Grain Growers Limited v Chief Commissioner of State Revenue

The nature of this application

1. The Plaintiff, Grain Growers Limited ("Grain Growers") is a company limited by guarantee. These proceedings concern whether it is entitled to an exemption from payroll tax under s 48 of the Payroll Tax Act 2007 (NSW) on the basis that it has charitable purposes and wages paid or payable to its employees are for work of a kind ordinarily performed in connection with that purpose and to persons engaged exclusively in that kind of work.
2. By letter dated 14 August 2013 from its accounting advisers, Grain Growers applied to the Defendant, the Chief Commissioner of State Revenue ("Chief Commissioner") for an exemption from payroll tax under s 48 of the Payroll Tax Act and for a refund of payroll tax which it had paid in the five years prior to its application for that extension. That application for exemption (Ex P4, Tab 1) outlined the basis on which the exemption from payroll tax was sought, namely that Grain Growers had a charitable purpose, as its activities met the requirements of the "public benefit" head of charity at general law, and that: "Grain Growers is a not-for-profit organisation that works on behalf of all Australian grain producers to promote the development of a more efficient, sustainable and profitable grains industry, which benefits not only its members but the public at large. Grain Growers undertakes all its activities with the aim of promoting the development of a sustainable, viable and efficient grains industry, Grain Growers is prohibited by its constitution from being a for-profit organisation, distributing any funds or property to its members or transferring any property or funds to its members or a for-profit organisation if it is wound up."
3. That application in turn sets out the range of Grain Growers' activities, in substantially the same terms as Grain Growers seeks to establish in this application, and submitted that the benefits of Grain Growers activities were provided to the public at large; that it only provided minor benefits to its members and did not limit its membership; and that: "Grain Growers' promotion of the development of Australian agricultural resources benefits not just its members, but the Australian community at large, as agriculture is vital to the community's welfare." That application also referred to other aspects of Grain Growers' activities, including the promotion of reform, engagement with business, government and the community, training and development programs and distribution of publications. The existence of these activities was not controversial in this application and was amply established by the evidence. That application also acknowledged the existence of commercial activities within Grain Growers, a matter to which I will refer below, and acknowledged that Grain Growers' employees located in New South Wales had mixed charitable and commercial roles and contended that the relevant products and services: "… support the overall functions of Grain Growers and the purpose of these employees' roles is not solely the delivery of products and services. The profits from these activities are retained by Grain Growers to fund the provision of benefits to those involved in the grains and food industry through the various activities and services provided by Grain Growers. … Accordingly, it is not relevant that Grain Growers charges fees for the services it provides, provided that any surplus generated from such fees are used in furtherance of the objects of Grain Growers. This is clearly the case with Grain Growers, as any funds generated by the organisation are used to assist the funding of the services and activities provided by Grain Growers to the grain industry and the community at large." That application in turn attached other documents that are in evidence in this application, including Grain Growers' constitution as at October 2011; evidence of its recognition as a charity by the Australian Taxation Office as at 2011; its 2012 annual report; and examples of various publications by Grain Growers.
4. On 22 January 2014, the Chief Commissioner declined Grain Grower's application for the exemption under s 48 of the Payroll Tax Act. The Notice of Disallowance (Ex P4, 185) accepted that Grain Growers was a non-profit organisation, but expressed the view that its purposes: "are primarily for the benefit of its members, and as such it cannot be said to have charitable purposes under the fourth head."
5. Grain Growers subsequently objected to the Chief Commissioner's decision by letter dated 19 March 2014. That Notice of Objection (Ex P4, Tab 3) took issue with the Chief Commissioner's contentions that Grain Growers' purposes were primarily for the benefit of its members and that its objects lacked public utility and that any public benefit was too remote from its overall purpose, referred to several of the authorities to which I will refer below and to a range of activities undertaken by Grain Growers that were said to benefit the Australian community, including engagement with Government, and to products and services which were contended to provide benefit to the food and agricultural industries and the Australian public at large, and to Grain Growers' activities in respect of education and events, and again attached a range of documentation as to Grain Growers' activities. The Chief Commissioner disallowed that objection by letter dated 18 August 2014, on the basis that Grain Growers' objects and activities were primarily for the benefit of its members and lacked a public benefit and charitable intent.
6. By Summons filed on 17 October 2014 Grain Growers applies, under s 97 of the Taxation Administration Act 1996 (NSW) for a review of a decision by the Chief Commissioner dated 22 January 2014 to disallow its application dated 14 August 2013 requesting an exemption from, and refund of, payroll tax. The amounts that are the subject of refund applications by Grain Growers are payroll tax of $31,803.54 paid in the financial year ended 30 June 2009; $47,200.29 in the financial year ended 30 June 2010; $70,894.54 in the financial year ended 30 June 2011; $189,683.06 in the financial year ended 30 June 2012; and $177,375.73 in the financial year ended 30 June 2013. The grounds of that application as identified in the Summons are that: "1 [The Chief Commissioner] erred in failing to allow the Application dated 22 January 2014. [Grain Growers] was a non-profit organisation having as its sole or dominant purpose a charitable purpose for the purposes of section 48(1)(c) of the Payroll Tax Act 2007 (NSW) and thereby entitled to the exemption and refund sought. 2 [The Chief Commissioner] made errors of fact in determining that [Grain Growers) was not a non-profit organisation having as its sole or dominant purpose a charitable purpose (for the purposes of paragraph 48(1)(c) of the Payroll Tax Act 1977 (NSW))."
7. The application is brought under s 97 of the Taxation Administration Act which provides that a taxpayer may apply to the Court for a review of a decision of the Chief Commissioner that is been the subject of an objection in specified circumstances. Section 19(2) of the Supreme Court Act 1970 (NSW) and s 97(4) of the Taxation Administration Act together provide that proceedings in the Court under this section are an "appeal" for the purposes of the Supreme Court Act. Section 101 of the Taxation Administration Act in turn specifies that the court dealing with the application for review may take any of several specified steps, including confirming or revoking the assessment or other decision to which the application relates and making an assessment or other decision in place of the assessment or other decision to which the application relates. A review under these provisions is a de novo review and is not limited to the materials before the Chief Commissioner: Tasty Chicks Pty Ltd v Chief Commissioner of State Revenue [2011] HCA 41; (2011) 245 CLR 446 at [12]-[22]. The issues raised by the appeal are identified in Grain Grower's Appeal Statement dated 31 October 2014 and the Chief Commissioner's Appeal Statement dated 3 December 2014.

Grain Growers' history

1. I should briefly refer to Grain Growers' history, which the evidence and submissions addressed at some length although its relevance is primarily as background to the Grain Growers' purposes and activities in the last several years. The predecessor to Grain Growers, the Premium Wheat Growers Association ("PWA") was formed in 1958. The Chief Commissioner drew attention, in his chronology of facts, to the fact that the objects of the PWA, at least when it was originally founded, appear to have been directed in significant part to promoting the interests of a subset of grain growers, namely those who grew high protein wheat, and that any surplus could then be returned to growers on a pro-rata basis. No doubt, these matters are relevant as part of the history of Grain Growers. However, they seem to me to provide little assistance as to Grain Growers' purpose or activities over 50 years later.
2. In 1992, PWA acquired wheat storage and handling facilities from the State Government of New South Wales, which it subsequently transferred to a commercial entity, GrainCorp, which was subsequently listed on Australian Stock Exchange and in which PWA had a significant shareholding for a period. The present body, Grain Growers, was established in 2000 by a merger between PWA and Victorian Grain Services which took place in connection with a merger between GrainCorp and a Victorian grain handler. Grain Growers subsequently received a substantial payment in respect of the cancellation of shares which it held in GrainCorp in 2001. Grain Growers was recognised as a charitable institution for the purposes of subdivision 50-B of the Income Tax Assessment Act 1997 (Cth) on 1 October 2002. The Chief Commissioner contends that Grain Growers was not then a non-profit organisation, because any surplus over operational costs could be returned to growers, and should not have been so recognised. It is not necessary to determine that matter for the purposes of this application. Grain Growers also accepted new members in Queensland following a merger between GrainCorp and a Queensland bulk handler in 2003.
3. Grain Growers acquired Australia Pty Limited (which had its origin as the Bread Research Institute) ("BRI"), to which I will refer below, on 31 December 2008 and acquired Agrecon Operations Pty Ltd ("Agrecon"), to which I will also refer further below, in 2009. Grain Growers subsequently sold the balance of its GrainCorp shares, again for a substantial payment, in 2011 and, in that year, assets, liabilities and staff of BRI and Agrecon were also transferred to it.

Whether Grain Growers is a non-profit organisation

1. The first issue in this case is whether wages paid by Grain Growers fall within s 48(1) of the Payroll Tax Act which, relevantly, provides that: "(1) Subject to subsection (2), wages are exempt wages if they are paid or payable by any of the following: … (c) a non-profit organisation having as its sole or dominant purpose a charitable … purpose (but not including a school, an educational institution, an educational company or an instrumentality of the State).
2. That section, as amended by the State Revenue Legislation Amendment Act 2008 (NSW), refers to a "sole or dominant" charitable purpose, by contrast with the requirement prior to 30 June 2008 for a "wholly" charitable purpose. An explanatory note recorded that the purpose of the amendment was that the exemption from payroll tax should apply: "To wages paid by any non-profit organisation that has as its sole or dominant purpose a charitable, benevolent, philanthropic or patriotic purpose. The amendment does not affect the existing requirement that the wages must be paid or payable for work of a kind ordinarily performed in connection with the religious, charitable, benevolent, philanthropic or patriotic purpose and to a person engaged exclusively in that kind of work."
3. By his Appeal Statement, the Chief Commissioner emphasises that, under s 100(3) of the Taxation Administration Act, Grain Growers bears the onus of establishing that it satisfies the description in s 48(1)(c) of the Payroll Tax Act. It is common ground that it will do so if it is a non-profit organisation and it has a sole or dominant purpose that falls within the fourth class in Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531 at 583 ("Pemsel") although the parties are, at least to some extent, at issue as to whether it must also establish that that purpose is beneficial to the community.
4. It may be that the fact that Grain Growers is a not-for-profit organisation is now conceded, as Ms Batrouney, who appeared with Ms Gatland for Grain Growers, suggested in oral submissions (T25). I address that question against the contingency that there is any uncertainty as to that concession. The Chief Commissioner points out that the term "non-profit organisation" is not defined in the Payroll Tax Act, but can include an organisation that makes a profit that is used to carry on its purposes rather than being operated for the profit or gain of its individual members: Incorporated Council of Law Reporting of Queensland v Federal Commissioner of Taxation (1971) 125 CLR 659 at 669-670, 671. The Chief Commissioner initially accepted, in his decision on objection dated 18 August 2013, that Grain Growers was a non-profit organisation (Balazs 17.10.2014, Ex JGB-1, Tab 2). The Chief Commissioner qualified that position in his Appeal Statement which did not admit that Grain Growers was a non-profit organisation prior to October 2011 on the basis that he had not then been provided with a previous constitution of Grain Growers (Appeal Statement [15]), although that document was in evidence in the proceedings.
5. I am satisfied that Grain Growers is a non-profit organisation, in both a broader and a narrower sense. Grain Growers does not appear to conduct, or seek to conduct, its activities at a profit and relies on income from invested monies derived from its earlier sale of an interest in GrainCorp to fund those activities (Eastburn 25.3.2015 [15], Garden 27.3.2015 [42]). It appears that one product provided by Grain Growers was sold with a mark-up or profit, but the evidence of its chief executive, Ms Garden, which was neither the subject of objection or any substantial cross-examination, was that the profit derived was applied to investment in other loss making or uncommercial products or to fulfil "industry good" functions (a concept to which I will refer further below) and to fund advocacy areas of Grain Growers' activities (Garden 27.3.2015 [91]). In the relevant period, Grain Growers' Constitution required that its income and property be applied solely towards the attainment of its objects and prohibited the distribution of its property to its members by way of dividend, bonus or otherwise or on a winding up or dissolution of Grain Growers. The annual and financial reports for Grain Growers from 2008 to 2014 are in evidence (Garden 27.3.2015 [51], Ex P2, Tabs 10-16) and do not disclose any dividend paid to members of Grain Growers at any time. These matters support its characterisation as a non-profit organisation, and I find that it had that character.

