Al-Jaafaria Society Incorporated v Chief Commissioner of State Revenue

Powers of Tribunal on review

1. Section 96 of the Taxation Administration Act 1996 (the TA Act) enables a taxpayer to apply to the Tribunal to review certain decisions of the Chief Commissioner that have been the subject of an objection.
2. On a review, the Tribunal is empowered by s 101 (1) of the TA Act to confirm, vary or reverse an administratively reviewable decision and make orders as to costs or otherwise as it thinks fit.
3. In Ferella & Anor v Chief Commissioner of State Revenue [2014] NSWCA 378, a matter involving a land tax dispute in which the Tribunal's predecessor, the Administrative Decisions Tribunal, had held "the objection decision under review is affirmed", the Court of Appeal said at [10]: The Chief Commissioner's decision that should have been the subject of the application for review by the Tribunal was the decision the subject of the objection, that is, the decision to make the assessment of land tax, not the decision on the objection (Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 at [28] and [53]). Nothing turns on this.
4. The Application requested a review of the Disallowance Decision on the basis that the Society "is an exempt charitable or benevolent body under 275 (3) (b) of the Duties Act 1997".
5. The Chief Commissioner observed at [1] in RS that the Society sought a review of the Disallowance Decision and submitted "it is the decision to refuse the exemption dated 31 March 2016, regarding the initial assessment, that the Tribunal is empowered to review". Neither ARS nor ACS specifically dealt with this submission.
6. In AS, which predates RS, the Society submitted at [2], notwithstanding the wording of the Application that the Society sought relief under s 275 (3)(b), that it sought from the Tribunal "an exemption from stamp duty in respect of the purchase of the Revesby Property under s 275(3)(a) and/or s 275(3)(b) of the Duties Act 1997".
7. Section 100 (2) of the TA Act provides "the applicant's and respondent's cases on an application for review are not limited to the grounds of the objection".
8. In the circumstances, and notwithstanding the wording of the Application, the matter is dealt with as if it were an application for a review of the 31 March 2016 decision and the Assessment.
9. In determining the Application, the Tribunal is to decide what the correct and preferable decision is, having regard to the material then before it, including any relevant factual material and any applicable written or unwritten law, s 63 ADR Act.

Brief factual background

1. The Society briefly described its history at [13] to [20]. Relevantly, the description, which the Chief Commissioner did not challenge, included: 13. The Society was established in 1991. The purpose of the Society was to cater for the social, educational and religious needs of the general community through the teachings of the Holy Quran and Ahlulbayt. …. 16. In 1994, the Society commenced a program teaching Arabic to children …. the teaching activities occurred at NSW state schools …. This program was supported by the NSW Department of Education program (either the "Community Languages Schools" or the predecessor to this program). 17. In 2000, the Society moved to a larger centre … with the intention of creating an Islamic Centre with a school to cater for the growth of the community…. 18. In 2007, the Society moved to the existing premises at …. Kogarah (the Kogarah Property)….. 19. In 2015, the Society was approached by a potential purchaser, who offered to buy the Kogarah Property …. The Executive Committee of the Society considered the proposal and ultimately made the decision to sell, on the basis that it could buy another property for a smaller amount and use some of the residual funds to develop that property to assist it with expanding its existing and proposed activities and programs. 20. On 9 November 2015, the Society entered into a contract to buy [the Property].
2. The Society provided evidence and made submissions as to its activities generally and in respect of the actual use of the Kogarah Property and the proposed use of the Property. The Chief Commissioner has challenged certain of the evidence and many of the submissions.

Legislative scheme

1. There is no dispute that Duties Act 1997 (the Act) levies duty on dutiable transactions including agreements "for the sale or transfer of dutiable property", s 8(1)(b)(i), and that the person liable to pay duty is the purchaser of the property. The Act provides exemptions from duty in specific situations.
2. The issues involved in this matter substantially relate to the interpretation of certain provisions of s 275. References to legislative provisions in these reasons refer to provisions of the Act unless stated to the contrary.
3. Both parties agree that s 275 provides a conditional exemption from the imposition of duty in respect of the purchase of property. The Society claims that the relevant conditions are satisfied in respect of its purchase of the Property and the Chief Commissioner claims that the conditions have not been satisfied.
4. Section 275 relevantly states: 275 Charitable and benevolent bodies (1) Duty under this Act is not chargeable on the following: (a) a transfer, or an agreement for the sale or transfer, of dutiable property to an exempt charitable or benevolent body, ….
5. Section 275 (3)(a) and (b) each define "an exempt charitable and benevolent body". If the Society satisfies the requirements of either definition, its purchase of the Property will be exempt from duty. The parties have described the requirements of 275(3)(a) as the "resources test" and of 275(3)(b) as the "transaction test".

Onus of proof

1. The Society bears the onus of proving its case in a review by the Tribunal, s. 100 of the TA Act. The requisite standard of proof in such a review is the "balance of probabilities" Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [31] and B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187, (2008) 74 NSWLR 481 at [104].

Satisfaction of s 275 conditions

1. The Society submitted at [10] that it "will be entitled to an exemption from duty in the following circumstances" (1) The Society is a body corporate, society, institution or other organisation. This is a requirement under both tests. This is not considered to be contentious. (2) The resources test in s 275(3)(a) is satisfied. This will be the case where the Society's resources are used wholly or predominantly for the promotion of education and/or the relief of poverty in Australia. "Education" is a broad concept and includes education about religion. (3) The transaction test in s 275(3)(b) is satisfied. This will be the case where the Society is a charitable or benevolent institution and the Revesby Property was purchased for purposes approved by the Commissioner, as set out in DUT 034.
2. The Chief Commissioner administers the Act and other legislation of a revenue nature. Revenue rulings are issued by the Chief Commissioner to assist understanding of the legislation he administers.
3. DUT 034 is a revenue ruling issued by the Chief Commissioner. The ruling is named Exemption from Duty - Charitable and benevolent bodies. The ruling states at [3] that it "gives general examples as to what societies or institutions might be considered to be of a charitable or benevolent nature, together with information as to what evidence is required when applying for exemption."
4. Revenue rulings, including DUT 034, represent the opinion of the Chief Commissioner and are not binding on the Tribunal.

Exemption based on receiving a previous s 275 exemption in respect of its purchase of the Kogarah property

1. The Society submitted at [24] "When the Society purchased the Kogarah Property in 2007, it applied for and was granted an exemption from stamp duty by the Commissioner under s 275 (3) (b), and observed at [27] that this prior exemption was one of the grounds of its objection.
2. The Society submitted that since purchasing the Kogarah property the Society had not changed its purposes, rather it had expanded the programs that it offered youth.
3. At [11] the Chief Commissioner noted that the Disallowance Decision had stated: It is not necessary for the Chief Commissioner to allow the exemption in relation to purchase of [the Property] only because an exemption was previously granted to the organisation under Section 275(3)(b) of the Act on purchase of the Kogarah property.
4. The Society provided no legislative or case law authority for the proposition that merely because some years earlier an exemption from duty had been granted under s 275, it was appropriate for the same exemption to be granted in respect of the purchase of another property.
5. I am aware of no legislative or case law support for the proposition raised by the Society. The Society has the obligation to prove its case. It has not done so and I reject the Society's submission.

Section 275 (3)(a) - the "resources test"

1. Section 275(3)(a) relevantly provides: (3) In this section: exempt charitable or benevolent body means: (a) anybody corporate, society, institution or other organisation for the time being approved by the Chief Commissioner for the purposes of this paragraph whose resources are, in accordance with its rules or objects, used wholly or predominantly for: (i) the relief of poverty in Australia, or (ii) the promotion of education in Australia, …
2. The Chief Commissioner conceded at [23(a)] that the Society was a "body corporate, society, institution or other organisation".
3. The issue in relation to the resources test is whether the Society's resources are, in accordance with its rules or objects, used wholly or predominantly for the relief of poverty in Australia and / or the promotion of education in Australia.

What are the relevant rules or objects of the Society?

1. The Society submitted at [25] that when it applied for an exemption from stamp duty under s 275(3)(a) the basis for the application "was that the primary objects of the Society were the advancement of education and relief of poverty."

