BAYTON CLEANING COMPANY PTY LIMITED v FC of TJudges:
Bayton Cleaning Company Pty Limited (``the taxpayer'') appeals from the decision of the Taxation Appeals Division of the AAT, constituted by Senior Member PM Roach given on 25 January 1990 at Sydney, in which the Tribunal ruled that the decision of the Commissioner under review should be varied, and reduced the taxable income of the taxpayer for the years of income ended 30 June 1981 to 1985 by sums of $24,431; $15,299; $1,000; $718 and $5,632 respectively; and varied the assessments of tax pursuant to Division 7 of the Income Tax Assessment Act 1936 (``the Act'') in relation to those years accordingly [reported as Case X16,
90 ATC 180].
The Tribunal found that since the late 1960s the taxpayer had carried on a substantial business as a cleaning contractor, with a turnover in the early 1980s in excess of $6,000,000 and with at times as many as 1,000 persons engaged in its service. However the numbers fluctuated. Many of those persons were employees. One employee of the early years was named as ``Richard''. He commenced in service in the late 1960s; he rose to become manager, but in 1976 left the company, returning to its service in 1977 and at
ATC 4078the date of the hearing before the Tribunal was its managing director.
For some years the taxpayer had paid moneys said to be on behalf of its employees, to the trustee of a superannuation fund which had been established by a deed entered into in terms approved by the Commissioner on 25 May 1973. In each of the years of income ended 30 June 1981 to 1985 Bayton had claimed substantial income tax deductions in relation to contributions said to have been made by it.
The principal issue to be determined by it was whether, and if so to what extent, the taxpayer was entitled to income tax deductions for these payments. The Tribunal held that the taxpayer was entitled to deductions but not to the extent claimed by it.
The Tribunal in its reasons set out the results of the assessments made by the Commissioner, so far as they were in dispute, as follows (at para 4, p 182):
``Year ended 30 June 1981 1982 1983 1984 1985 $ $ $ $ $ Taxable income acknowledged (15,344) (86,980) 10,329 (7,250) 107,280 Disallowed: prior losses 15,344 86,980 7,250 Superannuation contributions 195,631 197,699 44,200 20,500 33,632 Taxable income assessed 180,287 126,063 148,440 13,250 148,162 ------- ------- ------- ------ ------- * Tax assessed 82,932 57,989 68,282 6,095 68,155 Additional tax for late return 1,555 - 648 277 1,307 Div 7 tax 14,603 - - 716 - ------ ------- ------ ------ ------- 99,090 57,989 68,930 7,088 69,462 ------ ------- ------ ------ -------
*Figures are to the nearest $1.''
The Tribunal also set out in para 6, pp 182-183 the relevant provisions of the deed under which the superannuation fund had been established, in which the taxpayer was referred to as ``Cleanco'', as follows:
``6. Clause 1 identified a `Member' as:
- `an employee, director or other officer of the Company who has been approved by the directors as eligible for inclusion in the Fund and in respect to whom notice of approval has been given by the Directors to the Trustee', and
`Retiring age' was defined to
- `mean the attainment by a male Member of his sixty-fifth (65th) birthday or by a female of her sixtieth (60th) birthday or in either case such later age as the Directors may determine in respect of a particular Member.'
Clause 3. Control of the fund was to be vested in trustees.
Clause 4. Employees of Cleanco were to become members of the fund on Cleanco giving the trustee notice that such employees had been approved as eligible for inclusion in the fund. Upon admission as a member of the fund, Cleanco was to `give the Member notice in writing of the existence of the right of that Member and his dependants to receive benefits from the Fund not later than the time that (Cleanco) pays its first contribution to the Fund'.
Clause 5. The fund was to comprise contributions by the company; any other amounts received by the trustee for the fund; and interest and profits arising from the investment of the moneys in the fund.
Clause 9. The trustees were empowered (inter alia) to effect life assurance on the lives of members.
