 2000, CCI has grown in size and developed into a more commercially focused organisation. While CCI systems today broadly reflect this new focus, in some respects CCI's historical culture of a membershipbased organisation in which services to members are subsidised by membership subscriptions has hampered necessary change.
At the same time, CCI's change of focus should not undervalue the benefits to Western Australia industry from CCI's unique policy role. CCI's policy activities, based upon its core competencies, are what differentiates it from forprofit organisations providing business services.
CCI is now operating in a knowledgebased, global competitive environment. Widespread utilisations of communication technologies, an escalating rate of change, shrinking product life cycles and valueconscious customers are all features of this environment and management of less tangible assets is increasingly important to enable CCIA to:
76 CCI publishes a strategic plan, which is updated on an annual basis.
77 The strategic plan for 2004/2005 to 2009/2010 describes the vision of CCI as:
... to serve our members and the broader business community as the State's leading representative for commerce and industry, dedicated to the pursuit of a competitive and responsible free enterprise economy for the benefit of all individuals in our society ...
78 Under the heading 'Our Mission', the strategic plan provides:
(a) Providing quality, cost-effective support and services to help members and customers build their business; and
(b) Lobbying government to promote an economic and legislative environment that encourages the development of responsible free enterprise.
79 Under the heading 'Our Point of Differentiation', the plan provides:
We believe our commercial activities and our policy development and lobbying activities complement each other and we aspire to be both a market leader in the commercial services we offer and the premier lobby group for business in Western Australia.
As a key point of differentiation from profit-making organisations that provide business services, we can use our policy role to our competitive advantage.
80 Under the heading 'Our Value Proposition', the plan reads:
We aim to package our product and service offering to provide our members and other customers with a 'total solution' that meets their specific needs and helps them grow their business. How well we do this will be impacted by the quality of our relationships with members and customers and how well we understand and respond to their needs.
81 The plan identifies six key strategic matters. They are as follows:
The focus for our service activities (which includes those offered on a user-pays basis and those offered as part of a membership package) will be on:
The aim of rearranging our business activities into 3 divisions is to enable better support for our broad strategic direction:
are represented by three overlapping circles that signify the interdependencies between different areas.
Our focus will be on a more integrated approach with:
We accept the need for a degree of cross-subsidisation of our activities.
82 At page 6 of the strategic plan, the strategic priorities are identified. There is reference to 'our key business lines' including 'both policy and advisory activities offered as part of a membership package and user pays services that range from profitable activities with a dominant position in the market, through to fledgling operations whose costs outweigh the revenue they generate'. The plan also specifies key objectives of growing the membership base, the improvement of the effectiveness of the organisation's lobbying role, and developing customer focus.
83 The plan concludes with a 'Strategy Map' showing various strategies and values directed to the ultimate vision, which is expressed as 'extend our support to business'. The strategy map makes no mention of advocacy and policy activities.
84 The strategic plan endorsed by the Board in June 2007, for the period 2011/2012 contains the following statement of purpose:
The Chamber of Commerce and Industry of Western Australia exists to service our members and the broader business community as the State's leading representative for commerce and industry, dedicated to the pursuit of a competitive and responsible free enterprise economy for the benefit of all individuals in our society.
To that end, we serve the business community by:
85 The foundations which support five key strategic priorities are set out as follows:
The focus for our service activities (which includes those offered on a user-pays basis and those offered as part of a membership package) will be on:
The aim of rearranging our business activities into 6 areas of activity is to enable better support for our broad strategic direction:
Our core areas of activity are
These areas are represented by overlapping circles that signify the interdependencies between these areas.
Our focus will be on a more integrated approach with:
We accept the need for a degree of crosssubsidisation of our activities.
Our focus will be on:
86 The most recent strategic plan for CCI to 2015/16 describes the purpose of the organisation as 'to make it easier to do business'. The purpose identified for the strategies to be adopted is described as being 'to lead Western Australian business and support our members'. The benefit of achievement of those purposes is said to be leadership and support for the WA business community and members, and financial dividends for CCI. The initiatives identified are directed towards:
People: a more enabling culture for staff to make it easier for us to do business with clients;
Influence: improving our advocacy to make it easier for our clients to do business;
Profit: profitably growing those products and services that make it easier for our clients to do business[.]
87 CCI's annual reports for the relevant period were among papers tendered at the hearing.
88 The annual report of 30 June 2006 says, in relation to the 'principal activities' of CCI:
During the year the principal continuing activities of the Group consisted of providing a range of services including but not limited to Employer Relations Advice, Training, Apprentice Employment, Legal Advice, Onsite specialist IR support and Migration Services, predominately in Western Australia.
89 The principal activities were described in the same manner in the five following annual reports save that, as from the annual report for 2007/8, the reference to 'Legal Advice' was deleted.