The nature of a charitable purpose

1. The question whether Grain Growers has, as its sole or dominant purpose, a charitable purpose was at issue between the parties. Any such purpose would be established by reference to the spirit and intendment of the preamble to the Statute of Charitable Uses 1601 (Imp) as falling, relevantly, within the fourth category in Pemsel, as a trust for other purposes beneficial to the community. The Chief Commissioner submits that, within the fourth category, public benefit is not presumed and must be proved, and that Grain Growers has the onus of establishing that its objects are beneficial to the community: Incorporated Council of Law Reporting of Queensland v Federal Commissioner of Taxation above at 669; Royal National Agricultural and Industrial Association v Chester (1974) 3 ALR 486. Grain Growers in turn contends that the general improvement of agriculture is a charitable purpose which falls within the fourth class in Pemsel and also submits that the provision of assistance to business and industry can provide benefits of a kind that are recognised as charitable.
2. The case law makes clear that the term "charitable purpose" used in s 48 of the Payroll Tax Act is to be interpreted by reference to the Statute of Charitable Uses and Pemsel, where Lord Macnaghten observed that charity in its legal sense comprised four principal divisions, being trusts for the 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 of the preceding heads". The general rule that the word "charitable" should be understood in its legal sense, being the sense derived from Pemsel, unless a contrary intention appears in a statute, was recognised by the Privy Council in Chesterman v Federal Commissioner of Taxation (1925) 37 CLR 317. In Incorporated Council of Law Reporting of Queensland v Federal Commissioner of Taxation above at 666, where Barwick CJ (with whom McTiernan J agreed) observed that: "The Act attempts no definition of charity or of what for its purposes will be charitable. But having regard to the decision of the Privy Council in Chesterman v Federal Commissioner of Taxation [(1925) 37 CLR 317] … it must be taken that whether or not the institution is relevantly charitable will be determined according to the principles upon which the Court of Chancery would act in comexion with an alleged charity. That means that the indications contained in the preamble to the Statute of Elizabeth 1601 and the classifications in Lord Macnaghten's speech in Commissioner for Special Purposes of Income Tax v Pemsel … are to be observed in deciding whether or not the institution is charitable for the purposes of the Act."
3. The High Court also observed, in Central Bayside General Practice Association Ltd v Commissioner of State Revenue [2006] HCA 43; (2006) 228 CLR 168 at [18] (per Gleeson CJ, Heydon and Crennan JJ) that, absent a contrary intention in a statute, the word "charitable" should be given its technical meaning, as defined by Lord Macnaghten in Pemsel by reference to the spirit and intendment of the preamble of the Statute of Charitable Uses. In Commissioner of Taxation (Cth) v Word Investments Ltd [2008] HCA 55; (2008) 236 CLR 204 ("Word Investments"), the majority emphasised at [24] that the existence of a goal of profit, as a relevant purpose, does not exclude a characterisation of an institution as charitable in that sense. In that case, the factor that established a charitable purpose was that the profit would be applied to support another organisation that was charitable in character. The majority also held (at [26]) that the activities of that organisation, in raising funds by commercial means, although not intrinsically charitable, became charitable in character where they were carried out in furtherance of a charitable purpose. The Chief Commissioner accepted in submissions that Word Investments is authority that, if commercial activity is directed to furthering objects that are predominantly charitable, then that will not deprive that activity of its charitable character.
4. In Northern NSW Football Ltd v Chief Commissioner of State Revenue [2011] NSWCA 51; (2011) 83 ATR 603 at [9], Gzell J (with whom Allsop P and Handley AJA agreed) observed that there was no reason why the word "charitable" should have a different meaning in s 48(1)(c) of the Payroll Tax Act from that considered by the High Court in Word Investments. In Aid/Watch Inc v Commissioner of Taxation [2010] HCA 42; (2010) 241 CLR 539 at [18], the majority of the High Court in turn recognised that: "[T]he law of charity is a moving subject which has evolved to accommodate new social needs as old ones become obsolete or satisfied." Their Honours again noted (at [23]-[24]) in respect of the expression "charitable institution" as used in Item 1 of s 50-5 of the Income Tax Assessment Act 1997, the A New Tax System (Goods and Services Tax) Act 1999 (Cth) and the Fringe Benefits Tax Assessment Act 1986 (Cth) that: "Where statute picks up as a criterion for its operation a body of the general law, such as the equitable principles respecting charitable trusts, then, in the absence of a contrary indication in the statute, the statute speaks continuously to the present, and picks up the case law as it stands from time to time. Further, where, as here, the general law comprises a body of doctrine with its own scope and purpose, the development of that doctrine is not directed or controlled by a curial perception of the scope and purpose of any particular statute which has adopted the general law as a criterion of liability in the field of operation of that statute. Accordingly, the use of the term "charitable" in the phrase "charitable institution" in s 50-5, item 1.1 of the 1997 Act and the corresponding provisions of the FBT and GST Acts is to be understood by reference to its source in the general law as it is developed in Australia from time to time."
5. The focus in determining whether Grain Growers' purposes are charitable is on its main purposes. In Tasmanian Electronic Commerce Centre Pty Ltd v Commissioner of Taxation [2005] FCA 439; (2005) 142 FCR 371 at 385, Heerey J noted that: "The main object of the institution must be shown to be charitable. There may be objects that are incidental or ancillary to the main object, but an object that is not charitable, and not incidental or ancillary, will disqualify the institution as a charity." In Navy Health Ltd v Federal Commissioner of Taxation [2007] FCA 931; (2007) 163 FCR 1, Jessup J in turn noted that an object of an institution may be ancillary, incidental or concomitant to a main object, although it is not minor in quantitative terms, where that object is not "of substance in its own right" and is "something which tends to assist, or which naturally goes with, the achievement of the main object. Where an entity has a charitable purpose, the Court will also be conscious that there may be different means available to achieve that purpose, and, in Federal Commissioner of Taxation v Triton Foundation [2005] FCA 1319; (2005) 147 FCR 362 at [34], Kenny J noted that: "[I]t is immaterial whether this object might be achieved as or more effectively by some other means."

Whether Grain Growers has a purpose of the advancement of agriculture or other charitable purpose - the legal principles

