P Gerber DP
Administrative Appeals Tribunal
Dr P. Gerber (Deputy President)
In 1982, the Commonwealth dug up an hitherto unknown species of tax enshrined in the Bank Account Debits Tax Administration Act (``the Act''). The preamble states that it is:
``An Act relating to the collection of a tax of certain debits made to accounts kept with financial institutions, and for related purposes.''
Section 11(1) provides:
``Where an account holder in respect of an account kept in Australia applies to the Commissioner in accordance with this section for the issue of a certificate of exemption in relation to an account -
- (a) if the Commissioner is satisfied that all debits made, or to be made, to the account are, or are likely to be, either excluded debits or exempt debits - he shall issue a certificate of exemption in relation to the account; or
- (b) if the Commissioner is not so satisfied - he shall refuse the application and shall cause notice in writing of his decision in relation to the application to be served, by post or otherwise, on the person who made the application.''
2. On 6 April 1983 the Ladypowl Brownie Pack applied for exemption from this tax pursuant to sec. 11 of the Act. On 12 July 1983 the Commissioner refused to grant such a certificate and an objection was lodged by the applicant's (then) solicitors on 6 September 1983 on the ground that the Ladypowl Brownie Pack was
``a public benevolent institution or a school carried on by an association or other body of persons otherwise than for the purposes of profit or gain within the meaning of sec. 3 of the Act and that all transactions for that account will be wholly or exclusively in furtherance of the objects of the Girl Guide Movement and therefore exempt.''
The objection was disallowed, hence this application.
3. Section 3 of the Act provides that ``an excluded debit'' constitutes, inter alia, a debit made to an account kept with a financial institution in the name of ``a public benevolent or a religious institution'', being a debit made in relation to a transaction or transactions carried out by or on behalf of the institution ``wholly and exclusively in furtherance of its objects''.
4. The Commissioner's stated ground for disallowing the objection was that the applicant was not ``a public benevolent or a religious institution'' as defined. He went on to state:
``A public benevolent institution has been judicially defined as an institution whose principal or exclusive objects and activities are the relief of sickness, suffering, distress, poverty, misfortune, destitution or helplessness. The objects and activities of Brownie and Girl Guide Associations have been examined and it has been decided that they do not come within the ambit of the expression `public benevolent institution'.''
5. This produced the following response from the applicant's (then) solicitors stating, inter alia:
``We have your letter of 1st March, 1984. A cheque for $2.00 is enclosed. Our client is dissatisfied with the Commissioner's decision. Please treat the matter as an appeal and refer to the Board of Review.
Your letter does not set out citation of the authority you refer to and with which we disagree as a statement of principle.
With respect, we refer you to firstly,
Re Parker (1949) V.L.R. 135 which is in our view authority for the proposition that a public benevolent purpose means `charitable' purpose in its legal sense. Secondly we refer to
Re Webber (1954) 3 All E.R. 712, which held that a trust in favour of the Boy Scouts Movement was a valid `charitable trust'.
By analogy, the Girl Guides Movement is also `charitable'.
We are also of the opinion that the Girl Guide Movement is a `religious institution' and within the meaning of the Act as belief in God is an integral element in the teaching and motivation of the Movement.''
6. The ``Section 37 Statement'' states that the reason the application was disallowed was because:
``it is not considered that the objector is a public benevolent or a religious institution, and accordingly debits made to the bank account of the objector are not exempt from Bank Account Debits Tax by virtue of paragraph (a)(vi)(A) of the definition of `excluded debit' in subsection 3(1) of the Act.''
7. To complete the relevant correspondence between the parties, the objector, changing solicitors, led Messrs Phillips Fox to write to the Deputy Commissioner on 28 November 1988 in the following terms:
``We act for the Ladypowl Brownie Pack in relation to the Administrative Appeals Tribunal hearing on the exemption of our client from bank accounts debits tax.
On 28th November, 1988, we attended the preliminary conference at the Administrative Appeals Tribunal and advised that the matter would be contested. Our instructions are at present that the exemption for public benevolent institutions is available to our clients.
We were invited by the Registrar to make submissions to you for settlement as it appears that there is an English authority suggesting that the Boy Scouts Association is clearly charitable.
We propose to make such submissions in due course after completing the necessary research.''