90 As the above analysis demonstrates, CCI devotes extensive resources to the provision of services to its members and to business generally. The critical question for present purposes is not as to the nature of the activities, but rather as to the purpose of which those activities are carried on. Are the activities of CCI directed to the purpose of promotion and industry, generally in Western Australia, as the applicant contends, or rather are the activities directed to serving the private interests of members or other businesses, as the Commissioner contends?
91 Amongst the volume of material submitted to the Tribunal, there is evidence which is capable of supporting either conclusion. To ascertain the character of CCI's purpose, it is necessary for the analysis to be 'holistic' Victorian Women Lawyers' Association Inc v Federal Commissioner of Taxation [2008] FCA 983; (2008) 170 FCR 318 at 352.
92 CCI is a not for profit organisation. Thus its operations suggest no element or prospect of private profit. Its constitutional objects are couched in terms which support the applicant's contention. To the extent that there is a reference to the provision of services to persons engaged in industry, trade and commerce, the general context of cl 3 of CCI's constitution is suggestive of those services being provided as part of an overall purpose of promotion of trade commerce and economic development.
93 Mr Nicolaou was adamant in his evidence that the provision of services was merely a means to the end of pursuing and promoting free enterprise. The activities which he described, including the numerous discussion and policy papers, the activities of various committees and the advocacy and lobbying role played by CCI, are all suggestive of an organisation being carried on for a public benefit (in the sense that promotion of industry and commerce has been recognised as being directed to public benefit). The fact that the role played by CCI may be driven from a particular political or philosophical perspective does not disqualify its purpose from being characterised as charitable AID/Watch at [48].
94 This suggests that the principal purpose of CCI is a public purpose of a charitable nature within the fourth class of charitable purposes referred to in Pemsel.
95 Against those considerations, the Commissioner points to the provisions in CCI's strategic plans which are replete with references to services to members, to annual reports which identify the principal activities of CCI as providing a range of services, rather than activities directed to the promotion of trade, industry and commerce generally. As mentioned above, the Commissioner placed some emphasis on the Corporate Planning Background Paper produced in November 2000 as demonstrating either that the primary purpose of CCI was the provision of services to members for the benefit of those members, or at least that that purpose ranked equally with the advocacy and policy functions of the organisation, so that it could not be said that CCI's main, dominant or essential purpose involved a benefit to the public.
96 As Lord Simonds noted in Williams' Trustees v Inland Revenue Commissioners [1947] UKHL 1; [1947] AC 447 (at 455) 'cases in which the question of charity has come before the courts are legion and no one who is versed in them will pretend that all the decisions even of the highest authority are easy to reconcile'. The task has not become much easier with the passage of a further 65 years. Having reached the view that the promotion of trade and commerce generally is capable of being a charitable purpose, the question becomes whether the facts which emerge from the volume of this material as submitted at the hearing that the dominant or main purpose of CCI's activities is directed to a purpose of promotion of trade and commerce providing a general public benefit, or whether its activities are directed to the private benefit of its members.
97 In my view, CCI's main purpose is charitable. It is true that many of the extracts from the planning documents and annual reports are couched in terms which emphasise the importance of service provision in the operation of the organisation. Those references are, however, interlaced with references to support for trade and industry generally, the promotion of free enterprise, and lobbying on behalf of business. Taken as a whole, the materials before the Tribunal support the view that the driving force of CCI's operations is the promotion of a strong business community in Western Australia. It is apparent that access to advice, information and services to strengthen individual businesses is seen to be an integral part of a successful business community.
98 There can be no doubt that service provision to members has played a major part in the planning and activities of CCI from at least November 2000 when the Corporate Planning Background Paper was produced. In my view, however, the focus on building the membership base and achieving a strong financial position, which necessarily required the development of the service activities of the organisation, must be seen in the context of a view that strength through membership numbers and resources better enables the achievement of the primary object of the organisation, namely the promotion of trade commerce and industry and the development generally. I draw that conclusion from the statement of vision in the November 2000 background paper, statements in that paper such as 'CCI's change of focus should not undervalue the benefits to West Australian industry from CCI's unique policy role', the statement of vision in the strategic plans published since that time, and the focus on the policy role of the organisation as the key point of differentiation from other organisations which provide employment related services.