The rules and objects of the Society

1. At [25(3)] the Society stated in its application for an exemption from duty under s 275(3)(a) that the proposed use of the Property included "collection and distribution of clothing and poverty relief items".
2. At [57] the Society submitted that its constitution, which was adopted in 2001, included as its third object: To spare no efforts to assist in the relief of poverty and helplessness of distress, by collecting and distributing food, clothing and/or by giving shelter to the destitute and/or by contributing funds to other organizations, recognized by charitable (sic) in Australia.
3. At [59] the Society submitted that the resources test is forward looking and "it is necessary to consider not just how resources are currently being used, but also how they are proposed to be used in the future. The Society's resources are currently and are intended to be used predominantly for these objects [promotion of education and relief of poverty in Australia].
4. The Society also submitted: Relief of poverty 68. The Society's resources are currently and are proposed to be used for activities which have a purpose of relieving poverty, for the purposes of s 275(3)(a). For example, in the past the Society has organised a collection for sleeping bags for needy pilgrims and for the needy in Iraq. The Society will also use the Revesby Property as a central point for collections/donations for the relief of poverty. Operating model supports promotion of education and relief of poverty, as primary objects 71. Prior to the purchase of the Revesby Property, the Society adopted a new Operating Model. The background to the Operating Model is discussed in the witness statement of Mohamed Farhat made on 8 May 2017 (Farhat Witness Statement), specifically at [7] to [25]. 72. The Operating Model is intended to provide a framework for the Society's activities and support its primary mission as the promotion of education and the relief of poverty.
5. The Chief Commissioner submitted at [24] and [25]: …. it has been observed that the applicant is required to prove: (a) that the organisation's rules or objects "include" the relief of poverty or promotion of education in Australia; and (b) secondly, that the organisation's resources are used wholly or predominantly for the relief of poverty or the promotion of education in Australia. Rules or objects of the organisation 25. As to the first element, the Chief Commissioner submits (contrary to [37] of the Applicant's Submissions (AS)) that it is necessary, but not sufficient, to prove that the rules or objects "include" the relevant purposes. Section 275(3)(a) requires that the organisation's resources be used wholly or predominantly for the promotion of education or relief of poverty "in accordance with its rules or objects". This means that the objects not only must "include" the relevant purpose; the relevant purpose must be predominant among those objects.
6. The Society's Constitution is in evidence at Annexure B to MM-1.
7. Clause 2 of the Constitution states: Introduction: This society is committed to simulate (sic) welfare and functions according and in line with the holy Quran and AlJaafari decrees, and all objects stated below are restricted to the adherence to this commitment.
8. The objects are found at clause 3. There are 34 specific objects. Certain objects appear to focus on the relief of poverty. These objects comprise: 1. Object c. This is at [40] above. 2. Object w. which provides assistance "to widows and orphans who have no source of income abroad". 3. Object x. arranges "proper distribution for needy people abroad". 4. Object aa. provides "education for orphans abroad". 5. Object bb. provides "medical care for the ill or handicapped in remote areas and where no medical facilities are available abroad". 6. Object cc. assists "to educate the poor and disadvantaged and support existing schools abroad …." 7. Object ee. provides for the collection of "funds and donations including clothes, food, books, medical supplies and services … etc." Arguably this is for the benefit of the needy.
9. Only one of the seven objects listed above expressly relates to relieving poverty in Australia. Five of the objects expressly relate to relieving poverty "abroad". The word "abroad" in this context was not the subject of submissions by the Society.
10. The Macquarie Online Dictionary includes the following meanings of the word "abroad": adverb 1. in or to a foreign country or countries: …… -noun 6. any place outside one's own country, especially if overseas: ….
11. In the context of the Society's constitution, I find that objects w, x, aa, bb, and cc do not relate to the relief of poverty in Australia. I find that object ee is what the constitution describes as a "general object" and is ancillary to the more specific objects of the Society.
12. Having considered all of the Society's objects, I find that the relief of poverty is an object of the Society. However, contrary to the Society's submission at [25], I find that the relief of poverty in Australia is not a "primary object" of the Society.

What is the extent to which the resources of the Society are used for the relief of poverty in Australia?

1. Separate from a consideration of the rules or objects of the Society, the resources test also requires that the Society's resources must be used wholly or predominantly for the relief of poverty in Australia (or the promotion of education in Australia).
2. In relation to the Society's evidence in support of its submissions concerning the relief of poverty, the Chief Commissioner submitted at [44]: …. the current state of the evidence provides an insufficient basis for the Tribunal to assess whether Al-Jaafaria's resources are currently wholly or predominantly applied to the promotion of education or relief of poverty or otherwise.
3. In its submissions concerning the transaction test, the Society submitted at [51] in ASR: 51. …. the exemption should be available to a religious organisation for property acquired to provide emergency accommodation and food to the poor. The exemption should be available even if the constitution of the religious organisation has a religious dimension, and/or most of its beneficiaries subscribe to a particular faith. Poverty does not discriminate and applies equally to agnostics and followers of all religions.
4. Mr Mehdi stated in MM-1: Relief of poverty 93. The Society organises activities in relation to the relief of poverty. For example, in the past the Society has organised a collection for sleeping bags for needy pilgrims and for the needy in Iraq. 94. The Society will also use the Revesby Property as a central point for collections/donations for the relief of poverty. 95. These activities will occur in the area marked as General on Annexure C.
5. In MM-2, Mr Mehdi's written evidence concerning poverty comprised the following: Relief of poverty 39. In [93] to [95] I discuss the activities organised by the Society in relation to relief of poverty. 40. Annexed and marked as "Annexure 2K" is an advertisement, asking for donations to assist with buying sleeping bags for needy pilgrims. This is an example of the type of activities that are undertaken by the Society in this regard.
6. Other than the bank transfer details and a reference to the Society, the written content of the advertisement consisted of a heading "Arbaeen Campaign" and the words "Donate $30 and we will purchase a sleeping bag on your behalf to give to a needy pilgrim at Arba'een this year."
7. I find, having regard to the reference to assisting pilgrims, that this activity of the Society in assisting needy pilgrims seems more relevant to a religious observance than the relief of poverty in Australia.
8. I observe that Mr Mehdi conceded that all the activities referred to at [93] occurred outside Australia. It seems to me that there is no substantive evidence to support the Society's submissions that at least a material part of the Society's resources were used for the relief of poverty in compliance with s 275(3)(a)(i). Indeed, no such use is shown in the Society's accounting records.
9. In order to substantiate its submission in respect of the relief of poverty, it is necessary for the Society to satisfy the Tribunal that it is using, and will continue to use, its resources, at least to a substantial extent, for the relief of poverty in Australia. This requires a consideration of the evidence before the Tribunal in respect of the resources available to the Society and the extent to which those resources are used for the relief of poverty in Australia.

The Society's resources

1. In addition to the Application and some of the s 58 documents, the Society relied on evidence from three witnesses, Mrs Atoui, Mr Farhat and Mr Mehdi.
2. Mrs Atoui was cross examined before the Tribunal. Her unchallenged evidence related to the activities of the Society's women's group. Mrs Atoui referred to programs, activities and events which were to be organised and analyses of previous programs and activities that the Society had undertaken. These programs and activities related to general community issues including how children and adults could be better educated. An example given concerning general community activities related to an event for community members to learn first aid. Mrs Atoui gave evidence concerning a carnival held to raise funds for the Society's education programs; the organisation by the women's group of school holidays programs for youths; a Saturday School program involving Arabic lessons which take place at a Public School and religious education. Mrs Atoui also gave evidence that volunteers who intended to work with children were required to have appropriate clearance through the Office of the Children's Guardian.
3. I find that the volunteers in the women's group comprise an unquantified component of the resources available to the Society.
4. Mrs Atoui was asked whether the Society had an intention to set up a woman's program at the Property. She said she was not involved in any such program.
5. Mrs Atoui's focus in discussions with Mr Mehdi relates to filling a void within the community in respect of a lack of education. She also said that specific topics were provided to the Society by a high school to assist the Society help problem children.
6. I find that Mrs Atoui provided no evidence as to the overall resources available to the Society nor the use of any Society resources for the relief of poverty whether in Australia or elsewhere.
7. Mr Farhat was not required for cross-examination. Accordingly, his evidence was unchallenged.
8. In summary, Mr Farhat's evidence was: 1. He had been (and continued to be) a volunteer for the Society since 2001. As a participant, he regularly attended meetings of the Society's Executive Committee (the Committee) which was responsible for "the management and direction of the Society, at [1] [3] and [4]. 2. He was responsible for many tasks including contributing to the establishment of programmes and attending functions on behalf of the Society, [5]. 3. The Society set up a focus group intended to develop an operating model to allow the Society to fulfil many of its objectives in the near future, source a suitable site for the Society to execute its operating model at a single location, and consider expressions of interest from possible purchasers in respect of the Kogarah Property, [9]. The Committee resolved on 25 May 2015 that Mr Farhat would create and lead the Focus Group. (Annexure "A" to Mr Farhat's statement.) 4. The existing model of the Society was not documented and was a by-product of organic growth. The Operating Model which was developed was an attempt to formally document the organic growth and confirm adherence to the Society's constitution, [11].
9. Mr Farhat's statement included: 12. Based on its Constitution, the Focus Group formalised the overall "mission statement" of the Society as: "Educating individuals within our community to benefit society via the morals and ethics of Ahlul Bayt (AS)." 13. The morals and ethics of Ahlul Bayt reflect the morals and ethics of the Shia Muslim faith and provide an overall guidance of how the Society provides education to individuals. 14. The Focus Group also identified and listed the Society's overall drivers, goals, objectives and measures. 15. "Primary" and "support" services were drafted as to what activities / functions would be required to achieve the goals and objectives and overall mission statement. …. Primary services 19. Based on the objects of the Society's Constitution, the Focus Group identified five Primary Services: (1) Education; (2) Events; (3) Recreation; (4) Charity; and (5) Community Services. 20. In broad terms, the majority of the identified Primary Services, with the exception of charity, encompass the Society's mission of educating individuals. 21. The lower level functions within the Primary Services reflected in the Operating Model relate to the activities that the Society will be carrying out to execute the Primary Services. Support services 22. To support the primary services the following support services were identified: (1) Administration; (2) Human Resource Management; (3) Marketing; (4) Finance; (5) Technology; And (6) Religious Committee.
10. I observe that the preamble to the Operating Model referred to the following "drivers": Establish a strong leadership and example for our community; Moral Obligations; and Religious Duties
11. The objectives of the Operating Model to which Mr Farhat referred at [9], [14] and [15], but which he did not list, are: Manage the weaknesses in our community; Propagate Faith; Create services to meet the needs of the Society; Sustainable Budget; and Fulfil religious, social and economical (sic) needs.
12. Mr Farhat stated at [23]: The only support service within the Operating Model that specifically relates to religious activities is the Religious Committee. The other support services relate to the objects of the Society more generally.
13. I observe that the support service "Finance" contained no reference to relief of poverty although it did mention "Supporting other Centres".
14. The primary service of "Charity" consisted of Disaster Relief, Charity Drives (Sleeping bags, marquees), Provide Monthly grants to needy, and Support other centres and initiatives.
15. The primary service of "Events" consisted of International Visits, Cultural Events, Births/Deaths of Holy figures, Major events (Muharram, Fasting, Fatimiyyah, Shaaban) and Themed Campaigns (e.g. prayer week). No evidence was led as to the details of the Major events. Accordingly I am not satisfied that the principal issues in "Events" were not of a religious nature, whether or not they constituted religious observance.
16. The primary service of "Education" consisted of 10 major items being Library, Women Courses, Mentoring, Adult Courses, Vocational Education, Youth Focused Learning, Career Advice, Tutoring, Centre of Learning, and Integration into Australian Society.
17. The Centre of Learning item under Education consisted of 5 segments namely Saturday School, Arabic, Quran Courses, Scripture and Religious Education (Hawzah).
18. I am satisfied that, prima facie, the matters referred to in the preceding two paragraphs may, subject to what actually occurred, have been in the nature of the promotion of education.
19. The primary service of "Community Services" consisted of 18 segments of a wide range of community activities including School Holiday Programme, Orphanages Welfare of women and children, Cultural Medicine, Promote understanding of Ahlul Bayt, Raise Awareness of Islamic events (pilgrimage etc.), Marriage services, Defend prisoners of conscience, pressed or discriminated, Counselling, Propagation of faith, Aged Care and Scholarships. No evidence was led as to the detail of most of these segments and I am not satisfied as to the extent to which the resources of the Society were used in carrying them out, nor as to the extent to which they involved the promotion of education in Australia.
20. Mr Farhat's evidence included minutes of a committee meeting of the Society on 3 August 2015 at which the final version of the Operating Model was approved and endorsed by the Committee. The Committee confirmed: it should be the basis of our decision for the new premises and any future investment into programs.
21. Mr Farhat provided no evidence as to the extent to which the Society's resources were used for the relief of poverty in Australia or the promotion of education in Australia.
22. The Society relied heavily on the evidence of Mr Mehdi. In MM-1 Mr Mehdi described himself as having been a director of the Society since 2010. He stated: 2. I am authorised by the Society to make this statement. 3. As a director of the Society, I am responsible for the allocation of the Society's resources - both on a day to day basis and in the long term …. I am involved in developing and shaping the future of the Society.