1. It has long been recognised that a purpose of the advancement of agriculture can be beneficial to the community, for the purposes of the fourth category in Pemsel. In his opening submissions, the Commissioner undertook an extensive review of the authorities and concluded that: "It is accepted that as a matter of generality [emphasis in original] the promotion of agriculture may be charitable, but the manner in which the object is sought to be achieved needs to be looked at and where part of the manner/activities involve promotion of individual businesses, the [Chief Commissioner] contends that: (a) The public benefit is too remote because at its core the entity is promoting individual businesses even if that might have a flow on effect to the community generally; (b) However, in a given case, if proved by evidence [emphasis in original], the benefit may be sufficiently tangible and clearly definable to bring it within the fourth head of charity and to do so by the means by which the claimed public benefit is sought to be achieved. But in the absence of such evidence, the Court is not in a position to conclude that public benefit has been established."
2. The Chief Commissioner submits that, even if the objects and activities of Grain Growers are beneficial to the community in a general way, its purpose must be charitable in the sense noted above. The Chief Commissioner submits that Grain Growers' activities fails to satisfy the essential charitable element, so far as it is focused on the development of Grain Growers' business in Australia.
3. In reply, Grain Growers submits that it is not required to prove that the promotion of agriculture is charitable, but only that its purpose is the promotion of agriculture, and that it has established that matter by reference to its objects and its activities. It seems to me that little turns on the debate as to whether Grain Growers needed to prove public benefit where its objects fell within the fourth class of charity identified in Pemsel. As the High Court noted in Word Investments at [38]: "The charitable purposes of a company can be found in a purpose of bringing about the natural and probable consequence of its immediate and express purposes, and its charitable activities can be found in the natural and probable consequences of its immediate activities." I will return to the evidence as to the purposes and activities of Grain Growers below.
4. The question whether a purpose of the advancement of agriculture was beneficial to the community, for the purposes of the fourth category in Pemsel, was considered by the Court of Appeal in Inland Revenue Commissioners v Yorkshire Agricultural Society [1928] 1 KB 611, dealing with s 37(1) of the Income Tax Act 1918 (UK), in its application to an agricultural society which had the object of promoting, inter alia, an annual show, the improvement of livestock etc, the demonstration of methods and processes connected with, and the furthering of the interests of agriculture etc, agricultural education, scientific research and experimental work and watching and advising on legislation affecting the agricultural industry. The Court of Appeal also there addressed the question, which is in issue in this case and which I will address further below, of whether a purpose of benefitting members of an association is inconsistent with a charitable purpose.
5. Lord Hanworth MR observed (at 622), in respect of the concept of a "purpose beneficial to the community" that: "It has long been established that a mere benevolent purpose is not necessarily a purpose beneficial to the community. … it has been determined that where the purpose of the association is rather for the benefit of the members themselves, than a wider aim, then such institutions as are so established are not within the purview of purposes beneficial to the community." His Lordship there found that the relevant society was formed for the purpose of improving agriculture as a whole, rather than for benefiting its own members. Lord Atkin LJ similarly observed (at 631) that: "There can be no doubt that a society formed for the purpose merely of benefiting its own members, though it may be to the public advantage that its members should be benefited … would not be for a charitable purpose, and if it were a substantial part of the object that it should benefit its members I should think that it would not be established for a charitable purpose only. But, on the other hand, if the benefit given to its members is only given to them with a view of giving encouragement and carrying out the main purpose which is a charitable purpose, then I think the mere fact that the members are benefited in the course of promoting the charitable purpose would not prevent the Society being established for charitable purposes only." Lawrence LJ observed that, had the society been established for the promotion of agriculture generally, it would be established for charitable purposes, where agriculture "is an industry not merely beneficial to the community but vital to its welfare" contrasting the position if the Society was "a members' society, established for the promotion of the interests of its members in their respective businesses".
6. In Incorporated Council of Law Reporting of Queensland v Federal Commissioner of Taxation above, Barwick CJ also referred (at 669) to several cases holding that an agricultural purpose can be within the fourth category and observed that: "Agriculture partakes of that fundamental social quality which can give a charitable nature to a trust or purpose relating thereto which is beneficial to the community. … On occasions, a benefit of that kind to a section of the public less than the whole community by the trust or purpose may be enough. …"
7. The proposition that the promotion of agriculture is a charitable purpose has been accepted in the case law for a considerable period, on the basis identified in Incorporated Council of Law Reporting of Queensland above by reference to the "fundamental social quality" associated with agricultural activities. It seems to me that I can, without specific proof, infer that agricultural activity benefits society generally, and Australian agricultural activity benefits Australian society generally, and no evidence was led to suggest that the benefit that has previously existed in such activity has ceased to exist. There is also some evidence of the value of the grain industry to the Australian economy in Ms Garden's affidavit, including that Australia is a significant exporter of grains; there are approximately 24,000 grain farmers, of which approximately 18,500 are members of Grain Growers; and the Australian grains industry contributes approximately $15 billion to Australia's exports and approximately $26 billion to Australia's gross domestic product, presumably on an annual basis (Garden 27.3.2015 [13]-[18]). Ms Garden's evidence is also that grain producers support other agricultural industries, by growing wheat, barley and oats as a winter crop, using land for livestock and producing summer crops (Garden 27.3.2015 [17]).
8. It seems to me that I should accept that the promotion of agriculture can be a charitable purpose, as recognised in previous case law, as the promotion of industry or commerce can also be a charitable purpose: Pleasants v Attorney-General (UK) (1923) 39 TLR 675 (society for the "improvement of horticulture and good housewifery" was charitable); Inland Revenue Commissioners v Yorkshire Agricultural Society above at 623; Crystal Palace Trustees v Minister of Town and Country Planning [1950] 2 All ER 857 at 859; Federal Commissioner of Taxation v Triton Foundation above at [31]-[32] (promotion of "culture of innovation and entrepreneurship") was capable of being a charitable object); Tasmanian Electronic Commerce Centre Pty Ltd v Commissioner of Taxation above at [38]; Re Chamber of Commerce and Industry of Western Australia (Inc) and Commissioner of State Revenue [2012] WASAT 146 (promotion of Western Australian and Australian industry etc). In Federal Commissioner of Taxation v Triton Foundation above, Kenny J considered the position of an entity which had the object of promoting a culture of entrepreneurship for the benefit of Australian society, focusing on inventors, and provided advice and other assistance to such investors, as well as participating in programs to promote innovation. Her Honour held that, having regard to the constitution, activities and history of that organisation, its essential purpose was beneficial to the community and was charitable, although noting the possibility that it might lose its charitable status if it were significantly to change its operations, by charging market rates for most of its services.
9. In Re Chamber of Commerce and Industry of Western Australia (Inc) and Commissioner of State Revenue above, the State Administrative Tribunal of Western Australia (Chaney J) considered a somewhat similar situation, where a non-profit organisation had stated objects of, inter alia, promoting Western Australian and Australian industry, trade and commerce; membership of that organisation was open to anyone, within several categories of membership; and that body charged members and non-members for the services which it provided. The Commissioner of State Revenue in that case made somewhat similar submissions to those which were made, in part, by the Chief Commissioner in this case, namely that the main purpose of the body's enterprise was to provide support and services to individual members or, alternatively, any flow-on benefits to the public from the provision of such services were too remote to create a public benefit. Chaney J there emphasised the importance of the purpose for which the body's activities were carried on, as distinct from the nature of those activities, as to whether they were directed for the purpose of the promotion of commerce and industry, or to the private interests of members or other businesses. His Honour held that the taxpayer's main purpose was charitable, notwithstanding the emphasis on the provision of services in its planning documents and annual reports, where those documents also emphasised its purpose of support for trade and industry generally and for the promotion of a strong business community. His Honour left open the question as to how much of the wages paid could be said to qualify for the relevant exemption, on the basis that they were work of the kind ordinarily performed in connection with a charitable purpose for which the body or organisation was established or carried on, a matter which I will address below.
10. The parties also referred to Glebe Administration Board v Commissioner of Payroll Tax (NSW) (1987) 10 NSWLR 352. However, as the majority of the High Court observed in Word Investments, that decision was directed to an exemption from payroll tax available to a "religious … institution" and the statute there raised no question of the characterisation of the institution as charitable or otherwise.
