JL Burke Ch
RE O'Neill M
No. 1 Board of Review
J.L. Burke (Chairman) and R.E. O'Neill (Member): On 20 January 1970 the taxpayer made a payment of $4,100 to the N.S.W. Branch of the War Widows' Guild of Australia and consequent upon the payment was granted possession of a home unit in a block built by the Guild in circumstances which attracted the subsidy provided for by the Aged Persons Homes Act. The receipt issued by the Guild for the sum of $4,100 carried the handwritten endorsement ``Donation'' and, under the main heading on the receipt, were printed the words ``All donations tax rebatable''. The question for the Board is whether the amount of $4,100 constitutes a ``gift'' for the purposes of the deduction provided for by sec. 78(1)(a) of the Assessment Act.
2. The Guild administers two types of units, ``donation'' and ``rental''. The general availability of donation units is notified to members of the Guild through its magazine and verbal applications are received by the
ATC 372Honorary Secretary and recorded on a waiting list. Units are allocated strictly in order of application but there is no written form of application as such. Upon a donation unit becoming available the applicant is invited to make an inspection and, on acceptance, is asked to make the appropriate donation. No formal contract is entered into between the applicant and the Guild but on payment of the predetermined ``donation'' the future occupant is given a key of the unit and an ``information'' sheet.
3. In the case of the taxpayer, on paying the said amount of $4,100 to the Guild she was handed a printed list on Guild letterhead carrying words ``Donations Tax Rebatable'' and the general descriptive heading ``Information to Future Occupants of Guild Units at...''. The ``information'' sheet, which was signed by the Honorary Secretary, covered such matters as telephones, insurance, garbage disposal, cleaning, and the like. The future occupant was informed by the document that a service charge of $2 per week payable in advance would be made and that overnight visitors were permitted occasionally ``but a longer stay of, say, up to one week, is only permitted once a year. Children: No children under the age of 16 years are permitted to stay overnight in the unit at any time whatsoever. You will appreciate that these arrangements are made in the interest of all occupants as the units are classified as One Person Dwellings.'' Under the sub-heading ``Donation'' the following appeared: ``Would you please note that once having taken up residence, or taken over the unit by receiving the key, the donation you have made to the Guild, or any part thereof, will not be refunded to you under any circumstances whatsoever. I know you have all been made aware of this condition, but I mention it again to prevent any possible misunderstanding.''
4. The absence of a written contract conformed with the requirement of the then Department of Social Services which, in administering the Aged Persons Homes Act, wanted to ensure that organisations in receipt of subsidies retained unrestricted control over the allocation of accommodation and did not surrender that control in any degree by granting legal rights to residents, either express or implied.
5. The taxpayer entered into possession of a Guild ``donation'' unit in February 1970 and continues to occupy it. In terms of the arrangement between her and the Guild she has a right to occupy the unit for life but has no right of disposition over it and, if she yields up possession to the Guild, even if the occupation has been minimal, she is not entitled to a refund in whole or in part of her ``donation'' of $4,100.
6. In our opinion the payment of $4,100 made by the taxpayer to the Guild was made pursuant to a contract between the parties under which, in consideration of the said payment, the taxpayer was granted a non-transferable right to occupy a home unit for life. At the very least, even if no enforceable contract came into existence, the taxpayer, in return for the payment of $4,100, received a right of real value - the right to occupy a home unit for life on terms agreed to between the parties.
7. There is clear authority for the proposition that on the above finding the amount of $4,100 is not a ``gift'' for the purposes of sec. 78(1)(a) of the Act. In
F.C. of T. v. McPhail (1968) 117 C.L.R. 111 Owen J. judicially construed ``gift'' as it is found in sec. 78(1)(a) in the following words: ``But it is, I think, clear that to constitute a `gift', it must appear that the property transferred was transferred voluntarily and not as the result of a contractual obligation to transfer it and that no advantage of a material character was received by the transferor by way of return'' (at p. 116). Bound, as we are, by this decision of the High Court, we have no alternative but to uphold the Commissioner's decision to disallow the taxpayer's objection.