Mr Mehdi's evidence in relation to resources available to the Society and the use of those resources

1. Mr Mehdi's evidence was that the Committee decided to sell the Kogarah property, on the basis that it could buy another property for a smaller amount than the proceeds of sale and use some of the residual funds to develop the property to assist it with expanding its existing and proposed activities and programs, at [13]. Accordingly, the Society purchased the Property, at [14].
2. Mr Mehdi's evidence includes: 23 The Society has approximately five permanent volunteers, including me. In addition, it has approximately 15 part-time volunteers. …. 28. The Society is funded through donations and government grants (including the NSW Government language school grant). 29. The donations are usually provided by people who participate in the Society's activities and programs …. 30 The donations do not constitute "zakat" from the perspective of the Islamic faith. That is, the amounts are paid independently of any religious obligations.
3. Annexure 2L to MM-2 contains what Mr Mehdi described as the balance sheet and profit and loss statements for the Society for income years ending 30 June 2015 and 2016.
4. I observe that the balance sheets in evidence at Annexure 2L (pages 390 and 391 of the annexures to MM-2) disclose net assets of the Society as at 30 June 2015 and 30 June 2016 respectively of amounts in excess of $1,940,000 and $8,880,000.
5. What is stated to be the profit and loss accounts for the 2015 financial year appear at pages 392 and 393. These accounts made no specific reference to any expenditure for the relief of poverty. There are references to program expenses exceeding $43,000, sundry expenses exceeding $4,000 and income in respect of "projects-sleeping bags" of $6,300. In respect of the profit and loss accounts for the 2016 financial year, which appear at pages 394 and 395 of the annexures to MM-2, are references to program expenses of approximately $17,450, sundry expenses of $3100, and charity donations of $12,250.
6. No supporting accounts were provided by the Society to explain what if any of the Society's expenditure related to the relief of poverty.
7. Mr Mehdi's evidence included: Proposed use of the Revesby Property 31. In the following sections, I set out my understanding of the purpose for the purchase of the Revesby Property and how the Society intended and intends to use the Revesby Property. This is based on my involvement, as a director of the Society and participation in the Executive Committee discussions and decision making process with respect to the purchase and proposed use of the Revesby Property. …. Annexed and marked as "Annexure C" is a proposed floor plan for the Revesby Property, which sets out for what purposes specific areas of the property will be used.
8. I observe that the first of the 4 pages of plans entitled "proposed use of Revesby property first floor" contains a plan which divides the first floor of the Property into 11 marked areas and separate areas for toilets, stairways etc. There are no measurements detailing the size of any of the 11 marked areas. One of the largest areas, if not the largest individual area is marked "Religious activities". This observation and plan should be contrasted with other evidence by Mr Mehdi concerning the use, or non-use, of the Property for religious activities. His other evidence includes at [33]: I also set out the religious activities of the Society that will not occur on the Revesby Property. It is important to recognise this - as the special religious events, with international speakers, which attract large attendances and which are often advertised and represented in the media, occur only occasionally and generally separate premises are rented out to cater for the larger audiences.
9. Under the heading "Relief of poverty" in MM-1 Mr Mehdi stated: 93. The Society organises activities in relation to the relief of poverty. For example, in the past the Society has organised a collection for sleeping bags for needy pilgrims and for the needy in Iraq. 94. The Society will also use the Revesby Property as a central point for collections/donations for the relief of poverty. 95. These activities will occur in the area marked as General on Annexure C.
10. I observe that the area marked "General" on the first floor of the Property plan is one of the 3 largest marked areas on that plan. I also observe that the relief of poverty in Iraq is not "the relief of poverty in Australia" as required by s 275 (3) (a) (i).
11. Mr Mehdi's evidence in MM-2 concerning the relief of poverty consisted of a reference at [39] to paragraphs [93] to [95] of MM-1 and the statement: Annexed and marked as "Annexure 2K" is an advertisement, asking for donations to assist with buying sleeping bags for needy pilgrims. This is an example of the type of activities that are undertaken by the Society in this regard.
12. I observed above that other than the bank transfer details and a reference to the Society, the written content of the advertisement consisted of a heading "Arbaeen Campaign" and the words "Donate $30 and we will purchase a sleeping bag on your behalf to give to a needy pilgrim at Arba'een this year."
13. This activity of the Society, assisting needy pilgrims, seems more relevant to assisting in a religious observance or activity than the relief of poverty. In any event, there is no evidence before the Tribunal that the pilgrimage occurred in Australia or was relevant to an intention to relieve poverty in Australia.
14. In MM-2 Mr Mehdi stated: Application of the Society's resources in FY16 4. Annexed and marked as "Annexure 2A" is a document which sets out my estimate of how the three types of resources of the Society were applied during the income year ending 30 June 2016 (FY16), being the year during which the Revesby Property was acquired. 5. This table was prepared based on my experience as the director and member of the Executive Committee of the Society during FY16.
15. The table contains 4 columns. The details in relation to the relief of poverty are found at page 3 of Annexure 2A and, in summary, comprise the following: Activity undertaken by the Society and referred to in MM-1. Percentage of the Society's 2016 financial year expenditure which relates to this activity (excluding expenditure incurred by volunteers which is not reimbursed or captured by the Society) Number of volunteers involved in the activity Percentage of property used, during the course of the activity Relief of poverty activities (collection / donations drives): Mehdi [93] - [95]. 10% 5 people 5% Including donations made by the Society to other charitable organisations Meeting and planning occurs on the Kogarah Property

