Decision impact statement

Sea Shepherd Australia Ltd v Commissioner of Taxation

Court Citation(s):
[2013] FCAFC 68
2013 ATC 20-397
(2013) 212 FCR 252
(2013) 92 ATR 836
[2013] HCATrans 271

Venue: Federal Court of Australia
Venue Reference No: High Court of Australia special leave application M87 of 2013.
Full Court of the Federal Court of Australia VID 630 of 2012.
Judge Name: Besanko, Gordon and Dodds-Streeton JJ
Judgment date: 3 July 2013
Appeals on foot: No
Decision Outcome: Favourable

Impacted Advice

Relevant Rulings/Determinations:
  • Not Applicable

Subject References:
Deductible Gift Recipients

Exclamation This decision has no impact for ATO precedential documents and Law Administration Practice Statements


Outlines the ATO's response to this case which concerns whether Sea Shepherd Australia Limited is entitled to endorsement as a Deductible Gift Recipient under item 4.1.6 of section 30-45 of the Income Tax Assessment Act 1997.

Brief summary of facts

Sea Shepherd Australia Limited ("Sea Shepherd") conducts compaigns to protect marine wildlife from being harmed or killed by humans. The compaigns seek to protect whales by intercepting whaling fleets and obstructing whalers.

The parties agreed that if the Court held that Sea Shepherd was entitled to be registered as a deductible gift recipient ("DGR"), it would be registered from 29 November 2010, being the date Sea Shepherd launched its first vessel.

It was common ground that Sea Shepherd was a 'chartiable institution' for the purposes of item 4.1.6 in section 30-45 of the Income Tax Assessment Act 1997 ("ITAA 1997").

The Administrative Appeals Tribunal ("Tribunal") found that Sea Shepherd did not provide 'short-term direct care' to animals. Further, the Tribunal found that Sea Shepherd did not provide care to 'animals without owners' as whales are not animals that would ordinarily be expected to have owners from whom they have subsequently become separated.

Sea Shepherd appealed the Tribunal decision to the Full Court of the Federal Court. The Full Court dismissed Sea Shepherd's appeal on 3 July 2013.

Sea Shepherd applied for special leave to appeal to the High Court. The High Court refused leave on 8 November 2013 on the basis that there were not sufficient prospects of success to warrant a grant of special leave to appeal

Issues decided by the court

The issues raised by the appeal were:

Whether Sea Shepherd raised a valid question of law in its amended notice of appeal for the purposes of section 44 of the Administrative Appeals Tribunal Act 1975 ("AAT Act 1975")?
Whether Sea Shepherd's principal activities satisified paragraph (a) of item 4.1.6 of the table in sub-section 30-45{(1) of the ITAA 1997 (entitling it to endorsement as a DGR from 29 November 2011)?

In respect of the first issue, the Court found that Sea Shepherd's amended notice of appeal raised a question of law to found its appeal. The question raised uncertainty as to the meaning of a statutory word or expression which was to be resolved by construction of the word in its context.

In respect of the second issue, the Court found that the Tribunal did not err in finding that Sea Shepherd did not, as its principal activity, provide 'short-term direct care' to animals. Preventing the killing of whales by intercepting others from harming whales was held not to be the provision of short-term direct care.

The majority in the Full Court found that Sea Shepherd did not provide 'care' to animals. The question of whether it provided 'direct care' did not therefore arise. Further, the majority did not consider it necessary to consider the meaning of 'animals ... without owners'.

The Full Court did not accept Sea Shepherd's submission that item 4.1.6 should be construed liberally because the provision was 'remedial' or 'beneficial' in nature.

In dissent, Justice Dodds-Streeton held that 'care' was not limited to the provision of food, shelter and medical care and that Sea Shepherd's actvities constituted care. Further, the care was short-term and sufficiently direct. Her Honour also found that wild animals such as whales which never had or may not ordinarily be expected to have owners, constitute 'animals ...without owners'

ATO view of Decision

The Commissioner respectfully accepts the Full Court's finding that Sea Shepherd raised a question of law to found its appeal under section 44 of the AAT Act 1975.