11. The parties also recognised, and addressed considerable attention in submission to, the fact that a charitable purpose within Lord Macnaghten's fourth category in Pemsel requires that the relevant purpose is to benefit the public generally, as opposed to individual members of the community, although that purpose may be satisfied where a benefit is provided to a section of the public, and notwithstanding direct or indirect incidental benefit to individuals, such as members of a profession or, in this case, persons with a particular interest in grain farming: Inland Revenue Commissioners v Yorkshire Agricultural Society above at 622-623 per Lord Hanworth MR, at 629-630 per Atkin LJ; at 637 per Laurence LJ; Re Smith [1932] 1 Ch 153. In Barby v Perpetual Trustee Company Limited (1937) 58 CLR 316 at 324, Dixon J in turn observed of the fourth class that the relevant gift: "… must be directed to purposes that are for the benefit of the community or a considerable section or class of the community. The purposes must tend to the improvement of society from some point of view which may reasonably be adopted by the donor. The manner in which this tendency may be manifested is not defined by any closed category."
12. In Crystal Palace Trustees v Minister of Town and Country Planning above at 858-859, Danckwerts J rejected a submission that a purpose of promoting industry or commerce amounted to no more than promoting the interests of the particular manufacturers, and held that the relevant purpose was a public purpose of a charitable nature within the fourth class, where the trustees comprised representatives of public authorities who had contributed monies to the relevant project, would not distribute profits and the enabling legislation emphasised the provision of benefits to the public. The same approach has been consistently adopted in subsequent cases including Royal Australasian College of Surgeons v Commissioner of Taxation (Cth) (1943) 68 CLR 436 at 447, 450, 454. In Tasmanian Electronic Commerce Centre Pty Ltd v Commissioner of Taxation above at [56], Heerey J observed that: "Once it is accepted that assistance to business and industry can provide a public benefit of the kind which the law recognises as charitable … I do not see how the fact that individual businesses may benefit can be a disqualifying factor."
13. That approach was also taken in Federal Commissioner of Taxation v Triton Foundation above at [22]-[23] and Victorian Women Lawyers' Association Inc v Federal Commissioner of Taxation [2008] FCA 983; (2008) 170 FCR 318 at [133]. In Federal Commissioner of Taxation v Co-Operative Bulk Handling Ltd [2010] FCAFC 155; (2010) 189 FCR 322 at [109]-[110], the Full Court of the Federal Court noted that the existence of a private benefit to members did not exclude a charitable purpose, so far as the provision of such a benefit to members, incidentally or otherwise, would be "entirely consistent with the very purpose of the organisation being established and being given exemption" and that the activities of the co-operative in issue in that case, which were directed to advancing the interests of the grain industry in Western Australia as a whole, were not "carried on for the profit or gain of individual members". In Re Chamber of Commerce and Industry of Western Australian (Inc) v Commissioner of State Revenue above, Chaney J similarly treated the provision of services to members, in the case of that body, as directed to achieving its primary object, namely to promote trade, commerce and industry, and observed (at [99]) that: "Provision of services to members is ancillary to, and possibly a necessary part of, fostering trade and commerce generally for the benefit of the wider community."
14. There are, of course, also several cases where the relevant public benefit has not been established. The Chief Commissioner particularly relied on Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297 and R (Independent Schools Council) v Charity Commissioner for England and Wales [2011] UKUT 421 for the proposition that the requirement of public benefit involved both the benefit of society generally and the benefit to the public or a section of the public, rather than to a confined purpose relating to particular members. In Oppenheim v Tobacco Securities Trust Co Ltd above, a trust providing for, or assisting in providing for, the education of children of employees or former employees of certain companies was held to have a beneficial purpose, but not a charitable purpose, where the class of beneficiaries did not constitute a sufficient section of the public. Other examples of cases where an organisation has been held to benefit individuals, rather than a section of the community so as to be beneficial to the community or the public, include Thompson v Federal Commissioner of Taxation (1959) 102 CLR 315, in respect of a gift of an estate to a Masonic school, where membership of the Masonic order was by election by existing members. In Inland Revenue Commissioners v Oldham Training and Enterprise Council (1996) 69 TC 231, a company limited by guarantee was held not to have charitable status, where it had the freedom to provide private benefits by way of training and cash allowances for persons starting new businesses, on the basis that the benefits conferred by those activities on the community, as distinct from the recipients of those benefits, were too remote.
15. A charitable purpose was also not established in Canterbury Development Corporation v Charities Commission [2010] 2 NZLR 707, where the relevant corporation provided assistance to businesses which satisfied certain criteria, in the form of financial assistance as well as advice and support, again on the basis that the objects of that organisation focused on the development of individual businesses rather than public benefit. A similar result was reached in Re Queenstown Lakes Community Housing Trust [2011] 3 NZLR 502, where the Trust was established to promote or provide housing to households in the Queenstown area, by reference to specified criteria, on the basis that the particular form in which assistance was provided to individual recipients did not give rise to a charitable purpose. Grain Growers distinguishes the decisions in Canterbury Development Corporation v Charities Commission above and Re Queensland Lakes Community Housing Trust above on the basis that both involved organisations which provided direct private grants and funding for individual businesses and people in need of housing, so that any public benefit was derivative of the private benefit directly provided to the recipient. As Grain Growers points out, those decisions are not inconsistent with, and specifically approved, the reasoning in Federal Commissioner of Taxation v Triton Foundation and Tasmanian Electronic Commerce Centre Pty Ltd v Commissioner of Taxation that "assistance to business and industry can provide a public benefit which the law recognises as charitable": Re Queenstown Lakes Community Trust above at [67]. It seems to me that the distinction between the Australian decisions to which I have referred and those decisions is not one of principle, but one of fact, where the New Zealand courts held that the relevant assistance was not to business or industry generally, but to the particular recipients.
16. In R (Independent Schools Council) v Charity Commissioner for England and Wales above, in holding that a public benefit was not established, the Upper Tribunal referred to the decision in Oppenheim and observed (at [44]) that the concept of public benefit had two related aspects, namely that it involved a benefit to the community, which would in this case be established by the advancement of agriculture or, indeed, the narrower purpose of the advancement of grain farming; and a second aspect, that those who may benefit from the carrying out of the purpose "must be sufficiently numerous and identified in such a manner as to constitute a section of the public". The Upper Tribunal also observed (at [46]) that a distinction is not always drawn, and often will not need to be drawn, between those two senses of public benefit. The Upper Tribunal also observed (at [68]) that the Court will form a view on the evidence before it as to whether a trust is for the public benefit, not by way of assumption, but by decision, although it may take account of other decided cases and may take judicial notice of facts where appropriate.
17. It is common ground that, in order to determine whether Grain Growers' purpose is charitable it is necessary to examine its objects and the manner in which those objects are effected by its activities, and to determine whether its "main or predominant or dominant objects, as distinct from its concomitant or incidental or ancillary objects, are charitable": Word Investments at [217]. In Cronulla Sutherland Leagues Club Ltd v Federal Commissioner of Taxation (1990) 23 FCR 82 at 95-96, Lockhart J observed that: "[M]aterial facts and circumstances which should be examined to characterise the main purpose of the relevant body include its constitution, its activities, its history and its control. These may alter from time to time and the purpose of establishment may correspondingly change. It is not sufficient to look to the formation of the body and to ascertain what was at that time the purpose of its formation. The statute gives a periodic operation to the words and directs the inquiry to a particular time, namely, the year of income so that consideration must be given not only to the purpose for which the society was established but also the purpose for which it is currently conducted."
18. The Chief Commissioner points out that a determination whether Grain Growers has charitable objects involves a two-stage enquiry, the first being a factual enquiry as to its main object or objects, which looks at both those objects and activities, from which a finding of fact emerges, and the second stage being a determination whether the object that is found falls within the legal concept of charity. In Word Investments, the majority observed (at [17]) that, where a company had a constitution which stated its objects: "[I]t is necessary to examine the objects, and the purported effectuation of those objects in the activities, of the institution in question. In examining the objects, it is necessary to see whether its main or predominant or dominant objects, as distinct from its concomitant or incidental or ancillary objects, are charitable." The majority also observed (at [38]) that: "The charitable purposes of a company may be found in a purpose of bringing about the natural and probable consequences of its immediate and expressed purposes, and its charitable activities can be found in the natural and probable consequence of its immediate activities."
19. The determination whether a body is established or carried on for charitable purposes was regard to the circumstances existing at the time of incorporation, and also to the activities of the body at the time when its charitable status is to be determined, recognising that the purpose and status of such an entity may change over time: Brookton Co-Operative Society Ltd v Federal Commissioner of Taxation (1981) 147 CLR 441 at 450-451; Cronulla Sutherland Leagues Club Ltd v Federal Commissioner of Taxation above at 89. In Word Investments at [34], the majority similarly noted that "it would not be enough that the purpose or main purpose of an institution were charitable if in fact it ceased to carry out that purpose". The Chief Commissioner also rightly points out that the nature of Grain Growers' activities needs to be determined by reference to each of the tax years ending 30 June 2009 to 30 June 2013, although Grain Growers placed less weight on that matter where the substance of its case is that its activities did not change in those years. The determination in each of those tax years will only differ if there is any change of circumstance between the relevant years.

