Australian Council of Social Service Inc. & Anor v. Commissioner of Pay-roll Tax (N.S.W.)

Street CJ

Mahoney JA
Priestley JA

New South Wales Court of Appeal

Judgment date: Judgment handed down 10 May 1985.

Street C.J.

In this matter I have had the advantage of reading the judgment written by Priestley J.A. I agree with his conclusion that, on the facts of this case, the Association's activities do not fall within the description of a public benevolent institution and that, in consequence, the appeal should be dismissed. I wish to add only some brief observations upon the import of the decision of the High Court in
Perpetual Trustee Co. Ltd. v. F.C. of T. (1931) 45 C.L.R. 224 and the application of the judgments in that case to factual situations in which the entity claiming exemption does not itself dispense aid.

The phrase ``public benevolent institution'' is not circumscribed by any statutory definition; nor is it a term of art (
Public Trustee (N.S.W.) v. F.C. of T. (1934) 51 C.L.R. 75 at p. 100 ). Its import has been illuminated by authoritative decisions. Whilst its meaning is thus not absolutely incapable of extension or modification, the pursuit of certainty in the operation of statutes and dispositive instruments such as wills and settlements is a powerful factor to be taken into account when it is sought, as it is in the present appeal, to widen the established scope of those words. The fact is that those words do have an established scope, one of the elements of which involves the ascertainment of the identity of the persons to benefit from the benevolence of the institution in question. This tends naturally to imply that there will be direct beneficiaries of such benevolence. In
O'Connell v. Newcastle Municipal Council ( 41 S.R. 190 at p. 193 ), Jordan C.J. quoted with approval a passage in

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an earlier judgment of Campbell J. in relation to the phrase ``public benevolent institution'':

``I am of opinion that the question as to whether a benevolent institution is public in the sense in which that word is to be read in the exempting provisions referred to is less dependent upon the particular circumstances of its constitution and domestic government than upon the character and objects of its benevolence. What are the benefits which the institution dispenses, and to whom are the benefits extended, are enquiries the answer to which must be decisive on the question of whether or not the institution in question is public in the statutory sense.''

It is, of course to be recognised that, both in the factual context in which these words were written by Campbell J., as well as in the factual context before the High Court in Perpetual Trustee Co. Ltd. v. F.C. of T. (supra), the institution in question did itself directly dispense benefits. So far as I am aware, in every reported case but one this element of direct dispensation of benefits is to be found within the factual context. This, of course, does not necessarily and of itself predicate that direct dispensation of benefits is a prerequisite. It does, however, provide a strongly persuasive basis for holding that, over the passage of years, this element has now become built into the concept of a public benevolent institution. The judges of the past have taken this for granted and it is a long step to hold that a comparatively modern statute (The Pay-roll Tax Act was passed in 1971) can properly be construed as being freed from that basic factual element.

The one case I have excepted as not involving direct dispensation of benefits is the decision of Connor A.C.J. in
Australian Council for Overseas Aid v. F.C. of T. 80 ATC 4575 ; (1980) 49 F.L.R. 278 . That was an appeal from a Board of Review decision that had denied the status of public benevolent institution to the Australian Council for Overseas Aid essentially upon the ground that the Council did not itself relieve the poverty, etc., of any person directly - it made no distributions in the form of direct aid. The reasons of two of the members of the Board of Review were expressly based on their ``understanding of present authorities on the interpretation of that word'' (i.e. benevolent) ``in the context of this country's laws relating to revenue''.

I see much force in the conclusion reached by the Board of Review in the Australian Council for Overseas Aid case. The reversal of the Board on appeal may be able to be explained as Connor A.C.J. explained it on the basis that (at ATC pp. 4577-4578; F.L.R. pp. 281-282):

``the taxpayer has in effect been set up as a co-ordinating and educating agency by public institutions which are themselves in the main public benevolent institutions... nearly everything which the taxpayer does is done in the course of and for the furtherance of the relief of poverty even though it is done in conjunction with other institutions... 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.''

On the basis of this factual appraisal, the case came very close to the boundary line dividing institutions which do directly dispense aid from those which do not. It undoubtedly fell, however, on the other side of what has thus far been tacitly accepted as that boundary line, and I respectfully doubt the correctness of the decision.

The matter is not one in which laws or approaches previously laid down require to be moulded to accommodate modern social conditions and expectations. The phrase has, over the decades, been applied to countless property transactions in a context which has involved recognition of the need for the presence of the basic element of direct distribution or dispensation of aid. If the tacit assumption that this is an essential prerequisite is to be changed, it is in my view the province of either the Legislature or the High Court, which has itself more than once been party to that tacit assumption, to prescribe and authorise the change.

For the foregoing reasons I am of the view that the comparatively simple test that has thus far been recognised, although not expressly laid down, should not be regarded as able to be extended. In other respects, however, I am in

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full agreement with the reasoning developed in Priestley J.A.'s judgment and I concur with his conclusion that the appeal should be dismissed with costs.

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