Clause 12 provided that:
- `Unless the Directors otherwise determine in the case of any particular Member upon admission to the Fund, each Member shall either agree with the Directors to contribute to the Fund in
ATC 4079each year ended the thirtieth day of June in one sum or by instalments an amount not less than one percentum (1%) of such Member's remuneration for that year ended the thirtieth day of June or shall authorise the Company to deduct each week or at such other periodical times as the Trustees shall determine from his remuneration a sum not less than one percentum (1%) thereof as at that date and all amounts so deducted shall be forthwith paid into the Fund to the credit of such Member and from such credits subject to there being a sufficient balance in hand so contributed by the Member, the Trustees shall, in the event of a policy having been effected pursuant to Clause 9(c) hereof pay to the appropriate life assurance corporation the premiums falling due under such Member's Policy. An authority given pursuant to this clause shall be irrevocable except with the written concept [sic] of the Directors while the employee remains a Member of the Fund.'
Clause 16. Provision was made that:
- `In the event of any Member either voluntarily resigning or being dismissed from the service of the Company or resigning from the Fund with the express permission in writing of the Directors before attainment of retiring age:
- (a) The Trustees may deal with the amount remaining to the member's credit in the Fund arising from the Company's contributions and the Trustee's policy on that Member's life for all or any of the purposes and in the time and manner prescribed in paragraph (f) of Sub-section (2) of Section 23F of the Income Tax Assessment Act 1936 as amended.
- (b) All amounts remaining to the Member's credit in the Fund arising from his own contribution shall be paid to him and the Member's policy shall be handed to him forthwith...'
Clause 17 dealt with the rights of members on attaining retiring age. Despite some deficiencies in the drafting I am satisfied that cl 17 conferred on members who attained retiring age in the service of the company an immediate right to all moneys held to their credit with the fund at least in the absence of a resolution adopting a later age for retirement (cf ante).
Clause 18 provided that if a member died while in the service of the company, the trustee was to pay all moneys held in the fund to the credit of the deceased member to the personal representatives of the deceased or his dependants by way of a capital sum or an annuity or pension and in such proportions and otherwise, as the trustees should in their absolute discretion determine.
Provision was made for trustees' meetings and the execution of documents (cl 23); for the maintenance of trustees' records (cl 24); for accounts (cl 25); for the removal of trustees and appointment of new or additional trustees (cl 26); and for winding up (cl 32).''
The Tribunal found, that following its establishment, the fund commenced to operate in ``a quite unremarkable way'' as a superannuation fund. Initially, individual persons were named as the trustees, but, while the manner in which it happened was not explained to the Tribunal, it was satisfied that before the commencement of the relevant period, the trustee came to be a company which the Tribunal referred to as ``Trustco''. Its name was Bayton Management Services Proprietary Limited (``Bayton Management''). The operation of the fund was described as follows (at para 7, p 184):
``For some years following its establishment, the administration of the fund was such as to hardly attract notice. In the case of the two directors then controlling the company, only Cleanco made contributions to the fund. But with most others, including Richard, employer and employee contributions were made in equal amounts. They were not large. Further, the records show that in that early period, when membership with the fund came to an end, presumably on resignation from the service of Cleanco, retiring members were ordinarily paid the amounts standing to their credit as a result of `employee contributions' but the amounts standing to their credit as a result of `company contributions' were not: they were credited to others. When Richard's service came to an end during the
ATC 4080year of income ended 30 June 1977 - at which time there was no expectation that he would return to the service of the company - it seems from the record that he was paid an amount well in excess of the credit for `employee contributions'. I am satisfied that the amount paid to him was $3,524.45 but the evidence is not clear as to how that amount was made up.''