1. Mr Mehdi said that when preparing the table [on 1 August 2017] which included the above information, he did not know the actual expenditure incurred. He had provided a guestimate by comparing different activities.
2. The evidence is that the balance sheets and profit and loss accounts for the 2015 and 2016 financial years were annexed to MM-2, which included the table, and those accounting records had been provided by the solicitors for the Society to the Crown Solicitors Office under cover of a letter dated 15 June 2017, 6 weeks before the table was prepared. I also observe that on 30 May 2017, some two months earlier, Mr Mehdi had signed the 2016 Annual Information Statement of the Society (the 2016 Statement) prepared for the Australian Charities and Not-for-profits Commission (ACNC) enclosed with the 15 June 2017 letter. The 2016 Statement included, at a high level, details of the income and expenses of the Society for the 2016 financial year. Those details appear to have been based on MYOB ledgers provided by the Society to the Chief Commissioner and included in Exhibit EP-1 Vol 1.
3. Accordingly I am not satisfied that when preparing the table, relevant financial information was not available to Mr Mehdi.
4. The Society conceded that it had no audited accounts. Mr Mehdi's evidence was that the accounts had been prepared by external accountants. The Society's evidence was also that the accounts were produced using MYOB software and did not provide granular details. Mr Mehdi's evidence at MM-2 [59] and [60] is that the Society does not undertake detailed apportionment and allocation of its income and expenditure across various activities as there is no formal requirement for the Society to do this.
5. The balance sheet of the Society as at 30 June 2016 at page 391 of the annexure to MM-2 included a reference to a current asset of $100,000 being "Loan - The Supreme Islamic Shiite Council Aust" (the Shiite Council). Mr Mehdi conceded that there was no written request for a loan nor was there any loan agreement between the Society and the Shiite Council.
6. The Society submitted at [15] and [16] in ACS that the loan is consistent with the Society's objects in its constitution in particular advancing education by providing and assisting other charitable organisations to provide vocational or other centres of learning to education, cooperating with recognised charitable organisations for the benefit of all according to the holy Quran and Al-Jaafari decrees" and objects "(s) and (u)".
7. Mr Mehdi informed the Tribunal that the $100,000 loan to the Shiite Council, which he said was a charity, was to be used in relation to renovating its building. Initially the Society evidence was that the building was used for the purpose of education. However, Mr Mehdi's more detailed oral evidence was to the effect that the building was used by the Shiite Council to hold events including games, competitions, seminars, wedding receptions, playing ping-pong, and in order to enable people to pay their respects after persons had died.
8. I find on the evidence before me that the use of $100,000 of the Society's money by way of a loan to the Shiite Council was the temporary use of a resource of the Society by another charity. I also find that that use was not for the relief of poverty in Australia.
9. At ACS [16] the Society submitted, in the alternative, that "the loan should be considered to be consistent with the promotion of education". I find that this submission is not supported by the evidence before the Tribunal.
10. The Society also submitted at ACS [16] that "in the alternative, the loan, being repayable, is no different to the Society depositing funds with a bank." In so far as the Society's accounts are accurate, the Society earns interest from its deposits with banks. I find little similarity between an undocumented, apparently non-interest-bearing, loan to a charity and the deposit of money in an interest bearing loan with a bank. I also observe that object (s) to which reference was made at ACS (15) states: s. To invest all or any of the funds of the Society in any security for the time being authorised by law.
11. No explanation was provided to the Tribunal as to how the loan to the Shiite Council could be considered an investment in a security.
12. No material evidence was provided to the Tribunal as to the number of volunteers who assisted in any activity of the Society in respect of the relief of poverty in Australia nor the amount of time, if any, spent in any such activity.
13. No material evidence was provided to the Tribunal in relation to the use of other resources for the relief of poverty in Australia in respect of any year. The Society's evidence was also that since purchasing the Kogarah Property the Society had not changed its purposes, nor was any evidence brought to the attention of the Tribunal of any proposed material change in those purposes as a result of the purchase of the Property, other than an expansion of some of the activities.

The rules and objects of the Society

1. In its objection, the Society claimed "The property will be used predominantly for the promotion of education and the relief of poverty."
2. At [57] the Society submitted: 57. …. objects are specifically included in the Constitution …the following objects are consistent with the promotion of education …. 3. Objects: A. To promote a general understanding of Islam and the AlJaafari sect. "The AlJaafari principles, culture, historic background and objectives". B. To educate and assist the AlJaafari Moslems in Australia to positively contribute and integrate in the Australian society on basis of the AlJaafari social values. …. D. To advance education by providing and/or assisting other organizations, recognized as charitable in Australia, to provide vocational or other centres of learning committed to education. …. G. To provoke and assist Muslem women to institute and cooperate women auxiliary to be responsible and contribute in a positive manner to the education and welfare of women and children. (sic) …. J. To educate the children of the members of the Islamic AlJaafari faith in the doctrines of their faith. K. To print and publish any newspapers, periodicals, books and/or leaflets that the society may consider desirable for the promotion of its objects. L. To establish and run a library of Islamic literature and culture.
3. Several of the above objects expressly refer to "educate" or "education". Others do not.
4. Some of the objects which use the words "educate" or "education" refer to the purpose of the education. Examples of these are object B which seeks to educate in order "to positively contribute and integrate in the Australian society on the basis of the Al Jaafari social values; object D has as its aim the provision of vocational or other centres of learning committed to education, and object J seeks to educate "the children of the members of the Islamic Al Jaafari faith in the doctrines of their faith".
5. The Society submitted at [59] that the resources test is forward looking so that it is necessary to consider how resources are proposed to be used in the future as well as how they are currently used..
6. The Society submitted at [60] that various listed activities are consistent with the promotion of education. Those activities include, a high school special program, scouting and outdoor / sports activities, women's programs, special courses and training, religious education, career support and counselling.
7. The Society also submitted at [62] to [66] that "religious activities" are consistent with the promotion of education. It submitted that this is "consistent with the findings in Benjamin v Downs and A v Department of Education …. where it was held that these types of activities fell within the domain of "general religious education."
8. The Society submitted: 43. With respect to the object of "promotion of education," in the Faith Baptist first instance decision, Verick JM held that the object of "promotion of education" included promotion of "religious education" (at [63]). …. 45. Case law provides that the concept of "religious education" is broad and includes activities such as reading from scripture, praying, singing and the celebration of religious events. 46. For example, in Faith Baptist first instance decision, Verick JM referred to the decision in Benjamin v Downs & Another [1976] 2 NSWLR 199 (Benjamin v Downs). The case concerned the scope of "general religious education" at a public school and whether some of the activities were prohibited by legislation which required such education to be secular and non-sectarian. 47. In broad terms, it was held that the general teaching of the Christian religion, including the teaching of Bible stories as historical fact, and an acceptance of the basic tenets of the Christian religion did not constitute "dogmatic or polemical theology" and therefore was not forbidden by legislation. …. 54. Also, while the cases dealt with activities occurring in a school environment, this does not mean that the principles in that case cannot be applied in the context of religious education provided to adults. 55. Given the broad concept of "education" any form of religious instruction can constitute "religious education" - and in turn "education" for the purposes of s 275(3)(a), and as discussed below, the advancement of education in DUT 034 (at [17]).
9. The Chief Commissioner's response in RS included: 50. …. Al-Jaafaria seeks to define "promotion of education" very broadly, such that it would include even those activities which Mr Mehdi describes as "religious activities" at [96]-[105]: see AS [62]-[67] and [69]-[70]. 51. It may be accepted that a range of different topics can be the subject of "education", including law, drama, music, archaeology: AS [42], citing Perpetual Trustee Co Ltd v Groth (1985) 2 NSWLR 278. It is not necessarily limited to subjects that would ordinarily be found within a school or university syllabus. It can encompass teaching life skills or providing information towards a practical end. 52. However, when construing s 275(3)(a), it is important to bear in mind that the legislature has excluded the "advancement of religion" as a permissible purpose (as submitted at [25] above). Therefore, while it is possible that the "promotion of education" can encompass some education which is religious in nature, s 275(3)(a) clearly contemplates that a distinction will be drawn between activities that are properly characterised as promoting education and those properly characterised as promoting religion. 53. The cases cited by Al-Jaafaria at AS [43]-[54] provide very little guidance in distinguishing between the two. In Faith Baptist, the Tribunal merely recorded the Chief Commissioner's concession that "religious education" would satisfy the requirement in para 17 of DUT 034 in relation to the "promotion of education" (at [63]). However, this concession was in the context of s 275(3)(b), and in any event it is not clear whether the Tribunal endorsed the concession. The Tribunal may have been agreeing with the Chief Commissioner's broader submission that "religious education" was ultimately irrelevant for the purposes of s 275(3)(b) because of the exclusion in para 25(a) of the ruling. 54. Benjamin v Downs [1976] 2 NSWLR 199 concerned a different statutory context. It concerned s 7 of the Public Instruction Act 1990 (NSW), which required that teaching be "non-sectarian" but permitted "secular instruction" including "general religious teaching as distinguished from dogmatical or polemical theology". The question was whether the activities undertaken by the school constituted "general religious teaching". Helsham J made extensive observations about the particular legislative history of the provision in concluding that "general religious teaching" included teaching of the Christian religion (at 207). The meaning of "general religious teaching" in that particular statutory context says very little about the meaning of the phrase "promotion of education" in s 275(3)(a), and how it is to be distinguished from the promotion of religion. 55. Likewise, A v Department of School Education [1999] NSWADT 120 was concerned with s 31 of the Education Act 1991 (NSW) which permitted "secular instruction" including "general religious education as distinct from dogmatic or polemical theology". Again, it says very little about the meaning of "promotion of education" in s 275(3)(a). 56. Finally, the phrase "promotion of education" suggests that the mode of disseminating the relevant information must be "sufficiently structured". The same has been said in relation to the head of charity "advancement of education" at general law …. 57. Based on the available evidence, the Tribunal would not conclude that the various activities said to be engaged in by Al-Jaafaria constitute the "promotion of education". In respect of the activities described by Mr Mehdi, the evidence is unclear as to the particular subject matter being covered (eg whether it is more properly characterised as the promotion of religion) and whether the mode of delivery is "sufficiently structured". …. 58. Further, Al-Jaafaria's own website demonstrates its religious focus. There it refers to itself as the "Al-Jaafaria Shia Islamic Centre". It recognises the need for "more outlets for Islamic propagation". It refers to the centre as being "the cornerstone of the Islamic Education of the Islamic youth in the St George Area". It refers to a "Saturday afternoon Islamic school" which will teach "Arabic/Quran and Islamic studies". In describing the "Shia Islamic School Scripture", it says that it is devoted to "providing the basic principles of Islamic Ethics". It advertises an Arabic course "designed for beginners who want to learn to read the Holy Qur'an". It refers to building an "Islamic Library" and an "Islamic Youth Centre" and establishing an "Islamic Sunday school". It advertises a raffle to win a trip to Mecca to undertake "religious obligation". 59. For those reasons, Al-Jaafaria has failed to demonstrate that the activities to which it says its resources are applied are properly characterised as the "promotion of education" for the purposes of s 275(3)(a) ….
10. The Society submitted at [35] that, consistently with the approach of Verick JM at [34] in Faith Baptist Church Inc v Chief Commissioner of State Revenue [2008] NSWADT 199: …. in order to obtain the benefit of the exemption under s 275(3)(a), the applicant had to establish by way of evidence that: (a) its rules or objects include the promotion of education in Australia; and (b) its resources are used wholly or predominantly on the promotion of education in Australia. …. 37. The first limb requires that the rules or objects of the Society include the promotion of education. It is not necessary that the rules or objects provide solely or predominantly for the promotion of education - it is sufficient if they simply "include" these objects.
11. In response, the Chief Commissioner submitted at [25]: …. (contrary to [37] of the Applicant's Submissions (AS)) …. the objects not only must "include" the relevant purpose; the relevant purpose must be predominant among those objects.
12. The Chief Commissioner provided no authority in support of his interpretation of the Act.
13. The Appeal Panel in the Faith Baptist Church appeal did not expressly refer to whether s 275(3)(a) would not be satisfied unless the relevant purpose was predominant amongst the rules or objects or whether the provision may be satisfied if the rules or objects merely included the relevant purpose. Having regard to my findings below it is not necessary for me to make a finding on this issue.