8. The reason I have italicised the two specific references to a ``religious institution'' is that Mr Power, of learned counsel for the Crown, asserted at the hearing that the applicant's reliance on a ``religious institution'' took him by surprise and, in any event, it had not been formally raised in the objection. After argument on this point by both sides, and bearing in mind that the correspondence as well as the so-called sec. 37 statement made clear references to a ``religious institution'' (and thus, by implication, involving the issue of an ``excluded debit'' by definition), I ruled that I would allow the applicant to amend its grounds of objection to include the assertion that it was a ``religious institution'', but - charitably and benevolently - on terms that Mr Power be afforded reasonable time to prepare a written submission dealing with an aspect of the case which he had not come fully prepared to argue.
9. There can be no doubt - and indeed it was not challenged - that the Girl Guide Movement as well as all its tributaries, including the applicant, are charitable institutions within, for example, the meaning of sec. 23(e) of the Income Tax Act, which exempts from income tax, inter alia, ``the income of a religious, scientific, charitable or public educational institution''. The problem in the instant case arises from the fact that the class excluded from liability to pay debit tax is more narrowly drawn, so that the averment that the applicant ``is clearly charitable'' (see letter from Phillips Fox to the respondent dated 28 November 1988) rather misses the point. The real question is: Is the Ladypowl Brownie Pack a ``public benevolent institution or a religious institution'' within the meaning of the Act?
10. It was strongly urged upon me that the applicant was both a ``public benevolent'' and a ``religious'' institution. Dealing firstly with the submission that the applicant is a ``public benevolent institution'', it should be noted that
ATC 302the phrase is not term of art; cf.
Girls' Public Day School Trust Ltd. v. Ereaut (1931) A.C. 12 and
Perpetual Trustee Co. Ltd. v. F.C. of T. (1931) 45 C.L.R. 224. In the latter case, the High Court held that the expression referred to institutions organised for the relief of poverty, sickness, destitution or helplessness. The adjective ``public'' clearly qualifies the word ``benevolent'', and the question whether or not a benevolent institution is also a ``public'' institution is answered, not so much by analysing an organisation's constitution and/or its aims, but by looking at the character and objects of its benevolence; cf.
O'Connell v. Newcastle Municipal Council (1941) 41 S.R. (N.S.W.) 190 at p. 193.
11. The applicant placed considerable reliance on two single Judge decisions -
F.C. of T. v. Launceston Legacy 87 ATC 4635 and
Australian Council for Overseas Aid v. F.C. of T. 80 ATC 4575 on the aspect of ``public benevolent''. In the latter case, Connor A.C.J., sitting in the Supreme Court of the Australian Capital Territory, was asked to determine whether the Australian Council for Overseas Aid constituted a ``public benevolent institution'' for purposes of the local pay-roll tax legislation. At first instance before a Board of Review, the taxpayer failed on a finding that the taxpayer was not a ``public benevolent institution'' for purposes of the Act because the aid to the poor was provided by the taxpayer's members rather than the taxpayer, whose major role appeared to be making the Australian community aware of the need for overseas aid. His Honour accepted the Board's finding of fact, but reached a different conclusion on the law. Thus, his Honour noted (at p. 4577):
``On the basis principally of a decision of the High Court in Perpetual Trustee Company Limited v. F.C. of T. (1931) 45 C.L.R. 224 the Board took the view that the taxpayer was not a public benevolent insitution because it did not itself directly provide funds for the relief of poverty overseas. In that case the High Court was concerned with whether the Royal Naval House, Sydney was a benevolent institution within the meaning of the Estate Duty Assessment Act 1914. There was no question but that this insitution was directly supplying the services. The question in the case was whether those services were of a kind such as to qualify the taxpayer who provided them as a public benevolent institution. It was in that context that the now well known tests for what is a public benevolent institution were propounded i.e. `an institution organised for the relief of poverty, sickness, destitution, or helplessness' by Starke J. at p. 232 and `I am unable to place upon the expression `public benevolent institution' in the exemption a meaning wide enough to include organisations which do not promote the relief of poverty, suffering, distress or misfortune' - per Dixon J. at pp. 233-234.''