The evidence as to Grain Growers' purposes and activities

1. Grain Growers contends, in its Appeal Statement, that its objects and activities are directed towards the promotion of a Australian agricultural resources and that it: "conducts (and at all relevant times, conducted) a broad range of activities that were available to both members and nonmembers alike without distinction and without differential pricing or access. These activities include advocacy and policy submissions, research and development, education and training and publications. All of these activities are charitable in nature and to the benefit of members and non-members alike." Grain Growers also there contends that its purpose was and continues to be to promote the development of Australian agricultural resources and the Australian grains industry, which it contends is a charitable purpose, and the activities of Grain Growers, giving expression to those objects, are beneficial to the community.
2. Grain Growers contends that having regard to the objects in its Constitution, both before and after its amendment, and its activities, its dominant purpose was and is to promote the development of Australian agricultural resources and in particular the grains industry. Clause 1.1 of Grain Growers' constitution in its earlier form took effect from a date prior to 21 February 2008 and until its amendment in October 2011. That clause, which is applicable in two of the years for which Grain Growers seeks refunds of payroll tax, sets out its object as follows: "1.1(a) The objects of Grain Growers are to promote the development of Australian agricultural resources including by promoting and fostering a sustainable, reliable and efficient grains industry in Australia in any manner Grain Growers thinks fit and thereby to generally promote the interests of grain producers including those that are members."
3. The objects of Grain Growers, as amended from October 2011, are set out in clause 1.1 of its amended constitution as follows: "The objects of Grain Growers are to promote the development of Australian agricultural resources by: (a) representing the national interests of grain growers in Australia; (b) developing and implementing policies aimed at cultivating a strong, innovative, profitable, globally competitive and environmentally sustainable grains industry. These policies will be constructive, balanced and well researched; (c) making representations to and working with governments consistently with its role of representing the Australian grain community; (d) working with all sectors of the Australian grains industry where matters of common interest are concerned; and (e) exercising good corporate governance in representing the interests of the Australian grain community, in any manner that Grain Growers thinks fit."
4. Grain Growers submits, and I accept, that the objects stated in its constitution indicate a dominant purpose of the promotion and development of Australian agricultural resources, albeit with particular reference to the grains industry in Australia, although it remains to have regard to Grain Growers' activities as part of the holistic inquiry which the case law requires. While the objects specified in Grain Growers' constitution identifies a purpose of the promotion of agriculture generally, the evidence indicates that Grain Growers' activities are, perhaps not surprisingly, directed more specifically to the promotion of grain growing.
5. Grain Growers contends (Appeal Statement [36]) that it undertakes a range of activities to achieve its principal objective of promoting the development of the Australian agricultural resources industry. Grain Growers identifies those activities as including, first, policy and advocacy-related activities directed towards advancing the interests of the agricultural (and, in particular, the grains) industry within Australia, including the making of submissions to government and the development of policies. Second, Grain Growers contends that it develops and distributes products, services and projects directed toward benefiting the Australian agricultural (and in particular, the grains) industry and submits that those products, services and projects were available to the public without exclusion and there is no pricing differential between Grain Growers' members and non-members. Third, Grain Growers refers to the production of publications, information and resources, including research in scientific testing results, to members and non-members of Grain Growers with no difference in price, which it contends were: "intended to (and continue to) benefit Australian agricultural resources and in particular, the grains industry". Fourth, Grain Growers refers to its arranging educational, training and professional development activities including hosting meetings, arranging seminars and facilitating tutorials directed to benefiting the agricultural and grains industry in Australia and providing occupation-specific training courses for employees in the food production industry.
6. Grain Growers also submits that none of the products, services or activities it provides are solely or exclusively provided for its members and all services and activities are provided to members and non-members alike without pricing distinctions or discounts for members (Appeal Statement [37]). Grain Growers also submits that its activities and the benefits that arise from them are not limited to its members but were and continue to be the benefit of the Australian agricultural community generally, and contends that any benefits to its members or to individual businesses was and continues to be concomitant, ancillary or incidental to Grain Growers' dominant purpose of the promotion of Australian agricultural resources at the particular the grain's industry.
7. By its Appeal Statement, the Chief Commissioner put Grain Growers to proof of the claim as to its activities set out in paragraphs 36 and 37 of its Appeal Statement, to which I have referred above. The Chief Commissioner also submits that Grain Growers' objects are not shown to be beneficial to the community, so far as its main object is to promote the profitability of grain growers, for their benefit rather than for the benefit of the community. The Chief Commissioner also directs attention to a question of fact whether Grain Growers carries on its operations for the main or dominant purpose of benefiting its members, as distinct from a purpose of the promotion of agriculture. That question is, as the authorities to which I have referred above indicate, related to, and partly the converse of, the question whether Grain Growers' activities have an element of public benefit.
8. Grain Growers relies on the affidavit of its chief executive, Ms Garden, to establish those activities which indicate a broader purpose of the advancement of agriculture or at least of the grain growing industry generally. Ms Garden's affidavit refers to the provision by Grain Growers of what is described as "industry good" functions, which she defines as: "A service or function which does not directly generate commercial returns for specific individuals but provides benefits for the whole industry." (Garden 27.3.2015 [20]) Ms Garden gives evidence of Grain Growers' objective "to be recognised as the national representative body for grain growers" and to its efforts to draw its membership base from across the country and to understand concerns and issues affecting a diverse range of growers (Garden 27.3.2015 [46]). She also sets out, at considerable length, the functions performed by Grain Growers which she characterises as "industry good" functions and also deals with activities of grower engagement and international trade advocacy and domestic policy advocacy, directed to issues that impact the grains industry nationally and state-based issues which are likely to impact on the national grains sector, and gives evidence of publications issued by Grain Growers and the provision of technical assistance in offshore markets with the object of promoting the quality and characteristics of Australian wheat (Garden 27.3.2015 [61]-[179]). Ms Garden also sets out advocacy and community engagement tasks undertaken by Grain Growers, and also refers to other programs and scholarship opportunities offered by Grain Growers, which are not limited to its members or their associates, and to the publication of a magazine dealing with research and product testing in respect of farming equipment, through another entity, Kondinin Group. Some parts of that evidence were admitted as submission only and other parts were rejected with leave, so far as they were conclusory in character. Grain Growers submits, with reference to Ms Garden's evidence, that: "It is apparent that the industry-good functions which Grain Growers involved itself in were matters that would have been unduly burdensome for individual grain growers to have undertaken nor did these activities operate to derive a specific benefit to individual growers."
9. Grain Growers also relies on the evidence of Mr Eastburn, a director of Grain Growers and its chairman from February 2008 until August 2014, who gave evidence of what he perceived as a "market failure" when the Federal Government disbanded the position of the Australian Wheat Board ("AWB") as a single desk exporter of Australian wheat in 2008. Whether that change gave rise to a market failure, in any wider sense, is plainly a matter of perception as to which views may differ. Mr Eastburn also gave evidence that the change in AWB's role removed a body that had previously conducted "industry good" functions on behalf of the grain industry, and that Grain Growers sought to fill the gap by promoting Australian wheat overseas. The focus of Mr Eastburn's evidence is, however, squarely on the benefit of Grain Growers activity for the "grains industry" or at least the body of grain growers, rather than any wider focus on the agricultural industry, or other sectors in the grain industry such as grain traders.
10. I turn now to the evidence as to whether Grain Growers' activities are directed to the dominant purposes of benefiting its members rather than for the promotion of agriculture of any wider charitable purpose. Ms Garden's evidence is, as I noted above, that approximately 18,500 of the 24,000 grain farmers in Australia are members of Grain Growers (Garden 27.3.2015 [17]); membership generally requires a one-off membership fee (Garden 27.3.2015 [45]) and Grain Growers receives minimal income from memberships in each year (Garden 27.3.2015 [50]); membership fees can be waived, particularly where Grain Growers is seeking to increase membership at a particular region (Garden 27.3.2015 [47]-[48]); and Grain Growers does not provide discounts or rebates for products or services which it provides to its members (Garden 27.3.2015 [52]). It appears that Grain Growers has a membership test, directed to whether individuals are grain farmers with a holding of land which represents the area they consider is the minimum practical area for a viable grain farm (Garden 27.3.2015 [15]). However, the services which Grain Growers provides are not generally restricted to its members, with one exception in respect of a FarmRISK Crop Forecasting tool (Garden 27.3.2015 [53]). Grain Growers submits that: "Any benefits to members of Grain Growers or to individual businesses was and continues to be concomitant, ancillary or incidental to Grain Growers' dominant purpose of the promotion of Australian agricultural resources and in particular the grains industry and not because they are members."
11. There is also evidence that Grain Growers has published numerous reports seeking to promote the Australian grains industry, which are in evidence, with titles such as "What the World Wants from Australian Wheat Growers" (Ex P2, Tab 24); "What the World wants from Australian Wheat (Update: 2010)" (Ex P2, Tab 25); "What the World Wants from Australian Wheat (Stakeholders' Report 2011)" (Ex P2, Tab 26); "National What Quality and Variety Report 2012/2013 (Ex P2, Tab 27) and a similar report for 2013/2014 (Ex P2, Tab 28) and a report on the state of the Australian Grains Industry in June 2011 (Ex P2, Tab 32).
12. It is, of course, also helpful to consider contemporaneous documents that recorded Grain Growers' activities before any dispute arose. At a strategy meeting of Grain Growers' board of directors in August 2007, they discussed its future direction, by reference to the possibility of provision of industry services. Mr Eastburn's evidence in cross-examination was that not all aspects of the strategy considered were adopted, and that Grain Growers' purpose was to "benefit the industry all over", and specifically to benefit the growers and "improve their bottom line". Ms Seiden, who appeared with Ms Kaur-Bains for the Chief Commissioner, sought and obtained something of an acknowledgment from Mr Eastburn that the relevant purpose was to assist individual businesses to increase their profits, although I did not understand that acknowledgment to abandon Mr Eastburn's evidence as to Grain Growers' commitment to the promotion of agriculture, or at least of grain growing, and his evidence in cross-examination was also that services provided by Grain Growers were subsidised by Grain Growers, and charged for in order to encourage growers to recognise their value.