However, as found by the Tribunal, commencing with the year of income ended 30 June 1981 substantial changes occurred. In that year the taxpayer made contributions to the fund at the rate of $400 for each of 428 employees on its payroll, at the date of contribution, not otherwise provided for - para 8. (The Tribunal referred to these persons as ``unnamed employees'' as their names were not specified in income tax returns.) In each instance the amount contributed was credited to an account maintained with the fund in the name of the employee. The Tribunal found that ``neither the figure of $400, nor any of the other lesser amounts used later, in relation to unnamed employees was related in any way to the remuneration of any of those employees for that year, or any other year, or to their rate or remuneration, or to any consideration personal to the employees''.
In the years following, the amount of each contribution in relation to ``unnamed employees'' sometimes changed and the number of such employees always changed as follows (para 9, p 184):
``Year ended Contribution Number of Total 30 June per employee employees contributions $ $ 1981 400 428 171,200 1982 400 456 182,400 1983 100 432 43,200 1984 126 157 19,782 1985 400 70 28,000''
The Tribunal found that (at pp 184-188):
``10. Although records were kept by Trustco of the amounts credited to each employee, I am not persuaded that the fund obtained, or maintained, or sought to keep itself properly or reasonably informed with particulars as to dates of birth of the unnamed employees, or as to the identity of their personal representatives or their dependants. I am satisfied that Cleanco was aware of all the relevant practices, or lack of them, on the part of the trustee. I find that in a number of instances the amount of $400 so contributed was substantially greater than five per cent of the remuneration of the employee for that year. I also find as a fact that what caused Cleanco to fix upon $400 as the amount to be so contributed was the circumstance that sec 82AAE of the Income Tax Assessment Act (`the Act') was so expressed as to not place a limit of five per cent of employee's salary as prima facie the maximum amount of deductible contributions available to an employer so long as the contribution made for an employee did not exceed $400.
11. I am satisfied that Cleanco and the fund were conscious of the fact that it was in the nature of the industry that many of the unnamed employees would only serve the company for a short term and would never qualify to receive benefits. The same finding is appropriate as to the other named employees outside the principal employees. I find that the principal employees, such as the directors (JC and PC) and Richard, were well aware of the existence of the fund and of their prospects of deriving substantial benefits from it. I am not so persuaded as to the unnamed employees. One witness in the person of a former employee, called on behalf of Cleanco to attest his awareness of the fund, was so inaccurate in his statements of members' entitlements as expressed in the deed and so vague in his understanding that I am not persuaded that he was ever aware of membership or of any prospective entitlement of members such as himself to benefits. I am also satisfied that, measured by his own understanding, it was clear that he had never expected to personally benefit
ATC 4081from any membership such as he might have had and, having voluntarily left the service of Cleanco, did not think of himself as possibly entitled to anything.
12. His evidence, as an indication of the understanding of most employees, was confirmed by a witness called on behalf of the Commissioner. She had been an unnamed employee. I find that she had never known of the fund and had never considered herself to have any entitlement to benefits. Yet the fact was that upon her retirement from the service of the company, by reason of her age she had been entitled to benefits amounting to at least $16,363. Despite that, upon her retirement her benefits were treated as forfeited to others without anything having been done by the trustee or by Cleanco, acting to advance the interests of its employees, to ensure to her the benefit of the entitlement she had.
13. The foregoing sets out in outline the essence of the problem. The principles expressed in that outline find concrete expression in the following tables. Table A sets out the contributions to the fund made by Cleanco, identifying the amounts contributed for the three principals (JC, PC and Richard); for the `named employees', that is the employees whose names were identified to the Commissioner in returns of the fund from year to year; and the contributions made in relation to `unnamed employees': persons identified in records of the fund and in the employment records of Cleanco, but not identified to the Commissioner in the income tax returns of the fund.TABLE A CONTRIBUTIONS MADE Year ended 30 June 1981 1982 1983 1984 1985 $ $ $ $ $ PRINCIPALS JC 1,281 2,080 100 214 1,200 PC 400 Richard 3,420 1,521 100 126 4,032 NAMED EMPLOYEES 19,730 11,298 800 378 400 UNNAMED EMPLOYEES $ 400 x 428 171,200 400 x 456 182,400 100 x 432 43,200 126 x 157 19,782 400 x 70 28,000 ------- ------- ------ ------ ------ 195,631 197,699 44,200 20,500 33,632 ------- ------- ------ ------ ------
Table B identifies what was available to be known to the Commissioner upon a comparison of the several income tax returns of the fund. It is distinguished by the circumstance that, as to `unnamed employees', the sums of money said to be collectively available to their credit were recorded but not the extent of benefits held for, or forgone by, any individual; that only PC had been paid out without forfeiture; and by the position of LB - a named employee - as to whom there had been some payment but also some forfeiture.