After finding that
``in these days overseas aid may often involve quite intricate dealings with governments at home and abroad... The fact that the taxpayer does not constitute the whole of the activity does not appear to me to be critical''
his Honour concluded (at p. 4578):
``I do not see anything in the Perpetual Trustee case (supra) which runs counter to the proposition that an institution may promote or be organised for the relief of poverty even though it performs only one of a number of several steps in the benevolent process, provided it is clear that the relation of that institution to the other institutions involved in the process is such as to show they have a common benevolent purpose, albeit they contribute to it in different ways.
For the reasons I have indicated I think that is the case here; and consequently I think that the taxpayer should properly be regarded as a public benevolent institution. It carries on no independent business. It serves only the members who agreed to bring it into existence. They are, as conceded by counsel for the Commissioner, in the main public benevolent institutions and in cases where they are not it is only in their benevolent aspects that the taxpayer is involved with them.''
12. At first blush, the case seems to run counter to the well-recognised limitation imposed upon the term ``public benevolent'', viz. that to qualify as such an institution, the organisation must, in a public way, itself dispense benevolence towards those in need of it; it was not enough merely to act as a
ATC 303co-ordinator of benevolence. The correctness of the Overseas Aid decision was doubted by Street C.J. in
Australian Council of Social Service Inc. & Anor v. Commr of Pay-roll Tax (N.S.W.) 85 ATC 4235 at p. 4237; (1985) 16 A.T.R. 394 at p. 396, a decision of the Full Court of the Supreme Court of New South Wales in pari materia.
13. Fortunately, I am spared the necessity of having to make an election between seemingly conflicting authorities since I am not persuaded, despite counsel's heavy reliance on the Overseas Aid case, that anything turns on the decision when applied to the facts of this case.
14. This brings me to the more formidable Launceston Legacy case. The Launceston Legacy Club (``Legacy''), a member of a national support organisation for the families of fallen Australian servicemen, sought various certificates of exemption pursuant to the Act. After the Commissioner decided not to grant the certificates, the organisation sought to have the decision referred to this Tribunal. The matter came before Senior Member Roach, who found that Legacy was a ``public benevolent institution'' within the meaning of the Act. The Commissioner appealed that finding to the Federal Court. Northrop J., who heard the appeal, after an exhaustive review of the authorities, including a minute analysis of the Perpetual Trustee Co. case (supra), upheld the Tribunal's conclusion that Legacy was a public benevolent institution. His Honour held (at p. 4646) that:
``Having regard to the authorities, it is too late to attempt to give a different meaning to the phrase `public benevolent institution' where that phrase appears without the collocation of words in sec. 8(5) of the Estate Duty Assessment Act which refer to persons `in necessitous circumstances'. There is no such collocation of words in the Administration Act. However, it should be noted that the authorities cited show a softening of attitude to what comes within the concept of `benevolent' in the phrase `public benevolent institution'. This is made clear by a reference to the extracts from the last two authorities set out above. Nevertheless, the warning given by Street C.J. in Australian Council of Social Service Inc. & Anor v. Commr of Pay-roll Tax (N.S.W.) 85 ATC 4235 at p. 4236; (1985) 1 N.S.W.L.R. 567 at p. 568 should be kept in mind.
On the facts of the present appeals, I am satisfied that Launceston Legacy is an institution organized for the relief of poverty, suffering, distress or misfortune as discussed in the authorities. It is quite natural to describe it as a benevolent institution. I see nothing odd or inappropriate in so describing Launceston Legacy. It is providing a caring service, not limited to the provision of money, to persons who are in need. The caring service that is provided is something which cannot be bought. It is given voluntarily by the Legatees. The beneficiaries do not pay for the benefits received. These days the concept of benevolence being limited to the destitute is no longer accepted...
As Dixon J. said at p. 233 of the Perpetual Trustee case when discussing the phrase `public benevolent institution': `In such matters one must often be guided to a great degree by one's own experience in the use of terms'. His Honour noted that a meaning had to be given to a composite phrase and that little help is provided by reference to dictionaries to discover the meanings to be given to separate words forming the composite phrase. That is accepted, but it is interesting to note the development of the meanings given to the word `benevolent' appearing in the Shorter Oxford Dictionary, the 1933 Edition, and the Macquarie Dictionary published in 1981. In the former, the relevant meaning given to the adverb `benevolent' is `Desirous of the good of others, of a kindly disposition, charitable, generous'. In the latter, there appears the following: `1. desiring to do good for others. 2. intended for benefits rather than profit: a benevolent institution'.