99 The Commissioner drew support from passages in Canterbury Development Corporation and Queenstown Lakes which suggested that the assistance provided to individual businesses, and the benefit derived from that assistance, did not provide a sufficiently direct public benefit to characterise the activities as charitable. In Queenstown Lakes, activities were said not to confer on the community a sufficiently tangible and clearly defined benefit. As counsel for the Commissioner noted, activities undertaken by the organisations involved in each of those cases were of a much more confined area than the broad range of activities undertaken by CCI. As a result, it is far easier to analyse the particular benefits flowing from limited activities, and in particular to assess the extent to which those activities accrue a benefit to the general public. It was the narrowness of the objectives and activities of the New Zealand organisations, directed as they were to providing private benefits (start up money and housing) to individuals who met particular criteria, which rendered the benefits to the public too remote to satisfy the definition of charitable purpose. In CCI's case there is no doubt that the organisation plays a significant role in support for the business community generally, and its constitutional objects are directed to that end. In my view, provision of services to members is ancillary to, and possibly a necessary part of, fostering trade and commerce generally for the benefit of the wider community. This case is closer to the decisions such as Tasmanian Electronic, Yorkshire Agricultural Society, Triton Foundation and Cooperative Bulk Handling than it is to the New Zealand cases relied upon by the Commissioner.
100 Having reached that conclusion, the question arises as to how much of the wages paid by CCI can be said to qualify for exemption under s 40 of the PTA Act as being 'for doing work of the kind ordinarily performed in connection with a charitable purpose for which the body or organisation is established or carried on'.
101 The Commissioner's position is that this question is not one which has been specifically addressed in the assessment of CCI's application for exemption. That is because, having concluded that CCI is not a charitable organisation, the Commissioner was not then required to, and did not, analyse what wages come within the description found in s 40(2)(n) of the PTA Act.
102 CCI contends that a finding, that the provision of services and other activities of the organisation are directed to a principal purpose which is charitable, leads inevitably to the conclusion that wages paid for doing that ancillary work are paid for work performed in connection with the charitable purpose. Accordingly, it submits that the Tribunal should conclude that all wages paid by CCI are exempt. (It is common ground that wages relating to the apprenticeship scheme are separately exempt under s 40 of the PTA Act).
103 Whilst I recognise that there is force in CCI's submission, it seems to me that the Tribunal should not embark upon a finding on this issue without the benefit of the Commissioner having specifically addressed the question and formed an opinion. The issue was only briefly touched upon in closing by each party, and there may well be aspects of the detail of wages paid which bear upon the question and which have not been properly addressed in the course of the hearing before the Tribunal. Counsel for the Commissioner indicated that the Commissioner's general practice may be that, once an organisational body is found to be established for a charitable purpose, all the wages paid are exempted accordingly. From a practical perspective, one can see the attraction of that practice. The Commissioner submitted, however, that the facts of this matter are complex and unusual, and the opportunity should be given to consider the proper application of the words 'performed in connection with a charitable purpose' to the facts of this case. I accept that submission.
104 Accordingly, there should be an order that the matter be referred back to the Commissioner to undertake assessment in accordance with the conclusions reached as to the charitable status of CCI in these reasons. The parties should have liberty to refer the matter back to the Tribunal in the event that CCI does not accept the Commissioner's determination of this question.
105 The original application made by CCI in October 2009 did not seek a refund of payroll tax paid in the years prior to the date of the application. Pursuant to s 54 of the TA Act, it was open to CCI to seek a refund of tax for the previous five years. As noted above, when CCI lodged its formal objection to the initial determination by the Commissioner, the request for a refund of payroll tax paid over the previous five years was made.
106 In these proceedings, the Commissioner argued that, as no application for refund for earlier years was made in the initial application, is not now open to the Tribunal to direct a refund for that period. I do not accept that submission. The request for a refund was squarely made in the context of the written objection proceedings. The application to the Tribunal is for a review of the decision on the objection. It would have been open to the Commissioner, had he found, when dealing with the objection, that CCI is a charitable organisation or body to have acceded to the request for a refund for previous years payments. If, as has occurred in this case, the finding as to charitable purposes has resulted from an analysis of materials demonstrating the activities and purposes of CCI over the relevant period, there is no reason to deprive CCI of the entitlement to an exemption for the whole period in respect of which the exemption sought.
(i) make a determination as to the wages paid by the applicant for doing work ordinarily performed in connection with the charitable purpose for which the applicant is established and carried on, and
(ii) give notice to the applicant pursuant to s 41(2) of the Payroll Tax Assessment Act 2002 (WA).
I certify that this and the preceding [106] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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A & S Ruffy Pty Ltd
Federal Commissioner of Taxation
(1958) 98 CLR 637
(2008) 236 CLR 204
(2005) 147 FCR 362
(1990) 23 FCR 82
(2008) 170 FCR 318
(2010) 241 CLR 539
(1981) 147 CLR 441
(2007) 164 FCR 194
(1971) 125 CLR 659
(1970) 125 CLR 138
(2006) 228 CLR 168
(2010) 189 FCR 322
(2007) 163 FCR 1
(2005) 142 FCR 371