ATC 4082TABLE B MEMBERS' ACCOUNT BALANCES (Forfeitures are indicated by parentheses) 1980 1981 1982 1983 1984 1985 $ $ $ $ $ $ THE PRINCIPALS JC 24,688 28,330 78,169 130,359 215,904 497,531 PC 25,739 28,201 76,143 117,000 PAID Richard - 3,420 10,706 17,940 29,809 72,559 NAMED EMPLOYEES TS x 9,125 9,998 27,594 ( ) SV x 5,171 6,576 18,390 ( ) DL 20,632 22,605 61,649 ( ) DT 12,351 16,656 45,541 75,988 125,855 ( ) GR 9,096 9,966 ( ) AV 13,427 14,711 ( ) LB 2,614 4,016 11,333 18,985 31,538 (PART) xx BW 3,463 3,794 ( ) PW 3,218 3,526 ( ) CB 942 ( ) MU 1,855 ( ) PM 400 1,474 2,556 4,355 10,410 GW 400 1,844 ( ) KH 633 ( ) JC 963 ( ) JH 1,136 4,091 6,918 ( ) GL 3,420 ( ) MP 1,136 ( ) GW 1,631 ( ) FS 1,768 ( ) MH 650 1,183 ( ) DS 650 ( ) AB 1,281 2,234 ( ) HB 832 1,487 ( ) TD 737 ( ) TN 1,181 2,067 ( ) UNNAMED EMPLOYEES Others 112,142 294,067 371,469 488,461 479,790 456,743
It is to be noted:
(a) that of the nine named employees who were members of the fund at 30 June 1980, none remained at 30 June 1985;
(b) that only one of the nine received any amount in respect of `employer contributions'; and
(c) of the named employees introduced in the two years to 30 June 1982, only one remained in the fund at 30 June 1984.
x These persons also had credits for employee contributions.
xx LB was paid $20,000, forfeiting only $11,538.
14. Table C presents a different aspect: being concerned only with the identification of the individuals and groups who suffered their benefits to be forgone and of the individuals and groups to whom the benefits so forgone were credited.TABLE C BENEFITS FORGONE & BENEFITS TRANSFERRED (Benefits forgone appear in parentheses) Year ended 30 June 1981 1982 1983 1984 1985 $ $ $ $ TC 39,149 35,970 56,511 212,991 PC 38,971 35,038 PAID Richard 4,726 4,926 7,777 29,407 TS * 13,816 (27,594) SU * 11,595 (18,390) (2,758) DL 31,238 (61,649) DT 23,017 20,956 32,941 (125,855) GR (9,966) AV (14,711) LB * 5,550 5,215 8,230 (11,538) BW (3,794) PW (3,526) CB (942) MU (1,855) PM 553 678 1,108 4,296 GW 553 (1,844) KH (633) JC (963) JH 1,570 1,883 (6,918) GL (3,420) MP (1,136) GW (1,631) FS (1,768) MH 299 (1,183) DS (650) AB 589 (2,234) HB 383 (1,487) TD (737) TN 543 (2,067) Unnamed (223,672) (115,600) (301,642) (293,287) 97,279 119,984 211,749 183,986 -------- ------- ------- ------- (268,017) (226,464) (318,316) (430,680) 268,017 266,464 318,316 430,680 ------- ------- ------- -------
- * TS and SU made employee contributions and on or before retirement received employee contributions (plus interest thereon) but the remaining share of benefits were forfeited.
