The AAT handed down a favourable adverse decision to the Commissioner on 3 July 2013 in the case of Home Health Pty Ltd v Commissioner of Taxation  AATA 458External Link
On 5 June 2012, the taxpayer, a proprietary limited company controlled by one person, applied for endorsement to access all available tax concessions as a 'public benevolent institution'. It had changed its constitution on 6 January 2011 to insert non-profit clauses and was applying for endorsement from 1 July 2004.
Endorsement was refused and an objection disallowed on the basis that the taxpayer is not an 'institution' and therefore not a 'public benevolent institution'.
The Tribunal upheld the Commissioner's decision to refuse endorsement on the basis the taxpayer was not an 'institution' before and after 6 January 2011. In addition, prior to 6 January 2011, the taxpayer was not a 'public benevolent institution' because its constitution permitted the declaration of dividends to members and the distribution of profits to members on a winding-up.
Based on authorities binding on the Tribunal, the taxpayer was found not to be an 'institution'.
In Pamas Foundation Inc v Commissioner of Taxation (1992) 35FCR 117 membership consisted of a husband and wife, their 4 children and 2 other people. The Full Federal Court found the foundation was not a 'religious institution'. Beaumont and Lee JJ held that the foundation had 'a small and exclusive membership', and 'the term "institution" is to be given a meaning greater than a structure controlled and operated by family members and friends'.
In Christian Enterprises Ltd v Commissioner of Land Tax (NSW) (1968) 72 SR (NSW) 72; Walsh JA concluded that the company's membership of 7 persons was insufficient for it to be a 'charitable institution'.
In reliance on the above cases the Tribunal concluded that due to its 'small and exclusive membership' and the fact that it is controlled by one person, the taxpayer cannot be described as an 'institution' for the purposes of the expression 'public benevolent institution'.
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