Use of resources wholly or predominantly for the promotion of education in Australia - s 275(3)(a)(ii)

1. The parties agree that the second limb of s 275(3)(a)(ii) requires that, in conjunction with any relevant use of the Society's resources for the relief of poverty in Australia, it is necessary that its resources are to be used wholly or predominantly for the promotion of education in Australia.

Use of financial resources for the promotion of education in Australia

1. The 2015 financial year profit and loss accounts of the Society at pages 392 and 393 of the annexure to MM-2 provide for total expenses of over $84,500. $5,978 of those expenses are categorised as "ethnic school" from ledger 6-5300 and $43,700 are categorised as "program expenses" from ledger 6-4300. No details were provided by the Society as to the components of the "program expenses". The only other expenses exceeding $1000 are stated to be electricity and gas, $6390, legal expenses of $1690, printing and stationery of $1840, repairs and maintenance of $3830, subcontractors of $12,400 and sundry expenses of $4130. No details were provided by the Society as to the extent to which any of the "program expenses" or any other expenses related to the promotion of education.
2. The 2016 financial year expenses at pages 394 to 395 of the annexure provide for ethnic school expenses of $720, unallocated program expenses of $17,451, land tax of $24,490 and charity donations of $12,250. In other respects, the categorisation of miscellaneous expenses is not dissimilar to the expense categorisation 2015. All the above amounts are stated to have been prepared in accrual mode.
3. The Society provided to the Chief Commissioner certain of its accounting records pursuant to a summons issued to the Society. These records are contained in Exhibit EP-1 and appear to include certain MYOB ledgers of the Society prepared on a cash basis. I make the following observations: 1. Ledger 6-5300 records 2016 financial year "ethnic school" expenses totalling $720 which accords with the profit and loss amount in the annexure to MM-2. However, no details are provided as to what the money was spent on or paid to. 2. Ledger 6-4300 relates to program expenses totalling $17,451. This includes a general journal entry of $12,394 for "cash expenses". Some of the debit entries refer to transfers to another bank account, possibly an account of the Society. No payments for program expenses are identifiably for the promotion of education. 3. Ledger 9-1100 is described as charity donations which total $12,250. There are 6 separate entries. Two entries totalling $6150 are Internet payments for "MOSQUE DONATION", $3000 is described as "transfer to other donation to 40th - Imam Hussain legacy 40th non for profit organisation …"; There are 3 other donations totalling $3100. None of the payments in this ledger appeared to relate to the promotion of education. Slightly more than half of the donations appear to be Internet transfers to or for the benefit of a Mosque. No reason is provided for the donations nor as to the use to which payments will be put.

The Society's accounts and the 2016 Annual Information Statement of the Society

1. The 2016 Statement (see [99] above) includes the following question and answer: Question 6 - What is the size of your charity based on its annual revenue for the 2016 reporting period? Answer - small
2. The ACNC website provides that a small charity has annual revenue (comprising government grants, donations and bequests and other revenue and receipts) of less than $250,000. The Society's 2016 accounts and the 2016 Statement show that the Society's annual income for 2016 exceeded $7 million (including "other income" from the sale of the Kogarah Property of over $6,960,000) and its net assets as at 30 June 2016 exceeded $8,880,000.
3. In the circumstances, and having regard to Mr Mehdi's oral evidence that he prepared the apportionment of expenses table annexed to MM-2 without knowing the actual expenses incurred, I reject the Society's repeated submission that the Society is a small organisation and the Tribunal should accept the oral evidence of Mr Mehdi in relation to its expenses and how its finances are used in preference to relying on its financial records which, the Society stated at ACS [10] to [13], have been prepared by external accountants.
4. I am not satisfied on the material before me that the financial resources of the Society were at any time used wholly or predominantly for the promotion of education in Australia.

Volunteer resources used for the promotion of education

1. The number of volunteers whose work comprises an overall resource of the Society and the amount of work they do for the Society is not clear on the evidence before the Tribunal. Mr Mehdi's evidence at [23] is that the Society has 5 permanent and 15 part-time volunteers. The 2016 Statement, signed by Mr Mehdi, stated that there were no paid employees during the 2016 financial year and there were 30 unpaid volunteers. No evidence was provided to the Tribunal reconciling these numbers
2. At [38] Mr Mehdi stated that Arabic lessons were provided during the week by 10 teachers and 3 volunteers. He adjusted this in MM-2 at [14] stating one teacher and 2 volunteers assisted during the week, and at Saturday School there were 9 "teachers and volunteers". At MM-2 [20] Mr Mehdi provided the names of 10 volunteers who assisted with Arabic lessons and the Saturday School program.
3. Mr Mehdi said at MM-2 [27] that the Kogarah High School Mentoring Program was provided by himself, Mrs Atoui and a third person. At MM-2 [38] Mr Mehdi provided a table naming twenty volunteers who assisted with religious education at various schools.
4. At MM-2 [57] Mr Mehdi's evidence is that the Society: …. does not keep a list of every single volunteer that assists the Society's activities. The Society also does not keep timesheets or any other formal records of the amount of time spent by volunteers in preparing for and assisting with the Society's activities.
5. The rationale expressed at [58] for not recording details of volunteers and their work is that there is no formal requirement for the Society to do this and it would impose an unreasonable burden on the volunteers and hinder the Society in achieving its objectives as the time spent on administrative tasks would detract from time otherwise available to spend on other tasks.
6. Given that the Society's evidence is that a substantial amount of time provided by volunteers is spent working with children I am surprised by Mr Mehdi's evidence that the Society apparently keeps no record of which volunteers are working with children and when they are in contact with the children. I also contrast Mr Mehdi's evidence with Mrs Atoui's evidence at [18] that she prepares rosters for scripture and provides relevant workbooks, and at [21] that each volunteer is required to apply for a "working with children" clearance through the Office of the Children's Guardian website, and annexed to her statement is a spreadsheet which she retains of the volunteers and their "working with children" clearance certificate details. I note that the spreadsheet contains the names of 43 persons with cleared verification dates from 20 February 2016 to 2 May 2017. No details were provided of the amount of work performed by those persons for the Society.
7. No details were brought to the attention of the Tribunal in respect of the number of volunteers, as resources of the Society, who carried out other activities and programs on behalf of the Society, such as culture and arts, social services, economic social and community development, camping activities, sports activities and religious activities, nor the amount of time provided by those volunteers to Society activities.
8. Accordingly, having regard to both conflicting information and a lack of reliable evidence, I am not satisfied that the volunteer resources of the Society were used wholly or predominantly for the promotion of education in Australia so as to satisfy the conditions of s 275 (3) (a)(ii).

Physical resources used for the promotion of education

Mr Farhat's evidence

1. Mr Farhat's evidence under the heading "the Society's Internet website" was: 32. Due to limited resources, both technical and physical, the Society's website and social media platforms are currently only used to advertise certain activities of the Society (e.g. social events, announcements and religious programs). 33. The Society is currently engaging digital agencies to develop and upgrade its information technology systems (i.e. "front-end" and "back-end" systems). The intention is to implement a new content management system along with a member portal to allow the Society, among other things, to use its digital presence for the following: (1) course notices and registrations, teacher/student portals and student enrolments (related to educational purposes); (2) online fundraising campaigns and collections (to assist with activities targeted at relief of poverty. 34. The aim of this development and upgrade project is to: (1) broaden the Society's member base; (2) increase funding & donations; (3) enable better management of the Society's education, counselling & recreation programs; and (4) improve the Society's communications with its members.
2. This provides some evidence of the proposed use of the Society's website for the promotion of education.