- ** Forfeiture was only partial.''
Having found the facts as set out above, the Tribunal said (at p 188):
``15. Questions to be addressed in the resolution of problems raised on the references include: whether the fund was a `superannuation fund'; if it was, whether the provisions of Subdiv AA of the Act (`Contributions to Superannuation Funds for
ATC 4084Benefit of Employees') apply; and whether the deductions claimed are allowable pursuant to either the provisions of that Subdivision or pursuant to sec 51(1) of the Act. For reasons to be stated later, some of those questions will need to be the subject of separate consideration in relation to each of the three groups of employees: principals; named employees; and unnamed employees.''
The Tribunal went on to hold that the fund was a superannuation fund, saying (at p 190):
``In the present case I am satisfied that there was nothing in the administration of the investments of the fund which disqualified it from being a superannuation fund.
24. Further, in this instance if regard be had to only those contributions made in relation to employees expected to benefit, it was clearly to that extent a superannuation fund. It follows that the company was at least entitled to be allowed deductions for contributions made in relation to those persons. In my view, having reached that conclusion, it follows that all of the contributions which were made and credited to employees were contributions made to a `superannuation fund'.''
The Tribunal then turned to consider the relevant statutory provisions, as follows:
``25. Losses and outgoings incurred in the course of deriving assessment of income are deductible if the provisions of sec 51(1) of the Act are satisfied, unless other provisions of the Act prevail. Since sec 82AAR of the Act provides:
- `A deduction is not allowable under any provision of this Act other than this Subdivision in respect of an amount set apart or paid by a taxpayer as or to a fund for the purpose of making provision for superannuation benefits for, or for dependants of, an employee or employees',
it follows that, if the amounts now sought to be deducted are to be described as contributions `to a fund for the purpose of making provision for superannuation benefits for, or for dependants of, an employee or employees', the claim must be resolved by reference to the provisions of Subdiv AA of the Act - `Contributions to Superannuation Funds for Benefit of Employees'. If the payments are not to be so characterised, it will be necessary to consider deductibility under sec 51(1) of the Act.
26. The provisions of the Subdivision particularly calling for consideration are sec 82AAC(1) and 82AAE. They provide (immaterial words omitted):
- `82AAC(1) Where a taxpayer, for the purpose of making provision for superannuation benefits for, or for dependants of, an eligible employee,... pays in the year of income an amount... to a fund... from which the benefits are to be provided, and the right of the employee or dependants to receive the benefits is fully secured, the amount... so set apart or paid is, subject to the succeeding provisions of this Subdivision, an allowable deduction.
- 82AAE The deduction... allowable under this Subdivision in an assessment... of a taxpayer... in respect of income of the year of income in respect of amounts set apart or paid by the taxpayer... as or to a fund... for the purpose of making provision for superannuation benefits for, or for dependants of, any one employee -
- (a) shall not exceed whichever is the greater of the following amounts:
- (i) $400;...'
27. I construe the provisions on the basis that the tests as to deductibility for employers must be satisfied in relation to each payment and in relation to each employee. Those tests include satisfying:
- `a very precise requirement that the payments allowed as deductions must be for the purpose of making provision for individual personal benefits of employees and for that purpose only' (Driclad (ante) at p 67).
28. Although I am of the opinion that, by the terms of sec 82AAC, a decision must be made in relation to the deductibility of payments paid in relation to each employee as an individual, that does not prevent one speaking usefully in generalisations or
ATC 4085prevent identification of the employees by reference to some common characteristic. But it does mean that, just because some claims to deductibility fail, it does not automatically follow that all claims to deductibility for contributions made must fail. Conversely, because some claims to deductibility succeed, it does not automatically follow that all claims to deductibility will succeed.