In my opinion, the essential object of Launceston Legacy is benevolent. The objects and powers listed in the Objects section of its Constitution are incidental and ancillary to that essential object. If it be a fact that some of those powers and objects, considered alone, might not be regarded as benevolent, that fact would not prevent Launceston Legacy being benevolent.''
15. Mr de Wijn, learned counsel for the applicant, placed much emphasis on this case to
ATC 304argue for a more benevolent approach to the term ``benevolent''. I have much sympathy with his submission. In the end, however, I am satisfied that the recent authorities - including the Legacy case - continue to insist, as a condition precedent, that to qualify as ``a public benevolent institution'', the organisation must itself be engaged in the relief of poverty, suffering, distress or misfortune, albeit a distress falling short of destitution. Applied to this case, in no sense can the Ladypowl Brownie Pack qualify under that head. The submission that the organisation ``keeps the girls off the street'' can hardly be taken seriously.
16. I now turn to the alternative submission: viz., that the applicant is a ``religious institution''.
17. I must freely confess that, at first blush, the concept that a Brownie pack can be characterised as a ``religious institution'' offends common sense, and it is only in deference to Mr de Wijn's undoubted ability to make bricks without straw that I deal with this aspect of the case at all.
18. I therefore ask myself what - if any - religious component in integral to membership of the Brownie Movement? Substantial evidence was adduced from officers of impeccable background and familiarity with the Guide Association. So far as relevant to my enquiry, Brownie Guides are girls 7 to 11 years old who have made a ``Special Promise''. The wording of this Promise is contained in the Constitution of the Girl Guides Association of Victoria, which, so far as relevant is set out hereunder:
GIRL GUIDES ASSOCIATION OF VICTORIA (AUSTRALIA)
The Girl Guides Association of Victoria shall provide a functional organisation to implement the Aims, Policy and Methods of the Girl Guide Movement.
The Girl Guide Movement is a world-wide organisation of girls and women from all walks of life, bound together by the Law and Promise, to which they all subscribe.
AIMS AND POLICY OF THE GIRL GUIDE MOVEMENT
To give the girls the opportunity to become well-adjusted persons through self training based on spiritual and moral values according to the principles embodied in the Promise and Law of the Girl Guide Movement.
To give girls the opportunity to develop a sense of responsibility to community and country.
To encourage international goodwill and understanding.
The Girl Guide Movement is non political.
The spiritual beliefs of all shall be respected.
Members of the Association shall be girls and women entitled to wear a Promise Badge including those no longer uniformed but actively participating in the Movement by membership of a local association, a trefoil guild, a committee or other supportive work for guiding.
I promise that I will do my best:
- To do my duty to God,
- To serve the Queen and help other people, and
- To keep the Guide Law.
- A Guide is loyal and can be trusted
- A Guide is helpful
- A Guide is polite and considerate
- A Guide is friendly and a sister to all Guides
- A Guide is kind to animals and respects all living things
- A Guide is obedient
- A Guide has courage and is cheerful in all difficulties
- A Guide makes good use of her time
- A Guide takes care of her own possessions and those of other people
- A Guide is self-controlled in all she thinks says and does.''
Article 4 of the Constitution provides:
Membership of the State Council shall be open to anyone who
- (a) is a resident of the State of Victoria or who has substantive interests in that State and
- (b) is of good character and
- (c) subscribes to the aims and policy of the Movement and
- (d) such other persons as the Rules may prescribe.''
19. The religious policy of the Movement is set out in a ``Policy Statement'' (ex. ``C''):
``There is no religious side to the Movement, the whole of it is based on religion and service to God.'
- 1. Every member of the Association when she makes her Promise is committed to doing her duty to God, and is encouraged to be active in the practice of a religious faith.
- 2. Guiding has a positive attitude to religion. It stands firmly by the Promise of duty to God.
- 3. The Association expects its members to have a belief in the existence of God, actively to seek a growing spiritual relationship with God and to develop ways of doing their duty to God.