Mrs Atoui's evidence

1. Mrs Atoui's statement also provided some evidence concerning the promotion of education including an event for the community to learn first aid in about March 2016, the holding of a carnival to raise funds for education programs which funds were used to pay for photocopying textbooks for Arabic lessons and the Saturday School program. She also stated that School holiday programs involved arts and crafts, drama lessons and a science lesson.
2. She is the principal of the Saturday School program which occurs at Arncliffe Public School, engages volunteers and teachers and assesses their skills and qualifications, prepares a roster and collates and compiles the syllabus and material to be used in the lesson. The Society applies for government grants including grants from the NSW Department of education to assist with the Arabic school and a community languages schools program.
3. Mrs Atoui is also involved in arranging scripture programs for schools. The Society has been approved by the NSW Department of education to provide Islamic special religious education in public schools.
4. Other than as noted above, Mrs Atoui provided no evidence as to the number of volunteers engaged by the Society in educational activities nor the number of those volunteers in proportion to the number of volunteers engaged overall by the Society in all of its activities nor the amount of work carried out by either the volunteers with whom she worked or the 'global' group of all persons who volunteered to assist in all of the Society's activities.

Mr Mehdi's evidence at MM-2

1. Some of Mr Mehdi's evidence concerning volunteers and activities has been referred to above. In MM-1 he also said; 24. The Society has approximately 80 people who attend the activities related to Islamic education, including scripture reading, supplication and Saturday night lectures. 25. For special events, it has approximately 250 people who attend. 26. For Arabic Lessons and Saturday School, approximately 280 youth attend these activities. Educational activities Arabic lessons 36. Since 1994, the Society has provided Arabic lessons to youth and is listed with the NSW Community Languages Schools Program. These lessons are based on the syllabus of the NSW Department of Education. 37. Due to a lack of facilities and premises, the Society currently provides the Arabic lessons through classrooms leased from state school. 38. Lessons are provided between 4.30pm and 7.30pm Monday to Thursday and 4.00pm to 5.30pm on Friday. Approximately 280 students attend and there are 10 teachers and three volunteers. …. 42. When purchasing the Revesby Property, it was intended that part of the Revesby Property would be converted into classrooms. The Society would use the classrooms to conduct Arabic lessons for youth and also adults. That is, not only as part of the NSW Community Languages Program, but more broadly. 43. Arabic lessons are intended to take place in the area marked as "Classrooms" and the "Computer Room and Library" on Annexure C. 44. In addition, before, during and after the Arabic Classes, the following areas, also depicted on Annexure C, will be used by people attending these classes and their family (e.g. parents of children attending the Arabic Classes): (1) Study and Breakout; (2) General; (3) Cafeteria; and (4) Child Minding. 45. Volunteers and teachers will use the areas marked as Office Space to prepare for class and also the Cafeteria and Child Minding areas (e.g. to leave their children, during lessons and when preparing for class). …. 48. The Saturday School program will cover the following topics: (1) Arabic lessons; (2) Scripture (as part of the Society's accreditation as a scripture provider, with the NSW Department of Education); and (3) tutorial workshops. 49. With respect to (3), these workshops will cover a broad range of educational activities. By way of example, this will include topics such as first aid, good health choice for children to reduce obesity, cancer awareness, how to be more active in society and other topics of community and social importance such as domestic violence, gambling, alcohol drugs, homelessness and poverty, single-parent households, etc. The sessions will aim to shed light on how the community can respond and assist with these issues. In addition, people from successful businesses will be asked to come and speak about their experiences and encourage youth to take traineeships. These workshops will also be used to promote sport and scouting activities, including, but not only, those organised by the Society. 50. These activities will occur in the following areas depicted on Annexure C: (1) Classrooms; (2) Computer Room and Library; (3) General; and (4) Study and Breakout. 51. In addition, the areas marked as Cafeteria and Child Minding also will be used by the youth attending, their parents and the teachers and volunteers, who present the programs. In addition, Office Space will be used by teachers and volunteers to prepare for programs. After-school tutoring 52. The Society will also organise after-school tutoring in various primary school and high school syllabus subjects. The topics covered will include maths, physics, science and other subjects. The tutoring will be provided by volunteers and will occur during the week and on weekends. The time table will be flexible and students will be able to drop-in as and when they need assistance. 53. The after-school tutoring is intended to take place in the following areas marked on Annexure C: (1) Classrooms; (2) Computer Room and Library; and (3) Study and Breakout.
2. Mr Mehdi's statement from [54] to [86] included: 1. references to a community advice and referral service include information on accessing government services and benefits and that there would be volunteers present at the Property who would assist both general and specific enquiries including helping people struggling with the English all looking to apply for a job. 2. A computer room and library are intended to be used for other educational activities including learning languages, general interest and self-education, schoolbooks and children's books and books in relation to Islam. 3. Current youth education by the Society includes gatherings for about 2 hours every Saturday involving presentations focusing on social issues and personal development such as social media, tattoos, self-esteem, behaviour and social issues such as alcohol gambling and violence. Lectures / presentations are given by volunteers. The gatherings are also used to plan other activities and programs including athletic and scouting activities. It is proposed that these gatherings will take place at the Property. 4. In 2016 and 2017 the Society has taken part in a mentoring initiative for both Muslim and non-Muslim youths as part of the Kogarah High School's student well-being program. This is proposed to continue at the Property. There are usually 5 to 10 children in the classroom. Presently preparation occurs outside to Society property however it is intended that the Property will be used for that purpose. 5. The Society organises scouting activities including camps outside Sydney. It is intended that planning and some indoor scout activities will take place at the Property. 6. The Society has special programs for women which are intended to be organised and operated at the Property. The programs include vocational classes, fitness classes and health issues.
3. Mr Mehdi stated that the Society provides religious education at 10 schools and the intention is that preparation for the classes will occur at the Property, at [87]. Special lessons on the Quran for about one hour on weekends will be provided at the Property and the Society will use the property to record video and post readings from Scripture by volunteers on You Tube, at [87]to [90].
4. Mr Mehdi stated at [96] to [100] that the Property would not be used for congregational prayers however it would be used for "religious activities" including Scripture for 2 to 3 hours every night and supplication which involves readings from the Quran every Thursday. These activities currently occur at the Kogarah Property.
5. Mr Mehdi stated at [101] to [105] that the Property would be used more often during the month of Ramadan (approximately 30 days] and during Muharram (approximately 10 days). The Society would have a special program during Ramadan the details of which were not brought to the attention of the Tribunal. If 80 people or less attend the program would be carried out at the Property in the "Religious Activities" site. If more people attend then the Society would organise another property.

Mr Mehdi's evidence at MM-2.

1. Mr Mehdi referred to his estimate of how the 3 types of resources of the Society were applied during the 2016 financial year during which the Property was acquired by the Society. He stated that the table was prepared based on his experience as a director and member of the Executive Committee of the Society during that year.
2. I have referred above to this table in relation to evidence as to the Society's claimed activities in relation to the relief of poverty. Mr Mehdi's evidence that 10% of 2016 financial year expenditure related to the relief of poverty was not supported by a consideration of the accounts of the Society in evidence.
3. The accounts do not indicate that a substantial part, let alone the whole or a predominant part of the expenditure of the Society during the 2016 financial year, other than any expenses incurred for the relief of poverty in Australia, was applied to the promotion of education in Australia.
4. The Society's closing submissions included providing on the second hearing day what was described as a summary table of Annexure 2A of MM-2. The summary may well have encapsulated the contents of Annexure 2A. However, certain of its contents could not have been accurate.
5. I have already dealt with discrepancies concerning the number of volunteers engaged in various activities for the Society and will not repeat my comments.
6. The summary table included an estimated percentage use of the Kogarah Property by activity during the 2016 financial year.
7. The table states that "religious education" used 90% of the Kogarah Property during that year while "education other than religious education" used 305% and "other" activities occupied 15% of that property. I find that the whole of the Kogarah Property available for activities at any time cannot exceed 100%.
8. A summary of the aggregate estimated number of hours per week in respect of which the Property was proposed to be used for particular activities under the categories "Education", "Religious Education" and "Other" were respectively stated to be 214.5%, 87% and 1%.
9. I reject the summaries of the actual use of the Kogarah Property and the intended use of the Property and to the extent that the summaries accurately reflect Annexure 2A to MM-2, I reject the Annexure 2A Table.
10. I find on the material before me that the Society has carried out and intends to continue to carry out educational and other activities for the benefit of both the Muslim and wider communities.