29. The next thing to observe is that sec 82AAC, 82AAE and 82AAR all speak of payments `to a fund for the purpose of making provision for superannuation benefits'. It follows in my view that if, as was contended for the Commissioner, the Subdivision is to be the basis for disallowing a claim, it must be accepted that the payments in question did satisfy the test of being payments made `for the purpose of making provision for superannuation benefits'.
30. On the other hand, upon the evidence presented I am satisfied that the expectation of the employer and the trustee that the unnamed employees would never qualify for benefit was such that no care was taken by the applicant or the trustee to ensure that at retirement any who did qualify for benefits would receive the benefits to which they were entitled. I am not satisfied that it was ever intended that any member of the class of unnamed employees should be so entitled and benefit. None the less one person at least was entitled.
31. If the view so expressed is correct the Subdivision does not apply and in relation to the contributions for unnamed employees it is necessary to consider deductibility in terms of sec 51(1) of the Act. I am satisfied that in so far as the payments in question were not made `for the purpose of making provision for superannuation benefits for, or for dependants of' eligible employees nothing is available pursuant to sec 51(1) of the Act. In relation to such moneys nothing persuades me that the outlays in question were `for the purpose of gaining assessable income' or that the expenses were incurred `in' gaining assessable income in the course of carrying on the business of Cleanco (
Ure v FC of T 81 ATC 4100).
32. I return to a consideration of Subdiv AA. Section 82AAC(1) introduces a further concept namely that:
- `the right of the employee or dependants to receive the benefits is fully secured.'
That phrase is of critical importance. Yet it is a phrase amenable to many interpretations. In the circumstances of the present case the question could rhetorically be asked: `How could it be said that the rights of members were fully secured, when information was withheld from `members' as to their status as members?' and, a fortiori, as to their entitlements to benefit. On the other hand, the question can also be rhetorically asked for the taxpayer: `How can it be said that the rights of members were not fully secured when, subject to qualifying for benefit, the trustee could have no basis for resisting any claim to benefit?' - as in my view will be the case with at least one witness.
33. It must be possible to say that the rights of the employee are `fully secured'; but it is not necessary to find that there must be an expectation on the part of either the employer or the employee, that each employee will actually come to qualify for benefit. It is sufficient that the employee will be entitled to benefit if as a member of the fund he satisfies the qualifying conditions.''
Having reviewed the authorities, the Tribunal said (at pp 192-193):
``35. In the circumstances of this case, I am satisfied that the trustee was quite indifferent to the discharge of its responsibilities to the unnamed employees in that regard and I am satisfied that the applicant was aware of that. In a narrow legal sense, the rights of employees may have been `fully secured' in that those who became eligible to benefit acquired an indefeasible claim to benefit, not the less indefeasible because by reason of the inaction of others they did not know of that entitlement. In contrast to the situation in Northern Timber (ante), there was nothing which Cleanco or the trustee could do to diminish the entitlements of the employees. But that, in my opinion, is not the correct approach.
36. The questions under the Subdivision which must be determined in relation to each membership group are:
- (a) whether the contributions so made were `for the purpose of making provision for superannuation benefits for, or for dependants of, [eligible employees]'; and
- (b) whether `the right of the employee or dependants to receive the benefits is fully secured'.
37. In my view both questions must be answered in the negative so far as the group of `unnamed employees' is concerned. I am not persuaded that the applicant, in transferring funds to the trustee to be credited to accounts in the names of the unnamed employees, had a purpose or object of ensuring benefits to them (or their dependants) as individuals or collectively. I find that it was not expected that any of those unnamed employees would qualify for benefit and that no care was taken to ensure that any member of the class would receive any benefits to which as members they might become entitled. Furthermore, I am satisfied that no effective steps were taken by Cleanco to ensure that any persons from that group would become aware of the possibility of future entitlement.