The Court's construction of the phrase 'short-term direct care' is consistent with the Commissioner's submissions. 'Short-term direct care' requires provision of physical assistance, such as food, shelter or veterinary care to animals which require care of that nature. Accordingly, the Commissioner respectfully agrees with the Court's finding that Sea Shepherd's principal activity of protecting whales from harm does not constitute care of animals. Whether a charitable institutions principal activity constitutes 'short-term direct care' is a question of fact in the circumstances of each institution.

Although the Court found it unnecessary to consider whether whales were 'animals...without owners' for the purposes of item 4.1.6, the Commissioner considers that the Tribunal was correct in finding that wild animals that would not ordinarily be expected to have an owner would not come within that phrase. The Commissioner considers that the construction of the phrase, "animals ... without owners" should take account of the statutory context. The first two categories of animals referred to in paragraph (a) of Item 4.1.6 are animals that have suffered some misfortune because of something that has happened (being lost or mistreated), rather than something that may happen. In that context, "animals without owners" should be interpreted as referring to animals that are in need of care because of the misfortune of being without an owner.

The Commissioner respectfully accepts the Court's conclusion that there is no choice to be made between some "generous" construction of item 4.1.6 and a more confined meaning, because when construed according to orthodox principles of statutory construction, Item 4.1.6 could not be given the meaning which Sea Shepherd sought to give it.

Administrative Treatment

Implications for ATO precedential documents (Public Rulings & Determinations etc)

Not applicable

Implications on Law Administration Practice Statements

Not applicable

Legislative References:
Income Tax Assessment Act 1997
Item 4.1.6(a) of the table in sub-section 30-45(1)
Section 30-15
Section 30-120
Section 30-125

Administrative Appeals Tribunal Act 1975
Section 44

Federal Court Rules 2011 (Cth)
r 12.01(1)

Taxation Administration Act 1953
Section 426-30
Section 426-5

Tax Laws Amendment (2006 Measures No. 3) Act 2006
The Act

Case References:
Aid/Watch Incorporated v Federal Commissioner of Taxation
[2010] HCA 42
(2010) 241 CLR 539
77 ATR 195

Collector of Customs v Agfa-Gevaert Limited
[1996] HCA 36
(1996) 186 CLR 389
35 ATR 249
96 ATC 5240

Baxter Healthcare Pty Limited v Comptroller-General of Customs
(1997) 72 FCR 467

Hope v Bathurst City Council
[1980] HCA 16
(1980) 144 CLR 1
12 ATR 231
80 ATC 4386

Sharp Corporation of Australia Pty Ltd v Collector of Customs
(1995) 59 FCR 6

St George Bank Ltd v Federal Commissioner of Taxation
(2009) 176 FCR 424
2009 ATC 20-103
73 ATR 148

XYZ v Commonwealth
[2006] HCA 25
(2006) 227 CLR 532

R v Brown
[1996] 1 AC 543

Metropolitan Gas Co v Federated Gas Employees' Industrial Union
(1924) 35 CLR 449

Lorimer v Smail
(1911) 12 CLR 504

R v Carter Ex parte Kisch
[1934] HCA 50
(1934) 52 CLR 221

Biga Nominees Pty Ltd v Commissioner of Taxation
(1991) 104 FLR 74
21 ATR 1459
91 ATC 4342

R v Campbell
(2008) 73 NSWLR 272

General Accident Fire & Life Assurance Corporation Ltd v Commissioner of Pay-roll Tax
[1982] 2 NSWLR 52
13 ATR 372
82 ATC 4407

Project Blue Sky Inc v Australian Broadcasting Authority
[1998] HCA 28
(1998) 194 CLR 355

Cabell v Markham, Allen Property Custodian
148 F2d 737 (2d Cir 1945)

Yanner v Eaton
[1999] HCA 53
(1999) 201 CLR 351

Master Retailers' Association of New South Wales v Shop Assistants Union of New South Wales
(1905) 2 CLR 94

Khoury v Government Insurance Office (NSW)
(1984) 165 CLR 622

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory)
[2009] HCA 41
(2009) 239 CLR 27
73 ATR 256
2009 ATC 20-134

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