Bray v. Federal Commissioner of Taxation.

Judges: Barwick CJ
Stephen J

Mason J
Jacobs J
Aickin J

Court:
Full High Court

Judgment date: Judgment handed down 19 May 1978.

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Mason J.: The fund established by the appellant under the trust deed which he executed was not in my opinion at any relevant time a public fund within the meaning of sec. 78(1)(a) of the Income Tax Assessment Act 1936 (as amended). It is not a sufficient qualification of a fund as a public fund that it is to be applied for public purposes. By insisting that the funds to which it refers shall be ``public'' and at the same time specifying their purposes in such a way as to demonstrate that those purposes are to be public purposes the subsection requires that a fund in order to fall within the section shall have a public character distinct from the purposes for which it may be applied. See especially para. (iii), (v), (vii), (viii) and (xxxi) of sec. 78(1)(a). In these circumstances it is not possible to treat the adjective ``public'' as mere surplusage. In
Ashfield Municipal Council v. Joyce , (1976) 3 W.L.R. 617 where it was held that there was an element of tautology in the words ``public charity'', it was pointed out (at p. 628) that the two words were synonymous.

That the fund is open for subscription by the public is unquestionably an essential, though not in my opinion a sufficient, manifestation of its public character. It must also appear that the public participates in the fund by making contributions to it. No doubt the public character of the fund will be advanced by the participation of the public in its formation and in its administration but I cannot think that this is enough in itself without participation by the public in the making of contributions to the fund so as to constitute it as a public fund.

In some cases it may be a nice question to determine whether the public has contributed to a fund. If the fund is, according to the terms of the instrument which constitutes it, open to subscription by the public then a comparatively few contributions by persons not associated with the settlor or promoter may be enough to satisfy the requirement of public participation, more particularly if the administration of the fund involves public participation. However, the present case is not a marginal case. The appellant was the sole contributor and the trustees were his friends and associates.

Accordingly, in my judgment the fund was not at any relevant time a public fund and on this ground the appeal should be dismissed.