13. Grain Growers' strategic plan for 2009 - 2013 (Ex D1, tab 2) in turn indicated that: "[The strategic plan] provides [Grain Growers] with the basis for enhancing and delivering increasing value to members and to the industry; with the rationale to ensure [Grain Growers'] members support and legitimacy; and with the framework to develop the skills and resources to meet the challenges and opportunities ahead. Overall the Plan brings clarity to [Grain Growers'] strategic direction and to [Grain Growers'] identity. It introduces a new commercial perspective, but also identifies how GCA can participate in ways more beneficial to industry." That strategic plan also referred to aspirations that Grain Growers would "provide tangible services that underpin the delivery of an efficient, effective and competitive marketplace" and establish "a World recognised business that supports Australia's domestic and export grain program". These matters do not seem to me to support the Chief Commissioner's characterisation of Grain Grower's objectives as directed to the provision of services to individual growers, rather than as having a wider perspective. Mr Eastburn accepted in cross-examination that the plan was directed, to use the cross-examiner's words which he accepted, to "providing tangible services for growers". Again, I did not understand that acknowledgment to be an acceptance that the purpose of providing such services was to advance the individual interests of those growers, as distinct from Grain Growers' wider purposes. In re-examination, Mr Eastburn indicated his belief that such services were "to benefit to [sic] growers, not to benefit commercial business" (T23).
14. The Chief Commissioner also referred, by way of background, to evidence of Grain Growers' activities (Ex P2, 1767-1770) in respect of the 2008 tax year, which is not directly in issue in the proceedings, and accepted that grower development and industry development activities promoted agriculture generally and were charitable. The Chief Commissioner also referred to observations in the Chairman's report in Grain Growers' 2008 annual report to the effect that Grain Growers "took on new projects and invested in new areas to ensure growers had the latest information and tools to improve and enhance their grain growing businesses" (Ex P2, 1765) and to a further statement in the annual report (Ex P2, 1773) that: "[Grain Growers'] core activities will be separated from the new business streams of grains innovation fund and business services. We will do this by keeping [Grain Growers'] existing activities and services under the current [Grain Growers'] structure and by establishing subsidiary companies, with separate Boards, that will operate our Grains Innovation Fund and managed service businesses we acquire or develop. Business Services will seek to establish a world recognised business that supports Australian domestic and export grains program, making sure that information and technical services the grains industry needs are readily available and are well capitalised. Business Services could be built on acquisitions of current industry service providers who need an injection of capital or to be merged with others to ensure sufficient scale to compete globally." That reference to "business services" is put in terms that seem to me to emphasise industry benefit rather than benefit to individual growers. Grain Growers' 2008 annual report also refers to its activities as including the provision of member services, capacity building through innovation and community projects, projects to support industry development, such as climate initiatives and advocacy, and services to members such as FarmRISK tools and reports and surveys (Ex P2, 1767-1770) and records Grain Growers' identification of four strategic priorities "to add value to the industry" as follows: "1. Establish an informed and efficient marketplace, so growers have reliable market intelligence, access to transparent grains pricing and payments to growers are efficient and reliable. 2. Provide industry promotion and market development, both in Australia and globally. 3. Generate innovation by making R&D reflect industry needs, ensuring growers get access to technology and improved industry processes. 4. Improve grains industry productivity by investing in and pushing for a more efficient grain production and supply chain." That annual report contains a summary statement of Grain Growers' role, namely that: "The objects of Grain Growers' Association are to promote the development of Australian agricultural resources, including by promoting and fostering a sustainable, viable and efficient grains industry in Australia. … (and) to generally promote the interests of grain producers including those that are members." (Ex P2, 1771)
15. The Chief Commissioner places weight on Grain Growers' acquisition of two "commercial" businesses, BRI from 2009 and a survey and forecasting research company, Agrecon in 2010 and the nature of the services they provide. The Chief Commissioner contends, in summary, that the businesses of BRI and Agrecon provide business services to individual businesses and the public benefit is too remote, in the absence of evidence; that the amount expended on achieving the object of providing such services was such as to effect the other activities of Grain Growers, which would otherwise be charitable; or alternatively that Grain Growers has not discharged its onus in establishing that is dominant purpose is charitable.
16. Grain Growers acquired all of the issued capital of BRI on 31 December 2008 (Ex P2, 1830). A board memorandum dated 22 March 2008 dealing with the proposed acquisition of BRI (Ex D1, Tab 7) noted that the acquisition of that entity would provide Grain Growers with an opportunity to position itself as an "in market" player for a tangible grains based service offering a value proposition to, inter alia, processors, consumers and exporters. The Chief Commissioner points to the "commercial focus" involved in that proposition. The Chief Commissioner draws attention to BRI's financial report for the year ended 30 June 2008 (Ex P2, 2449) which describes its principal activity as an independent scientific research company earning revenue from Australian grains, flour milling and grain-based industries, and providing laboratory services, technical advisory services, consultancy and training courses to companies in the food industry (Ex P2, 2451). That statement of BRI's activities refers, of course, to the period prior to its acquisition by Grain Growers but there is no evidence that those activities have substantially changed since that date.
17. The description of BRI in Grain Growers' 50th anniversary publication, Fields of Gold (Ex P1) refers to its role in providing impartial testing, so as to support claims about the milling and nutritional qualities of Australian what varieties (Ex P1, 126). That description also adopts the language of "industry good", by which Grain Growers' wider objectives have been described, as follows: "As the relationship between [Grain Growers] and BRI continues, it is well placed to contribute significantly in developing 'industry good' services in the fully deregulated industry scene of the future. One of the future developments for [Grain Growers] is in providing 'industry good' services which could not be regarded as 'commercial return' services. The relationship between [Grain Growers] and BRI can contribute to this growth area. Industry good services are those where the likely return on investment is lower than the return a commercial company would require." (Ex P1, 128)
18. Mr Eastburn's evidence as to the acquisition of BRI (and Agrecon, to which I will refer below), which had a somewhat conclusory character, was that Grain Growers acquired BRI and Agrecon in implementation of a strategy to support "fledgling businesses" in order to encourage "industry good" functions (Eastburn [19]). Mr Eastburn's evidence was that BRI, under Grain Growers' control, undertakes testing of "wheat cultures" and researches breeding of new wheat varieties and development of food products based on wheat and other grains (Eastburn [26]). Ms Garden's evidence also deals with the circumstances of the acquisition of BRI - although she was not employed by Grain Growers at that time - and with research and testing undertaken by Grain Growers, as a result of that acquisition, and the activities undertaken by BRI since its acquisition by Grain Growers, including research, testing and development, research milling, food testing, and development of a product to test grain quality on site at farm level.
19. The Chief Commissioner identifies a question whether the acquisition of BRI affected Grain Growers' dominant purpose to the extent that it could no longer be said that the dominant purpose of Grain Growers was charitable, where BRI provided business services to individual businesses for a fee and where, the Chief Commissioner submitted, the provision of services to Grain Growers' members and non-members was a non-charitable purpose. I do not accept the latter submission, so far as the provision of such services was a means of pursuing Grain Growers' wider objects. The Chief Commissioner also submits that Grain Growers' acquisition of BRI: "has not been proved to be in furtherance of the other charitable purposes (being the 'industry good' activities) and accordingly the acquisition to provide Business Services has affected the activities of Grain Growers to such an extent that it could no longer be said the dominant purposes of Grain Growers is charitable." Alternatively, the Chief Commissioner contends, in respect of the 2009 tax year, that the Court should find that the evidence does not enable it to conclude what Grain Growers' dominant purpose is and that Grain Growers has not discharged its onus of establishing that it is entitled to the exemption.
20. On 31 July 2009, Grain Growers acquired all of the shares in Agrecon, which in turn held the shares in Agricultural Reconnaissance Technologies Pty Ltd, which conducted the business of providing satellite image products, advisory and consultancy services within the agricultural sector (Ex P2, 1812, 1839). A discussion paper dated December 2008 (Ex D1, Tab 8) referring to Grain Growers' potential acquisition of Agrecon (which used somewhat similar language to that which had been previously used in respect of the acquisition of BRI) indicated that that acquisition provided Grain Growers: "with a unique opportunity to position itself as an independent 'in market place' with a tangible grains based service offering and value proposition to Grain Growers' processors, consumers and exporters both domestic and off-shore." (Ex D1, Tab 8, 5)
21. Mr Eastburn also gave evidence as to the acquisition of Agrecon, which was developing a product on Grain Growers' behalf to assist growers to keep records in one place and understand weather patterns relevant to their farming areas. Mr Eastburn's evidence is that the relevant product is a commercial product but Grain Growers significantly subsidises its costs. His evidence, admitted as his understanding as chairman, was that Grain Growers considered that it would be better for Australian producers to have the information developed by Agrecon rather than it being acquired by a foreign entity and that Grain Growers' intention in acquiring Agrecon was that it would "benefit the entire Australian grains industry". Ms Garden's evidence also deals with the circumstances of the acquisition of Agrecon and its role after its acquisition by Grain Growers and the particular products which it produces.
22. On 24 August 2009, Grain Growers entered into an arrangement with Kondinin Group which, as I noted above, publishes a magazine dealing with research and testing of farming equipment, including the entry of commercial service contracts which was described as, in substance, a merger (Ex P2, 1839).
23. The Chairman's report in Grain Growers' 2009 annual report in turn refers to the acquisitions of BRI and Agrecon as steps taken in implementation of Grain Growers' 2009-2013 strategic plan, as follows: "The four strategic initiatives identified in the plan; to build an informed and efficient marketplace; industry and market development; invest in innovation; and grow the industry's productivity have been at the heart of [Grain Growers'] recent key strategic and investment decisions. ● The purchase of BRI Australia in late December 2008 is an investment in industry and market development, with BRI playing a vital role in providing a range of services, training and research to the grain production, marketing, grain processing and grain-based food industries. ● An investment in innovation through the purchase of Agrecon Pty Ltd in July 2009. Agrecon is a sophisticated informatics company that helps corporate agribusiness and rural landholders manage risk through the development of a range of tools and the use of the latest technology, including satellite imagery and spatial and temporal mapping." (Ex P2, p 1811)" That annual report also indicated (Ex P2, 1811) that Grain Growers' acquisition of BRI and Agrecon and its "merger" with Kondinin Group: "have grown the information and services platform for industry that [Grain Growers] has firmly established. It is this platform that will become crucial as the Australian grains industry continues to rapidly evolve." That annual report in turn recorded that Grain Growers was: "acquiring companies that will support a broader industry services platform and as a consequence [Grain Growers'] corporate structure has changed significantly over the last 12 months." (Ex P2, 1828) That annual report in turn indicates that Grain Growers acquired BRI in order to build: "an industry service platform across our three areas of business intent: ● An intelligent grains platform providing enhanced information services; ● Providing tangible business services to support the supply chain; ● Providing a basis to attract new capital into the grains industry."