The Society's website

1. Behind the tab marked "Advertisements" from pages 630 to 704 of Exhibit EP-1 to Ms Pardey's affidavit is unchallenged evidence of what appear to be screenshots from the Society's website.
2. The Society submitted that the website is out of date and should be disregarded by the Tribunal.
3. However, I observe that several of the dates of events advertised in the website are in 2015 and 2016 and I have no reason to find that the screenshots do not represent events organised by the Society during those years. If the Society did not want the public to be aware of relevant events I am aware of no reason why the advertisements were not removed from its website.
4. I have referred above to the event concerning obtaining donations for pilgrims.
5. I refer below to certain of the screenshots. I have set out excerpts from every tenth page of the 75 pages in evidence. 1. Page 630 - "Donations providing everlasting rewards." 2. Page 640 - "Rare Islamic jewellery auction. Don't miss out! Birth of Imam Mahdi dinner". 3. Page 650 - "Basic Arabic Course … designed for beginners who want to learn to read the Holy Qur'an" 4. Page 660 - Dua Tawassul - new weekly program. I observe that the term "Dua Tawassul" may indicate an activity for the advancement of education. However, no evidence was brought to the attention of the Tribunal as to its meaning. 1. Page 670 - "Jaffs Youth Summer Camp - Activities Includes: Islamic Workshops / Kayaking / Hiking / Fishing / Archery / Sports / Much More" 2. Page 680 - most of this page appears to be in Arabic. No evidence was brought to the Tribunal's attention as to an English translation of the Arabic words. Words in English on the page are "Month Of Ramadan 2016" and the name of the Society. 3. Page 690 - "Weekly Islamic Game Show Buzz Master" 4. Page 700 -"They did it again! Presentation night to welcome back our champions - 2015 champions". A photograph on the page is of several young men dressed in a sporting uniform.
6. I have no evidence before me as to whether the screenshots in evidence are typical or atypical of events organised by the Society. However, the Society had the opportunity to provide material evidence in response to the screenshots and chose not to do so.
7. In so far as the onus lies on the Society to prove its case, a failure to contest potentially probative evidence brought by the Chief Commissioner does not assist the Society's position.
8. I find that the events referred to in the above extracts seem to relate at least as much to the promotion of religious observance or activities or to sporting or other general community activities as they do to education.

Use of the Society's resources wholly or predominantly for the relief of poverty in Australia and/or the promotion of education in Australia

1. I am satisfied that the activities of the Society are, or are intended to, benefit the Society, its members and the wider community. I find that the activities in which the Society is involved are subject always to what the Society's executive committee regards as moral obligations and religious duties in accordance with "The Al-Jaafari principles, culture, historic background and objectives" as stated in the first of the Society's objects in its constitution and in line with "the Holy Quran and Al-Jaafari decrees" pursuant to paragraph 2 of its constitution.
2. However, having regard to my above findings, I am not satisfied on the balance of probability on the material before me that the aggregate resources of the Society have or will in the near future be used wholly or predominantly for either or both of the relief of poverty in Australia and the promotion of education in Australia.
3. Accordingly, I am not satisfied that the Society complies with the requirements of s 275(3)(a).

Section 275 (3)(b) - the "transaction test"

1. Section 275 (3)(b) relevantly provides: (3) In this section: exempt charitable or benevolent body means: …. (b) anybody corporate, society, institution or other organisation that, in the opinion of the Chief Commissioner, is of a charitable or benevolent nature, or has as its primary object the promotion of the interests of Aborigines and if: (i) (in the application of this definition for the purposes of subsection (1) or (1A)) the dutiable transaction or instrument is for such purposes as the Chief Commissioner may approve in accordance with guidelines approved by the Treasurer, ….
2. The Treasurer's Guidelines relevantly state: Guidelines for exemption under section 275 (3)(b) of the Duties Act 1997 1. The following are approved charitable and benevolent purposes: the relief of poverty, the relief and prevention of sickness and disability, the relief of suffering and distress caused by old age, the promotion of education, the establishment of organisations to assist sections of the community with special needs, the relief of distress caused by naturals (sic) disasters or sudden catastrophes. …. 3. In relation to transactions and instruments other than vendor duty transactions: (a) The transaction for which exemption is claimed must relate to property to be used for the charitable or benevolent purposes of the organisation. It cannot be let or sold for profit. (b) Property acquired for use as the headquarters of an approved organisation will be eligible for exemption if the use of the property is part of continuing charitable or benevolent work. (c) …. (d) Property acquired by religious organisations must be used for approved charitable and benevolent purposes of the organisation and not for predominantly religious purposes.
3. The Society described the test in [10(3)] as: … where the Society is a charitable or benevolent institution and the Revesby Property was purchased for purposes approved by the Commissioner, as set out in DUT 034.

The "ultra vires" argument

1. The Society submitted at [87] that in DUT 034 the Chief Commissioner had purported to limit the availability of the exemption where property was acquired by a "religious organisation" and the property was used for "predominantly religious purposes" and in [88]. The paragraph is ultra vires and cannot be relied on by the Commissioner to limit the availability of the exemption, where the other requirements of the second limb are satisfied.
2. Irrespective of the reasoning of the Chief Commissioner in DUT 034, the Society's submission is contrary to the express wording of paragraph 3 (d) of the Treasurer's Guidelines. Accordingly, the submission is rejected.
3. The Society also made a submission in the alternative.

If proscription in relation to religious purposes is not ultra vires 94. The proscription in [18] of DUI 034 refers to the use of the property for "predominantly religious purposes." Therefore, there are two elements which need to be satisfied: (1) the property needs to be used for "religious purposes;" and (2) that use needs to be "predominant." 95. With respect to the first element, the term is not defined in DUT 034 or in the legislation. In Faith Baptist first instance, the Tribunal proceeded on the basis that "religious purposes" included activities which related to the "advancement or promotion of religion" (at [67]). 96. With respect to the second element, the proscription will not apply, even if the property is used for religious purposes, if those are not predominant. 97. No guidance is provided on how "use of the property" is to be determined, including whether this refers to a quantitative, qualitative or a mixed assessment.

1. The Society also submitted: 117. The Society is not a "religious organisation." Rather, it is an "educational organisation" operating within a broadly religious framework. The Society's objects are centred around education and its resources, likewise, are predominantly used for the promotion of education, as well as the relief of poverty. If it is considered that the Society is established for both educational and religious purposes, it should be considered to fall into that category with which it has more in common. In this regard, given the broad range of educational objects and activities, as well as the fact that the concept of "education" can include "religious education," the Society should be considered to fall into the "educational" category and therefore be considered to be an "educational organisation." 118. Furthermore, the use of the Revesby Property will not be predominantly for "religious purposes." Rather, it will be predominantly used for "educational purposes," ….
2. In response to AS the Chief Commissioner submitted: 60. Under s 275(3)(b), the applicant is required to demonstrate (relevantly) that: (a) it is of a charitable or benevolent nature; and (b) the dutiable transaction or instrument is for such purposes as the Chief Commissioner may approve in accordance with guidelines approved by the Treasurer. 61. The first limb, and in particular the use of the word "charitable", requires that the organisation fall within one of the four heads of charity recognised in Pemsel (ie relief of the poor, aged and impotent; the advancement of religion; the advancement of education; or other purposes beneficial to the community).40 This is generally assessed in accordance with ATO Taxation Ruling TR 2011/D2 (previously TR 2005/21). 62. The second limb gives the Chief Commissioner "a real discretion to determine what purposes he can approve subject to the policy guidelines approved by the Treasurer". DUT 034 provides that the following are purposes that may be approved by the Chief Commissioner (at [17]): (a) the relief of poverty, (b) the relief and prevention of sickness and disability, (c) the relief of suffering and distress caused by old age, (d) the promotion of education, (e) the establishment of organisations to assist sections of the community with special needs, and (f) the relief of distress caused by natural disasters or sudden catastrophes. 63. These do not include the advancement of religion. 64. At [18(d)], DUT 034 provides: "Property acquired by religious organisations must be used for approved charitable and benevolent purposes of the organisation and not predominantly for religious purposes". 65. At [25(a)], DUT 034 provides: "Although most religious bodies are charitable institutions, property used for churches, residences or religious activities (including religious instruction or religious education) are not used for approved purposes". As such, DUT 034 expressly excludes "religious instruction and religious education" from the scope of approved purposes. 66. Although not expressly stated in s 275(3)(b), the Chief Commissioner submits that, to be a transaction "for" approved purposes, the transaction must be predominantly for an approved purpose. If a transaction has multiple purposes, with only the minor or insubstantial ones being "approved", that is not enough to satisfy s 275(3)(b). …. 72. For the purposes of the present application, the Commissioner does not dispute that Al-Jaafaria is of a "charitable or benevolent nature", in the sense that it is an organisation for the promotion of religion. The question is whether the acquisition of the Revesby property was for an "approved" purpose. Purpose of transaction 73. Al-Jaafaria contends that the focus of the s 275(3)(b) inquiry should be on its purpose for entering into the transaction for the purchase of the Revesby Property, as opposed to the proposed "use" of the property: AS [105]-[111]. It submits that the purpose of purchasing the Revesby Property was educational, because: (a) the Kogarah property was sufficient to carry out Al-Jaafaria's non-educational activities; and so (b) Al-Jaafaria would not have purchased the Revesby property but for its intention to expand its educational activities. 74. This analysis should be rejected. It completely overlooks the fact that, had the Revesby Property not been suitable for the carrying out of Al-Jaafaria's non-educational activities, it would not have been purchased. Accordingly, it is clear that there were multiple purposes in purchasing the Revesby Property. Al-Jaafaria's analysis in this regard adopts an artificial "but for" test which ignores the uses to which the property will be put. 75. Even if this analysis were appropriate, for the reasons given at [48]-[59] above the evidence fails to demonstrate that the activities which are proposed to be undertaken at the Revesby property are "educational" in nature. 76. Moreover, for the purposes of s 275(3)(b), as noted above "religious education" is expressly excluded by DUT 034 [25(a)]. Therefore, many of the activities relied upon by Al-Jaafaria cannot be "approved" purposes - such as instruction on scripture, supplication and discussions about Islam, reading from the Quran, and activities associated with religious dates and events: AS [62].
3. The Society's response in ASR included: 12. Contrary to the Commissioner's submission, there is nothing to indicate that the legislation refers to or is somehow intended to operate by reference to the four heads of charity in Pemsel. The text of s 275(3)(a) does not include the words "charity." In fact, it specifically does not use those words. Rather, it reflects a codification and legislative expansion of entities that may benefit from an exemption from duty. It does this by creating a new class of entity - "exempt charitable or benevolent body" (Exempt Body) - determined by reference to the criteria in ss 275(3)(a), (b) and/or (c). Effectively any entity can be an Exempt Body, if it satisfies those criteria. 13. The creation of a new class of entity, the Exempt Body, is consistent with the codification and legislative expansion of a "charity" in the Charities Act 2013 (Cth) (Charities Act). In a similar way to s 275(3), this defines a "charity" by reference to specific criteria. These criteria do not refer to and are not otherwise constrained by the concept of a charity in Pemsel. They provide significant latitude for an entity to satisfy the definition of a charity. For present purposes, s 5 (Definition of charity) and s 12 (Definition of charitable purpose) are relevant: …. Section 275(3)(6) - "Transaction Test" - Relevant principles 49. With respect to RS [64], the reference to "religious purposes" in [18 (d)] of DUT 034 is a narrower concept than "advancement of religion." It refers to the actual use of property for religious activities. It does not refer to activities which may be provided by an organisation that may have a religious dimension, or activities that may be provided in a religious context. 50. For example, the exemption should be available to a "catholic" school. While its educational activities may be provided within the context of religion, the focus of the test is on the actual activities that will occur on the school grounds. In this regard, it may be expected that these will predominantly relate to education and only a small part of the property will be used for religious instruction. 51. In a similar way, the exemption should be available to a religious organisation for property acquired to provide emergency accommodation and food to the poor. The exemption should be available even if the constitution of the religious organisation has a religious dimension, and/or most of its beneficiaries subscribe to a particular faith. Poverty does not discriminate and applies equally to agnostics and followers of all religions. 52. Contrary to Commissioner's submission in RS [66], there is nothing to indicate that a transaction must be "predominantly" for an approved purpose. No authority or support is provided for this proposition. In the absence of authority, and given the principle to be applied in the interpretation of tax exemption provisions in Burt v FCT, the lower threshold should apply - namely that it is simply necessary for "a" purpose of the transaction to be "approved." That is, there is no need for the purpose to be predominant. 53. Further support for this is the fact that the exemption in [17] DUT 034 is limited to entities of a "charitable or benevolent nature." This is in contrast to s 273(3)(a), which can technically apply to "any" entity. That is, there is no need to control or limit the exemption. 54. Also, the Commissioner's submission in RS [66] does not address the situation where there is an overlap in purposes - that is, a transaction both promotes education and advances religion at the same time, in equal measure. This will occur, for example, in the context of religious education. In such an instance, the fact that a transaction advances religion is irrelevant. ….
4. From [57] to [62] the Society made a number of submissions challenging RS and parts of DUT 034 including at [61], which states "the exemption should apply equally to religious and other types of organisations. Under the Commissioner's construction, religious organisations are not treated equally.".
5. The submissions disregard the clear restriction in s 275(3)(b)(i) that the Chief Commissioner's approval of purposes must be in accordance with guidelines approved by the Treasurer. The Treasurer's Guidelines at paragraph 3 (d) expressly provide that "property acquired by religious organisations [must not be used] for predominantly religious purposes".
6. The Society provides no authority for any of the submissions at [57] to [62] and I reject them.
7. In the Treasurer's Guidelines, the phrases "charitable or benevolent purposes" and "charitable and benevolent purposes" of a relevant organisation are not defined. Nor are they defined in the Act.
8. In Faith Baptist Church Inc v Chief Commissioner of State Revenue [2007] NSWADT 199, at first instance, Verick JM said at [66] "religious education is a religious activity". I agree with that statement and I agree with the Society's submission that religious education is also education.