- 4. The privilege of adult leadership carries with it the responsibility to encourage, through example and participation in guiding activities, the spiritual growth of the girls within the concept of their own religious faith so that they may gain a deeper understanding of their duty to God as they progress through the Movement.
- 5. If a girl is a member of a faith or denomination which has rules or expectations of its members, it is the responsibility of the leaders to respect these and help the girl to carry them out. Careful attention should be paid to this policy when arrangements are made for church parades, unit prayers, Guides' Own or any other activities in which the unit is involved.
- 6. Where a unit is composed of members of one religion, it is expected that, in consultation with the religious authorities, the leader will arrange such observances as may be considered suitable.
- 7. In places where there can only be one unit, that unit should not be restricted to members of any one religion.
- 8. A Guides' Own is an act of worship planned and conducted by members of the Movement.
- 9. `Duty to God' is defined as the acknowledgement of the necessity for a search for a faith in God, in a Supreme Being and the acknowledgement of a Force higher than man, of the highest Spiritual Principles. (World Conference, confirmed 1972 and 1975.)
- 10. The Faith Awareness badge links guides more closely with their own churches. Full particulars and syllabi may be obtained from state headquarters.''
20. I was informed that the Movement encourages the acquisition of badges, handed out after passing the relevant test. There are 18 badges for which girls can compete, including one called a ``Faith Awareness Badge''. There is no compulsion to acquire this (or, semble, any) badge. To qualify for the ``Faith Awareness Badge'', the Movement provides the following guidelines:
``There is no religious side to the Movement, the whole of it is based on religion and service to God' (words of the Founder).
Guiding has its foundation in the Promise. The Faith Awareness Badge will help you in this. It is a way for all members who have made the Promise to increase their awareness of its meaning.
You have promised to do your best to do your duty to God. Talk to another member of the Guide family or your assessor about what this part of the Promise means to you.
2.Do two clauses from the following:
- (a) Help to organise and participate in a Guides' Own for your patrol, unit or district.
- (b) Regularly participate in worship in your place of worship, over a period of at least 3 months.
- (c) Write a prayer, or poem, or prepare a song or dance and use it at a Guides' Own or at your place of worship.
- (d) Express in your own way (write, draw, sing, model, mime etc.) your understanding of God as Creator.
3.Do five clauses from the following:
- (a) Read a true story about a famous person whose experience of God has led him/her to help others, e.g. Mother Teresa, William Booth.
- Spend half an hour by yourself in the open air. Use your senses of smell, hearing, sight and touch and then write down or draw the new things you have learnt about God's gifts.
- (b) Find a blessing to be used before or after meals, which is not known to your unit or group and share it with them. Know why it is said or sung.
- Make something to illustrate a festival of a religious faith.
- (c) Find out about the beliefs of two main world religions. Make an aid or game and use it to pass on the knowledge you have gained to others.
- Find out about the origin and beliefs of your own religion. Tell your assessor about them.
- (d) Tell in your own words:
- A story about creation
- An Aboriginal Dreamtime story
- A story from the sacred book of your religion.''
21. The above satisfies me that the organisation is non-denominational and requires, for eligible membership, no more than the subscribing ``to the aims and policy of the Movement''. It is no more a religious institution because ``the Promise'' requires a Brownie to make a commitment to do her duty to God than it is monarchical because ``the Promise'' also demands a commitment ``to serve the Queen''.
22. Whilst ``religion'' is easily defined (cf.
The Church of the New Faith v. Commr of Pay-roll Tax (Vic.) (``the Scientology case'') 83 ATC 4652), the definition of a ``religious institution'' is more elusive. Be that as it may, I am satisfied that it requires a quantum leap to conclude that because an organisation is based on religion, it is, a fortiori, a religious institution.