24. Grain Growers' 2009 annual report also referred to its offering of other services, described as "client services", being a "FarmRISK" tool assisting grain growers to learn about risk profiles and a crop forecasting tool, which was apparently made available only to members of Grain Growers on its website, and a grain and hay report also made available to members on a weekly basis (Ex P2, 1815). That report referred to the development of a technology known as "PriceWise" by Agrecon, which was an online grain pricing tool providing real time grain pricing information, which it appears was intended to address growers' concerns about marketplace transparency and how to evaluate what grain buyers were offering (Ex P2, 1826). However, that report also refers to many other activities that appear to have a wider focus, including education of grain growers about climate change (Ex P2, 1821, 1826), promotion of courses for young Australians to encourage them to work in the grain industry (Ex P2, 1822) and other research and development programs, partly funded by Government (Ex P2, 1827).
25. Grain Growers' 2010 annual report (Ex P2, 1865) in turn refers to an expectation, or anticipation, that Grain Growers' newly appointed Chief Executive Officer would: "assist in driving the Grain Growers' group to become a leading services company for Australian agriculture, we will look to further integrate these organisations to provide more efficient operating platforms and advance the group overall. The Grain Growers group is building a solid position in the marketplace to provide independent information, innovative products and sought after services that growers and the wider industry need to succeed in the global grains environment." (Ex P2, 1874 - 1879)
26. Grain Growers' 2010 annual report also stated (Ex P2, p 1864) that: "Following the acquisitions of Agrecon and BRI Australia and the merger with Kondinin Group during the financial year, in 2010 Grain Growers set out leveraging these companies to provide a range of innovative products and services for Australian agriculture. The Grain Growers group of companies is strategically investing in the future of our industry and in products and services so that growers in particular are equipped with the knowledge and tools they need to successfully participate in the global grains marketplace. … Grain Growers' ongoing investment in the industry can be broadly characterised into three areas: programs to build capacity in agriculture's future generations; platforms for information, product and service delivery; and projects to support industry development." These observations seem to me to emphasise the wider purposes for which Grain Growers was undertaking the relevant activities, including those undertaken through Agrecon, BRI and the Kondinin Group. That annual report also outlines activities of the Kondinin Group, Agrecon and BRI, including the provision of training courses and the development of information systems by Kondinin Group, the development of information products, systems and services by Agrecon, made available to customers on a subscription basis. Grain Growers' 2010 annual report again also refers to wider functions, including sponsoring various activities intended to involve future generations in agriculture (Ex P2, 1864).
27. The Chief Commissioner submits that the activities of BRI, Agrecon and the Kondinin Group in the 2010 tax year are not inherently charitable as they focus upon promoting individual business and any public benefit, in the absence of proof, is aspirational and too remote. I do not accept that submission, which seems to me to give insufficient weight to the purpose for which the relevant businesses were being conducted by Grain Growers.
28. The Chairman's report contained in Grain Growers' 2011 annual report, after the acquisition of BRI and Agrecon and Grain Growers' entry into the arrangement with Kondinin, records that: "In 2011 Grain Growers' Board completed a strategic review of the business. … Grain Growers plays an active advocacy role on behalf of all grain growers with a key focus on Australian wheat promotion and market information. … The primary role of Grain Growers is to drive a better and more profitable industry for all Australian grain producers. Grain Growers also delivers high quality services and solutions that [are] flexible and responsive to changing domestic and global industry needs and opportunities. These services and solutions are delivered through the core function of Grower Development and Industry Development, with the support of our Information Services, Technical Services and Analytical Services teams" (emphasis added) (Ex P2, 1931).
29. The Chairman's report in Grain Growers' 2011 annual report in turn refers to Grain Growers' future direction, in similar terms to earlier annual reports, as follows (Ex P2, 1931): "Grain Growers will continue to build the only truly independent, financially and technically resourced grain producer focused organisation in Australia. A key delivery of the organisation will be providing producers and international customers with the technical information they require to increase the overall value of Australian grain with a focus on quality and demand to drive an increase in the profitability and sustainability of the grains industry. Grain Growers will continue to provide independent and evidence-based national representation on behalf of producers. Efforts will be focused on producer returns and ensuring producers are equally represented within the marketplace. Grain Growers is in a unique position to deliver a solid platform for the Australian grains industry to succeed and ensure a commitment to a sustainable, efficient, and viable industry providing real benefits and real returns to all Australian grain producers." The statement quoted above tends to emphasise Grain Growers' commitment to advancing the grains industry and grain growers, which may or may not coincide with other interests such as those of market intermediaries or consumers of grain. That annual report again refers to wider objectives and activities undertaken to advance them, including enhancing farm productivity. That report also refers to the offering of "ProductWise" and "SprayWise" products online for a fee, which assists farmers with managing crop production and the proper use of pesticides and chemicals.
30. In her evidence in re-examination, Ms Garden's evidence was that the acquisition of BRI and Agrecon added value to Grain Growers, but did not give Grain Growers a "new remit" and that their importance in 2008 and today was ranked as two or three out of ten, so far as they provided technical underpinning to Grain Growers' activities but "certainly don't determine what we do as an organisation" (T12). I give limited weight to her evidence in that regard where, as the Chief Commissioner points out, Ms Garden was an employee of Agrecon rather than Grain Growers prior to 1 July 2011; she was employed by Grain Growers only from that time and initially in the Agrecon business, albeit she was also a member of Grain Grower's executive team; and has been Chief Executive Officer of Grain Growers only since May 2014. However, little turns upon that evidence, where it seems to me that the businesses conducted through BRI and Agrecon are conducted for Grain Growers' wider purposes.
31. The Chief Commissioner submits Grain Growers' subsidiaries, BRI or Agrecon, were not acquired to further the "industry good" functions of Grain Growers by adding to their wealth, since the subsidiaries are not profitable under Grain Growers, despite generating revenue from services, and that the Court may, on the current evidence, not be satisfied of the dominant purpose of Grain Growers, but Grain Growers would then fail to discharge its burden of proof. I accept that BRI and Agrecon were not generating, and were possibly not being operated so as to seek to generate, profits to support Grain Growers' "industry good" functions, by contrast with the position in Word Investments. However, that does not seem to me to deprive the operation of those businesses, or Grain Growers' wider activities, of a wider charitable purpose of the advancement of agriculture, or at least the grain industry, which was served by the operation of those businesses in that manner.
32. From 1 July 2011, staff, assets and liabilities of BRI and Agrecon were transferred to Grain Growers and BRI and Agrecon remained as dormant corporate entities, which owed inter-company loans to Grain Growers (Garden 27.3.2015 [58]). A corporate chart tendered by Grain Growers (Ex P2, 2215) indicates that Grain Growers' activities, after the merger of BRI's and Agrecon's activities into Grain Growers, comprised seven components, namely corporate services, grower development, industry development, business development, information services, technical services and analytical services. The Chief Commissioner accepts that at least Grain Growers' activities of grower development, industry development and possibly business development involved "industry good" functions and were capable of being described as being for charitable purposes. The Chief Commissioner noted that the divisions of information services, technical services and analytical services conducted the activities previously conducted by BRI or Agrecon and contended that: "If one applies the logic that when they were separately owned entities, BRI and Agrecon were not charitable, then when those activities are carried out by Grain Growers, Grain Growers' activities to that extent to would not be charitable." (Emphasis in original) That submission has the difficulty that, as I have noted above, the conduct of commercial and charitable activities are not mutually exclusive, so that commercial activities carried on by BRI and Agrecon could be carried on for a charitable purpose, where carried on to advance Grain Growers' wider charitable purpose. The same position applies both while BRI and Agrecon were subsidiaries of Grain Growers, and once their activities were integrated into Grain Growers. The characterisation of those activities depended not only on the nature of those activities but on the purpose for which they were carried out.
33. The Chief Commissioner further points to the fact that the "commercial activities" of BRI and Agrecon accounted for approximately $4.4 million of expenses in the 2012 year whereas Grain Growers' "charitable" activities, being the activities other than those conducted by BRI and Agrecon, accounted for approximately $3.3 million in expenses, after excluding expenses in the corporate services division of $2.8 million on the basis that they would be incurred for the benefit of the entire organisation and not purely with respect to the corporate or charitable part of its activities. I am not persuaded that that analysis is of particular assistance. First, it depends upon a characterisation of the activities of BRI and Agrecon as not conducted for a charitable purpose, either because they are commercial in nature or because they are said to have been conducted for the benefit of the individual businesses to which services were provided, and I have not accepted that characterisation. Second, while the quantum of expenses incurred in the functions may well be relevant to the question of which function dominates, it is only one relevant factor, and may be of lesser weight where the possibility exists that the commercial services are simply more expensive to perform, although of lesser significance, than Grain Growers' "industry good" functions.
34. There seems to me to be no reason to doubt that Grain Growers had the intention that it claims to have had in acquiring the BRI and Agrecon businesses, and the evidence that it subsidises the products that they sell supports the view that it does so in order to advance the interests of at least the grain industry, where such products are available to grain growers generally and not only its members. It seems to me that the evidence to which I have referred establishes that Grain Growers' business services activities were conducted in order to advance its larger charitable purpose, and are not to be treated as non-charitable merely because they had a commercial character, or because an attempt to advance the level of information and technical services available to the grains industry generally also benefited individual growers. I recognise that the functions of BRI and Agrecon have something of a commercial character, and were carried out by commercial entities before those entities were acquired by Agrecon, and at least Agrecon's products also have commercial competitors. However, as the High Court emphasised in Word Investments, an activity does not cease to be charitable because it has a commercial character, if it is conducted for a charitable purpose.
35. I should add, for completeness, that it does not seem to me that the conduct of the separate businesses of BRI and Agrecon, or the Kondinin Group, within separate legal entities, in the period to 1 July 2011 could deprive the conduct of Grain Growers' activities of the charitable purpose that I have otherwise held to be established. The Full Court of the Federal Court took a similar view in respect of an analogous provision of the Income Tax Assessment Act in an analogous situation in Federal Commissioner of Taxation v Co-Operative Bulk Handling Ltd above.
36. I am satisfied that the evidence to which I referred above establishes that Grain Growers' purpose in conducting its affairs, and the businesses of BRI and Agrecon in particular, is that of advancing at least the Australian grain industry, and the Australian agricultural industry so far as the grains industry forms a subset of that industry, and has a charitable character. The requirements of s 48(1) of the Payroll Tax Act are therefore satisfied in respect of Grain Growers' activities in the relevant years.