Pemsel's Case

1. In Faith Baptist Church Inc v Chief Commissioner of State Revenue [2008] NSWADTAP 31 … the appeal panel said: Part C Pemsel's case 15 The Appellant contended that in accordance with The Commissioner for Special Purposes of the Income Tax v John Frederick Pemsel (1891) AC 531 ("Pemsel's case" or "Pemsel") the term "charitable body" should have its technical legal meaning and so as to include all four of the relevant divisions, those being trusts for relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not falling under any preceding heads. 16 The judgment of the High Court in Central Bayside General Practice Association Limited v Commissioner of State Revenue (2006) 229 ALR was cited in support of the proposition that the word "charitable" has a technical meaning (in line with Pemsel's case) which, in the absence of a contrary intention, applies. 17 Mr Verick held that there is just such a contrary intention in section 275(3)(a) of the Act in that it refers in its terms to an exempt charitable or benevolent body and defined as one whose resources are used wholly or predominantly for the relief of poverty in Australia or the promotion of education in Australia. Mr Verick in the decision below accordingly held that the other two Pemsel categories (and in particular the advancement of religion) were thus excluded. We consider that his finding as set out in this clause 17 was correct.
2. After the decisions in the Faith Baptist Church cases were published, the Commonwealth enacted the Charities Act 2013 (Cth). The preamble to this Act includes: Until now, the meaning of charity in Commonwealth law has largely been that of the common law, based on the preamble to the Statute of Charitable Uses 1601. Modern, comprehensive, statutory definitions of charity and charitable purpose, applying for the purposes of all Commonwealth law and ensuring continuity by utilising familiar concepts from the common law, will provide clarity and certainty as to the meaning of those concepts in contemporary Australia.
3. The Charities Act includes definitions of "charity" and "charitable" and lists certain purposes that are presumed to be for the benefit of the public.
4. The Society submitted in ASR: 13 …. the codification and legislative expansion of a "charity" in the Charities Act 2013 (Cth) (Charities Act). In a similar way to s 275(3), this defines a "charity" by reference to specific criteria. These criteria do not refer to and are not otherwise constrained by the concept of a charity in Pemsel. They provide significant latitude for an entity to satisfy the definition of a charity. …. …. 14 …. "charitable purposes" are not in any way constrained by the four heads of charity in Pemsel.
5. There is no material before me to the effect that the New South Wales Parliament has adopted the extended meaning of "charity" or "charitable" in the Charities Act in place of the concept derived from Pemsel.
6. The Society relied on Burt v Federal Commissioner of Taxation (1912) 15 CLR 469 to the effect that "where there is ambiguity about how an exception provision should be interpreted, a construction which favours the claimant should be preferred".
7. I find that there is no relevant ambiguity. The Treasurer's Guidelines unambiguously provide at [3(d)] that in order to obtain the benefit of the exemption under s 275(3)(b) property acquired by religious organisations is not to be used for predominantly religious purposes.
8. I have referred previously to the Introduction to the Constitution of the Society and will repeat it here. At paragraph 2 the Introduction states: This society is committed to simulate (sic) welfare and functions according and in line with the holy Quran and AlJaafari decrees, and all objects stated below are restricted to the adherence to this commitment.
9. At paragraph 3.a the first object of the Society is: To promote a general understanding of Islam and the Al-Jaafari sect. "The Al-Jaafari principles, culture, historic background and objectives".
10. I find that, to the extent that the activities of the Society are carried out pursuant to its objects as stated in its constitution, and there is no evidence to the contrary, the use of the Society's resources is pursuant to its objects.
11. The Society chose not to provide evidence as to the meaning of "the holy Quran and Al-Jaafari decrees". The Society has not satisfied me that these decrees do not reflect religious purposes nor that the Society is not a religious organisation.
12. In the circumstances, I am not satisfied that the activities of the Society are not predominantly for religious purposes. Accordingly, even though some and perhaps many of the Society's activities may well be for the advancement of education or other purposes beneficial to the community I am not satisfied that they fall within the Treasurer's Guidelines. Accordingly, I find that: 1. neither the Chief Commissioner, nor the Tribunal in place of the Chief Commissioner, can approve those purposes under s 275(3)(b)(i); and 2. the Society is not an exempt charitable or benevolent body for the purpose of s 275 (3)(b).

Section 275A Partial exemption for certain transactions by charitable and benevolent bodies

1. On the second day of the hearing the Society raised in ACS, for the first time, submissions in the alternative to the effect that if the Tribunal was not satisfied that the resources test or the transaction test was satisfied, then the Society sought relief under s 275A with respect to the portion of the Property that the Tribunal finds is being used for "approved purposes".
2. The hearing was adjourned briefly to enable counsel for the Chief Commissioner to obtain instructions including as to whether to seek an adjournment. On resumption Mr Klank informed the Tribunal that the Society would not press any submissions as to its compliance with the requirements of s 275A.
3. As the onus lies on the Society to prove its case and it has not pressed any relevant submissions, I make no findings in respect of the application of s 275A to the Society's circumstances in respect of the purchase of the Property.

Decision and orders

1. Having regard to the above findings on the material before me, and the matters which I referred to above as being relevant, I am not satisfied on the balance of probability that the Society has satisfied the requirements of s 275 of the Duties Act 1997 in relation to its purchase of the Property.
2. The correct and preferable decision of the Tribunal is that the decision of the Chief Commissioner under review is confirmed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 September 2017