23. Not surprisingly, much reliance was placed by the applicant on the decision of the High Court in
The Young Men's Christian Association of Melbourne v. F.C. of T. (``the YMCA case'') (1926) 37 C.L.R. 351. The issue before the Court in that case was whether the appellant was a ``charitable'' and/or a ``religious institution'' for purposes of the Income Tax Assessment Act. The by-laws of the Association stated that it ``seeks to unite those young men who, regarding the Lord Jesus Christ as their God and Saviour according to the Holy Scriptures, desire to be His disciples in their doctrine and their life, and to associate their efforts for the extension of His kingdom amongst young men''. (The ``Paris Declaration''.) The object of the Association was ``the improvement of the spiritual, intellectual, social and physical condition of young men''. These features persuaded Isaacs J. to conclude that the Association's status as a ``religious institution'' within the meaning of the Act ``rests on the essentially `religious' character of the institution'' (p. 357). Both Knox C.J. and Rich J. upheld the view that the Association was a ``religious institution''. Gavan Duffy J. came to the same conclusion (at p. 361):
``In my opinion the appellant is substantially an association of persons holding specific religious views, and acting together for the purpose of comforting and encouraging one another, and of inducing others to adopt those religious views and to join that Association. It is therefore a `religious
ATC 307institution' within the meaning of sec. 11(1)(d) of the Income Tax Assessment Act 1915.''
Higgins J. concluded that the Paris Declaration (at p. 360):
``shows, in my opinion, that the Association is religious; and I am inclined to think that the mere fact that the object includes the improvement of the intellectual, social and physical condition of young men does not detract from the fundamental religious character of the Association.
But the aim is to improve the spiritual, intellectual, social and physical condition of young men, and not only the young men who happen to be members. To improve the `social condition' of young men, I take it, means to make them better members of human society, and not merely to improve what is called their social position.''
This view led his Honour to conclude that the Association was ``charitable in the technical sense, as being designed for the good of young men generally'' (p. 360).
24. Mr Power, learned counsel for the respondent, submitted that the aims and objects of the Brownie Movement are readily distinguishable from those contained in the constitution of the Young Men's Christian Association, which was held to be an exclusively Christian organisation. Indeed, Mr Power went so far as to submit that the non-denominational character of the Brownie Movement was fatal to its attempt to qualify as a ``religious institution'' under the Act. This submission, he added, receives substantial support from what might be described as the ``majority view'' in the YMCA case, best expressed by Gavan Duffy J. (``... the appellant is substantially an association of persons holding specific religious views... It is therefore a `religious institution'... '').
25. In the YMCA case, the ``specific religious views'' involved the belief in and acceptance by young men of Jesus Christ, ``acting together for the purpose of comforting and encouraging one another, and of inducing others to adopt those religious views and join the Association''. This is a far cry from the ``religious'' component of the Brownie Movement, which does not demand - or even pretend - to a unity of a specific belief in a ``God'' as understood in the Judao-Christian World. All witnesses were agreed upon one fact: the Brownie Movement is non-denominational in character, requiring no more than a belief in a ``superior being'' as a condition precedent to membership.
26. In the result, the applicant cannot demonstrate that ``essentially `religious' character'' which was so integral to the outcome in the YMCA case, and which persuaded the majority in that case to conclude that the Association was a ``religious institution'' within the meaning of the Income Tax Act. Indeed, it became clear during the hearing that the Brownie Movement has recognised - and come to terms with - the fact that, for it to remain a viable and meaningful institution in a pluralist, secular and multicultural society, religion cannot be more than an aspect - albeit an important one - in its overall aims and activities. As one of the applicant's witnesses put it: ``The reality is that the girls come together to generally have fun''. This drew the somewhat cynical response from the Commissioner that ``fun doesn't come from following religious pursuits''.
27. I find that the Brownie Movement's principal aim is ``to improve the spiritual, intellectual, social and physical condition of young (girls)... ''. To improve the ``social condition'' of young (girls), I take it, means to make them better members of the human society, and not merely to improve what is called their ``social position''. By substituting ``girls'' for ``boys'', I find the facts in this case to be governed by the conclusion reached by Higgins J. in the YMCA case: viz. that the Brownie Movement is ``charitable'' in the technical sense. However, the Act demands more. I must assume that when Parliament limited the beneficiaries of its ``excluded debit'' to a narrowly defined class of ``public benevolent or religious institutions'', it saw no good reason why a Brownie Pack should not pay tax on debits made to its bank account. Perhaps the Guide Law which states that ``A Guide takes care of her possessions and those of other people'' should carry the additament ``and pay its cash into a Key Card account''.
28. As I have been unable to conclude that this applicant is either a ``public benevolent'' or a ``religious institution'', I have no alternative but to uphold the Commissioner's decision on the objection.