38. As to the question as to whether the provision of such benefits was `fully secured' to the unnamed employees, I adopt the test as posed in Metropolitan Gas (ante) and answer it in the negative: a conclusion which accords with the view taken by Taxation Board of Review No 2 in Case A11,
69 ATC 53.''
The Tribunal then said (at p 192):
``39. It remains to consider the claims in relation to contributions said to have been made in respect of the principals and in respect of the group I have referred to as the named employees. It is implicit in the findings I have made that it was very much the purpose of the applicant in effecting the payments made in relation to the principals to ensure that those principals (or their dependants) would be provided with superannuation benefits. As to the principals I am satisfied that the conditions for deductibility specified in the Subdivision have been satisfied. To that extent the claims will be allowed.
40. The matter is more difficult in relation to the group I have referred to as the `named employees'. On the one hand as appears from the findings I have made, in the period of their membership only one of the persons in this group ever qualified for benefits reflecting employer contributions, although some did obtain the benefit of employee contributions. On the other hand, Richard at an earlier time had been a member of this group and had drawn benefits upon the termination of his service; some members of the group had made `employee contributions' and received at least those benefits on retirement; membership was provided for more senior employees; and contributions were set in sums which varied from employee to employee according to circumstance. On balance I am persuaded that the contributions so made were allowable deductions.
41. For those reasons the order of the Tribunal will be that the decisions of the Commissioner under review shall be varied and that the taxable income of the company shall be reduced by sums of $24,431, $15,299, $1,000, $718, and $5,632 in relation to the years of income ended 30 June 1981 to 1985 respectively and that the assessments of Div 7 tax in the years of income ended 30 June 1981 and 1984 be varied accordingly.''
The notice of appeal filed on behalf of the taxpayer appeared to have been drawn on a basis appropriate to an appeal on the facts but leave was granted to file an amended notice of appeal and, later, a further amended notice of appeal. It did not emerge clearly from any of these notices what were said by the taxpayer to be errors of law made by the Tribunal. However in the course of argument, its counsel said that there was no evidence to support the Tribunal's findings that information was withheld from employees as to their status as members of the fund and that no effective steps were taken by the taxpayer to ensure that any persons from the unnamed employees groups would become aware of the possibility of future entitlement.
In my opinion, it is clear from the Tribunal's reasons that there was ample evidence upon
ATC 4087which it was entitled, without error of law, to make these findings. Counsel for the Commission referred to the evidence of two former employees (at pp 219 and 222 of the Appeal Book).
The taxpayer also attacked the conclusion of the Tribunal that the amounts paid by it to the fund in the years in question described as being in respect of the unnamed employees were not made for the purpose of making provision for superannuation benefits for those unnamed employees, or their dependants. The Tribunal was said to have taken irrelevant considerations into account in reaching this conclusion.
This submission was based upon the proposition that, in the circumstances of this case, the only matters relevant for consideration by the Tribunal were the provisions of the deed, by virtue of which all employees had legal rights which they could have enforced against the trustee. In my opinion, the Tribunal was entitled, without error of law, to make the findings that the expectation of the taxpayer and the trustee was that the unnamed employees would never qualify for benefit and that it was not satisfied that it was ever intended that any member of that class should be so entitled and should benefit. The Tribunal correctly instructed itself as to the effect of the statutory provisions upon which its decision depended and, in my opinion, made no error of law in reaching that decision. The Tribunal's conclusions may also be supported by reference to the judgment of Windeyer J in
Scott v. FC of T (1966) 14 ATD 333 at pp 351-352.
The Commissioner filed a notice of cross-appeal, foreshadowing contentions that the Tribunal wrongly characterised the fund as a superannuation fund and that it should have held that the taxpayer was not entitled to any deductions in respect of payments to it. However, it was said that if the taxpayer's appeal failed, the Commissioner did not wish to persist with his cross-appeal.
The order of the Court is that the appeal be dismissed with costs, and that the cross-appeal be dismissed without any order as to costs.
THE COURT ORDERS:
1. That the appeal be dismissed with costs.
2. That the cross-appeal be dismissed without any order as to costs.