Whether the requirements of s 48(2) of the Payroll Tax Act are satisfied

1. The second issue in this case is whether wages paid by Grain Growers satisfy the requirement under s 48(2) of the Payroll Tax Act which relevantly, requires that: (2) The wages must be paid or payable: (a) for work of a kind ordinarily performed in connection with the religious, charitable, benevolent, philanthropic or patriotic purposes of the institution or body, and (b) to a person engaged exclusively in that kind of work."
2. A predecessor of the present exemption was found in s 10(2) of the Pay-roll Tax Act 1971 (NSW), introduced by the Pay-roll Tax (Further Amendment) Act 1977 (NSW), which provided that wages were exempt where they were "paid or payable to employees in respect of time when they are engaged in charitable work within the charity". The Second Reading Speech in respect of that amendment, to which the Chief Commissioner refers, noted income tax avoidance schemes involving charities, and noted that the provision: "operates only to exclude from wages liable for payroll tax … wages that are paid or payable to employees in respect of time when they are engaged in charitable work within the charity."
3. The present form of the section was introduced by the Payroll Tax Act and provides for an exemption where wages are payable for work that is "of a kind ordinarily performed" (emphasis added) in connection with the charitable purposes of the institutional body. That section seems to me therefore to require an inquiry whether the work of employees of Grain Growers is such that it is of a kind that would ordinarily be performed in connection with the relevant charitable purpose of the body, here the advancement of agriculture or possibly of the grain industry, rather than whether the work is ordinarily performed by that particular body.
4. No question as to s 48(2) of the Payroll Tax Act arises in the 2009 to 2011 tax years, where the Chief Commissioner accepts that if, as I have found, Grain Growers had a dominant charitable purpose, and wages were paid for "industry good" functions, then the wages paid by Grain Growers would be exempt. It is common ground that BRI and Agrecon, which were then separate legal entities, paid payroll tax in those years and they do not now seek a refund of that payroll tax. The issue as to s 48(2) of the Payroll Tax Act arises in respect of the 2012 and 2013 tax years, after employees who were previously employed in the business of BRI and Agrecon were transferred to Grain Growers in its information services, technical services and analytical services sections from July 2011.
5. Grain Growers seeks to establish that all wages paid or payable by it in the 2012 and 2013 tax years are paid or payable for work of a kind ordinarily performed in connection with its charitable purpose and to persons engaged in work exclusively related to Grain Growers' charitable purpose of promoting the development of Australian agricultural sources (Appeal Statement [39]). Grain Growers advances that proposition on the basis that the relevant work is in fact performed in connection with its charitable purposes, without identifying whether there are any limits to the work that it would include within that category. By his Appeal Statement, the Chief Commissioner puts Grain Growers to proof of the proposition that wages paid or payable by Grain Growers were of that character and indicates that it does not appear that the work performed is of a kind ordinarily performed in connection with Grain Growers' charitable purpose. By his Appeal Statement, the Chief Commissioner also emphasises that, under s 100(3) of the Taxation Administration Act, Grain Growers bears the onus of establishing that, for the purposes of s 48(2) of the Payroll Tax Act, the wages paid or payable by it, said to be exempt, are paid or payable by it for work of a kind ordinarily performed in connection with the charitable purpose and to a person engaged exclusively in that kind of work.
6. Ms Garden's evidence indicates the identity and, in many cases, the duties of Grain Growers' employees for the period as to which exemption is sought. Ms Garden was in turn cross-examined as to the activities undertaken by Grain Growers' employees, by reference to an organisational chart (Ex P2, 2215). Her evidence was that Grain Growers' information services division was previously Agrecon and that its technical and analytical services together represented what was previously BRI. She also fairly accepted that Grain Growers' corporate services division, and employees such as its Chief Financial Officer, would perform functions across all divisions, including in respect of information services, technical services and analytical services. The Chief Commissioner in turn refers to correspondence between Grain Growers' accounting representatives and the Office of State Revenue which acknowledged the involvement of some of Grain Growers' employees in the provision of "commercial services and products" and noted that employees located in New South Wales and the Australian Capital Territory had mixed roles, with none of them having a "solely commercial role" but, implicitly, none of them also having a role that was solely directed to non-commercial purposes.
7. It was common ground between the parties in submissions that there was little authority dealing with the question of the application of s 48(2) of the Payroll Tax Act. Grain Growers submitted that the test required by s 48(2) of the Payroll Tax Act was whether the work performed by the employees of Grain Growers has a "sufficiently close connection" to the charitable works of the institution. Ms Batrouney submitted (at T51) that the words "in connection with" are the widest possible words of relation that could be used. Ms Batrouney also referred to Ngurratjuta Pmara/Ntjarra Aboriginal Corporation v Commissioner for Taxes [2000] NTSC 25; (2000) 44 ATR 217 at [35], [39] in support of the test for which she contended. Riley J there considered the application of the exemption under s 9(a) of the Payroll Tax Act (NT) which provided that the liability for payroll tax did not apply, relevantly, to a public benevolent institution where the work was "of a public benevolent nature" or "work of the hospital of a kind ordinarily performed in connection with the conduct of public hospitals". That question depended on whether the relevant work was of a "public benevolent nature" and is quite different to that which I need address, namely whether work is of a kind "ordinarily performed" for the relevant charitable purpose. It seems to me that the decision is therefore directed to a different question and is of limited assistance.
8. Riley J there observed (at [35]) the factors relevant to determining whether particular work was or was not work of a "public benevolent" character, and observed that that matter would always be a matter of fact and degree and that the work must be considered in its context. His Honour also observed that: "A person cleaning rooms in a private hotel will not normally be performing a benevolent activity. The same person doing the same work in an establishment classified as a public benevolent institution and providing assistance to the sick and needy will be performing a benevolent activity. That work is a necessary part of fulfilling the objectives of the institution." That analysis has substantial force, in respect of the question which his Honour was determining. It does not seem to me to cast any particular light on the question whether particular work is of a kind "ordinarily performed" for a charitable purpose, although it might be thought uncontroversial that work undertaken by cleaners within an institution providing care to the needy might well have that character. His Honour also observed at [37] that: "… The mere fact that a person is employed by a public benevolent institution does not mean the wages of that person are to be exempt under the legislation. For example the provision of services to others for reward, where the services provided are not benevolent activities of the kind provided by the institution is not work of a public benevolent nature. The work itself is not benevolent, it is not part of or directly involved with the benevolent functions of the institution and it is work that is of a commercial rather than a benevolent kind." Again, that observation seems to me to be persuasive, in respect of the question his Honour was addressing, but to cast little light on the concept of "ordinarily performed" in s 48(2) of the Payroll Tax Act. Ms Batrouney in turn accepted in submissions that the mere fact that a person is employed by a public benevolent institution does not mean that the wages of that person are to be exempt (T52), although that is not the question I am required to determine.
9. On appeal, in Ngurratjuta Pmara/Ntjarra Aboriginal Corporation v Commissioner of Taxes [2001] NTCA 4, Thomas J (with whom Martin CJ and Angel J agreed) indicated his agreement with the approach adopted by Riley J in construing s 9(a) of the Payroll Tax Act. The Court of Appeal also accepted that it would be necessary to determine the function of individual staff members to enable an assessment to be made whether their work fell within the relevant exception. In oral submissions, Ms Batrouney noted that the transcript of an unsuccessful special leave application to the High Court of Australia in that case was against the submissions which she put. While that characterisation of the transcript seems to me to be accurate, I consider it preferable not to rely on it where the observations there made in that transcript are not a decision of the High Court on the merits of the matter.
10. Grain Growers in turn contended that all wages paid or payable by it were paid or payable for work of a kind ordinarily performed in connection with its charitable purpose to persons who were engaged exclusively in that kind of work and there were no wages paid to persons who were engaged in activities which were unrelated to the furtherance of the charitable objects of Grain Growers. That statement was not cross-referenced to, for example, any evidence that the work undertaken by Grain Growers' employees, including those performing work within the businesses acquired from BRI and Agrecon, was of a kind "ordinarily performed" for the advancement of agriculture. Grain Growers further referred to the organisational structure to which Ms Garden had referred in evidence and submitted that no employee of Grain Growers was employed for any purpose other than to carry out activities in furtherance of Grain Growers' objectives. That approach in turn assumed that whether work was "ordinarily performed" was to be determined by what Grain Growers did, rather than by reference to what would ordinarily be done to advance a purpose of the advancement of agriculture. As I noted above, Ms Batrouney submitted that the relevant test under s 48(2) of the Payroll Tax Act was whether the work had a "sufficiently close connection" to the charitable work of the institution. If that submission contemplated that that was to be determined by reference to the particular activities of the particular organisation for which exemption was sought, and without regard to what was ordinarily done by organisations with the relevant charitable purpose, then I do not accept it, for the reasons set out below.
11. The Chief Commissioner submitted that the employees involved with the activities originating with BRI, Agrecon and the Kondinin Group are not carrying out work that is exclusively for work which is "intrinsically charitable", of a kind ordinarily performed in connection with Grain Growers' charitable purposes, and those wages are not exempt from payroll tax. The Chief Commissioner also submitted that services performed by administrative staff in respect of commercial activities is not work of a kind ordinarily performed in connection with Grain Growers' charitable object and that employees with such a dual role are not persons engaged exclusively in charitable work, so their wages are also not exempt under s 48(2) of the Payroll Tax Act. That submission rests on the proposition that the expression "of a kind ordinarily performed" in s 48(2) of the Payroll Tax Act required that the particular activity that the wages are paid for must be "intrinsically charitable". While I accept that that section draws attention to the particular activity that is performed, it does not seem to me that it establishes a test of the strictness for which the Chief Commissioner contends, that the work be "intrinsically charitable".
12. For the reasons set out below, it seems to me that the test established by the section requires an assessment whether the work is of a kind "ordinarily performed" in connection with the relevant charitable purpose of the particular body, in this case the advancement of agriculture or at least of grain growing. The term "ordinary" is of course a term in general usage, defined in the Shorter Oxford English Dictionary as involving, relevantly, a concept of "usual", a "common occurrence", "frequent" or "customary". That concept has been considered in case law, albeit in a somewhat different contest, for example Federal Commissioner of Taxation v Chubb Australia Ltd (1995) 128 ALR 489 per Burchett J at 491, where his Honour noted that the term "ordinarily" could be used idiomatically in the sense of "commonly". It seems to me the test in that section will require an assessment of whether the particular activities of the relevant body are such that bodies with the same charitable purpose ordinarily, or in other words regularly, commonly or customarily, perform them. It will be readily satisfied in some circumstances. For example, it might be readily established that bodies with a charitable purpose of the advancement of agriculture ordinarily conduct agricultural shows or educational activities to improve the knowledge of participants in that industry or to attract participants to that industry, as Grain Growers does, or that bodies with a charitable purpose of the relief of poverty ordinarily conduct soup kitchens to feed the poor or distribute food to poor families or toys to poor families at Christmas, such that it is apparent that those activities are "ordinarily performed" for that purpose. That statutory test will have regard to the circumstances of the particular body, since whether the relevant connection exists is to be determined having regard to that body's purpose. However, it does not seem to me that it can be established that an activity is "ordinarily performed" in connection with a charitable purpose of the advancement of agriculture merely by the fact that the particular body performs it, even if it does so on a regular basis. The phrase "ordinarily performed" would otherwise be deprived of any real application, if activities uniquely performed by the particular body - for example, the conduct of a funeral business as in Word Investments - could be treated as satisfying that requirement merely because a particular entity performed them to support its charitable purpose, where other bodies with the same purpose did not ordinarily do so.
13. The Chief Commissioner also submitted that, unless the words "ordinarily performed" are limited to work that is "intrinsically charitable", there would be no work for s 48(2) of the Payroll Tax Act to perform. I also do not accept that submission. If, for example, there were employees of Grain Growers whose work was not ordinarily performed in connection with a charitable purpose of the advancement of agriculture, then s 48(2) of the Payroll Tax Act, understood in the manner noted above, would exclude them from the exemption from payroll tax. It is readily possible to identify situations in which the exclusion under that section would apply. For example, a funeral business, or a car dealership or plumbing business or any other kind of profit-making enterprise, might be conducted for a charitable purpose, if the intent of those conducting it were to apply its profits to support the charitable purpose. However, the persons working in the funeral business or car dealership or plumbing business would not, without more, perform work of a kind ordinarily performed in connection with the charitable purpose of the body supported by those profits and their wages would not be exempt from payroll tax, unless it were established that bodies with such a purpose ordinarily performed such activities. The question of the application of s 48(2) of the Payroll Tax Act is more finely balanced in this case than in these examples, since the work of BRI and Agrecon plainly have a real connection with agriculture generally and the grain industry specifically.
14. Alternatively, the Chief Commissioner submitted that, even if Grain Growers has charitable objects so as to satisfy the first element of s 48(1)(c) of the Payroll Tax Act, commercial services performed by those employees is not work of a kind "ordinarily performed" in connection with a charitable object. I also do not accept that submission, in terms. It seems to me to turn on the same reasoning as the Commissioner's earlier submission that the section requires that the relevant work be either "intrinsically charitable", which I have not accepted above, or possibly on a dichotomy between work of a commercial character and work conducted for a charitable purpose, of the kind that was rejected by the High Court in Word Investments. However, the reading of s 48(2) of the Payroll Tax Act to which I have referred above may have the same result in some cases, where the commercial activity is not conduct of a kind ordinarily performed by a body with the relevant charitable purpose. For example, the conduct of a subsidised café, proving cheap meals to the hungry, might well be more readily be shown to be work of a kind ordinarily performed by a body with a charitable purpose of the relief of poverty than the sale of prestige cars at a discount, although both have a partly commercial purpose.
15. It follows that it could, in principle, have been established by evidence that work of the kind performed by BRI and Agrecon, despite its commercial character, is ordinarily performed by bodies with a charitable purpose of advancing agriculture and the requirements of s 48(2) of the Payroll Tax Act would then be satisfied. That was not established in this case, as a matter of evidence in respect of the activities of BRI and Agrecon, rather than because it could not be established as a matter of principle. It does not seem to me that, as a matter of inference and without a specific evidentiary basis, I could properly find that grains research or the provision of consulting services utilising satellite imaging are work of a kind "ordinarily performed" in connection with a charitable purpose of the advancement of agriculture. As I noted above, the fact that Grain Growers itself conducts those activities does not establish that they are ordinarily performed for the purpose of the advancement of agriculture, since its interest in those fields may be idiosyncratic or a product of its particular circumstances. Grain Growers did not lead evidence of any substance that research into bread or grain or the provision of consulting services using satellite imaging are ordinarily performed by charitable bodies that have the purpose of promoting agriculture, by contrast with, for example, educational activities that may well be ordinarily performed by such bodies. Although there are scattered references in the evidence to activities undertaken by United States governmental and trade bodies, those references fall well short of establishing any "ordinary" practice among bodies directed to the advancement of agriculture of undertaking the kind of activities undertaken by BRI or Agrecon. The business rationale for Grain Growers acquisition of those businesses, so far as it emerges from the affidavit evidence and the documents to which I have referred above, did not suggest that they were acquired because their services were "ordinarily performed" by comparable bodies to Grain Growers, or other bodies directed to the advancement of agriculture, as distinct from being desirably performed by Grain Growers in its particular circumstances.
16. Grain Growers has therefore not established that wages paid or payable to Grain Growers' employees working in the successor functions to the BRI and Agrecon companies are paid or payable for work of a kind "ordinarily performed" in connection with the relevant charitable purposes of Grain Growers, whether it is characterised as to the advancement of agriculture or the advancement of the grain growing industry, and the exemption from payroll tax is not available to Grain Growers' employees engaged in any part of those activities.
17. The Chief Commissioner accepts that executive and administrative staff of Grain Growers would fall within the relevant exemption, to the extent that they were performing work that is necessary for charitable work. However, the Chief Commissioner submits that, to the extent that the Grain Growers' executive and administrative staff are performing services in respect of Grain Growers' commercial activities, and specifically the functions continuing BRI's and Agrecon's former businesses, that is not work of a kind ordinarily performed in connection with a charitable object, and does not satisfy the test under s 48(2) of the Payroll Tax Act. That submission must also be accepted where I have held that activities undertaken respect of those businesses are not shown to be of a kind "ordinarily performed" in connection with a charitable purpose of the advancement of agriculture. The exemption is not available for wages of executive and administrative staff of Grain Growers who are partly engaged with those activities and businesses, and not exclusively engaged in work of a kind ordinarily performed in connection with the Grain Growers' charitable purposes.

Orders and costs

1. I did not understand there to be any contest between the parties that, where Grain Growers has established that it was entitled to the benefit of an exemption under s 48 of the Payroll Tax Act, as it was in respect of the period prior to 1 July 2011 and as to some of its employees after that date, it would be entitled to repayment of part of the payroll tax it had paid in that period. It will be necessary for the parties to make further submissions as to the form of orders necessary to give effect to Grain Growers' partial success in the appeal and as to any costs orders that follow and I will afford them the opportunity to do so.

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