The Salvation Army (NSW) Property Trust v Chief Commissioner of State Revenue [2018] NSWSC 128

Date of judgement 16 February 2018 Proceeding No. 2016/321043
Judge(s) Ward CJ in Eq
Court or Tribunal Supreme Court of New South Wales
Legislation cited Duties Act 1997, ss 6, 12, 275, 275A

Interpretation Act 1987, ss 21(1), 32

Stamp Duties (Further Amendment) Bill 1980

Stamp Duties Act 1920

Taxation Administration Act 1996, ss 97(1)(a), 101(1)

The Salvation Army (New South Wales) Property Trust Act 1929, ss 3, 4, 7, 8, 9
Catchwords TAXES AND DUTIES – Interpretation of s 275(3) of the Duties Act 1997 (NSW) – Meaning of “as trustee for” an institution – Meaning of “for the time being approved”
Cases cited 2 Elizabeth Bay Road Pty Ltd v The Owners - Strata Plan No 73943 (2014) 88 NSWLR 488; [2014] NSWCA 409

Attorney-General for New South Wales v Perpetual Trustee Co (Ltd) (1940) 63 CLR 209

BBLT Pty Ltd v Chief Commissioner of the Office for State Revenue [2003] NSWSC 1003; (2003) 54 ATR 323

BSH Holdings Pty Ltd v Commissioner of State Revenue (2000) 2 VR 454; [2000] VSC 302

Coles v Pack (1869) LR 5 CP 65

Commissioner of Land Tax (NSW) v Joyce (1974) 132 CLR 22

Commissioner of Taxation v Bargwanna (2012) 244 CLR 655; [2012] HCA 11

Commissioner of Taxation v Bruton Holdings Pty Ltd (in liq) (2008) 173 FCR 472; [2008] FCAFC 184

Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297

Coverdale v West Coast Council (2016) 259 CLR 164; [2016] HCA 15

Ellison v Thomas (1862) 32 LJ Ch 32

Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503

Federal Commissioner of Taxation v Wade (1951) 84 CLR 105

Glebe Administration Board v Commissioner of Pay-roll Tax (1987) 10 NSWLR 352

Joyce v Ashfield Municipal Council (1959) 4 LGRA 195

Lake Maroona Pty Ltd v Gladstone Regional [2017] QPEC 25; (2017) 224 LGERA 166

Law Institute of Victoria v Commissioner of State Revenue [2015] VSC 604; (2015) 101 ATR 899

McGarvie Smith Institute v Campbelltown Municipal Council (1965) 83 WN (Pt 1) (NSW) 191

Milstern Nominees Pty Ltd v Chief Commissioner for State Revenue (2015) 89 NSWLR 43; [2015] NSWSC 68

Minister of National Revenue v Trusts and Guarantee Co. Ltd [1940] AC 138

Oates v Commissioner of Taxation (1990) 27 FCR 289

Re Byrne Australia Pty Ltd [1981] 1 NSWLR 394

Sargents Charitable Foundation Ltd v Chief Commissioner of State Revenue [2005] NSWSC 659; (2005) 60 ATR 129

Stratton v Simpson (1970) 125 CLR 138

SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; 91 ALJR 936

TAL Life Ltd v Shuetrim (2016) 94 NSWLR 439; [2016] NSWCA 68

Tasty Chicks Pty Ltd v Chief Commissioner of State Revenue of the State of New South Wales (2011) 245 CLR 446; [2011] HCA 41

Warringah Shire Council v Salvation Army (NSW) Property Trust (1943) 15 LGR (NSW) 91

Background

The plaintiff uses part of the Property as its territorial headquarters. At the time the plaintiff acquired the Property, part of the Property was (and currently remains) subject to two leases (to Woolworths Limited and to South Sydney District Rugby League Football Club Limited). The leased area comprises approximately 35% of the total area of the Property.

At issue in the proceedings was the availability of a duties concession for “exempt charitable or benevolent bodies” contained in s.275 (and alternatively, s.275A) of the Duties Act 1997 (the “Duties Act”). The Chief Commissioner had assessed the plaintiff to duty on the basis that it was entitled to a 65% duty concession under s.275A of the Duties Act, on the basis that 65% of the total area of the Property was to be used for exempt purposes, and the remaining 35% was to be used for non-exempt (leasing) purposes. The plaintiff submitted that it was entitled to a 100% duty exemption under s.275 of the Duties Act. The amount of duty in dispute was approximately $885,000.

The Statutory Framework

Section 275 of the Duties Act provided (in part):

  1. Duty under this Act is not chargeable on the following:

    1. a transfer, or an agreement for the sale or transfer, of dutiable property to an exempt charitable or benevolent body,

    ...

  1. In this section:

    exempt charitable or benevolent body means:

    1. any body corporate, society, institution or other organisation for the time being approved by the Chief Commissioner for the purposes of this paragraph whose resources are, in accordance with its rules or objects, used wholly or predominantly for:

      1. the relief of poverty in Australia, or

      2. the promotion of education in Australia, or

    2. any body corporate, society, institution or other organisation that, in the opinion of the Chief Commissioner, is of a charitable or benevolent nature, or has as its primary object the promotion of the interests of Aborigines and if:

      1. ... the dutiable transaction or instrument is for such purposes as the Chief Commissioner may approve in accordance with guidelines approved by the Treasurer, or

      ...

    3. any person acting in the person’s capacity as trustee for a body corporate, society, institution or other organisation referred to in paragraph (a) or (b).

Submissions

The Chief Commissioner sought to rely on the legislation that established the plaintiff, The Salvation Army Act 1929 (the “TSA Act”). Under the TSA Act, the plaintiff was established as a trustee of two separate purpose trusts (known as a General Work Trust and a Social Work Trust). The Property was purchased, and held, by the plaintiff in its capacity as trustee of the General Work Trust, but the plaintiff submitted that it was trustee for the “institution” known as “The Salvation Army Australian Eastern Territory”, and that it was this wider “institution” that was an “exempt charitable or benevolent body” for the purposes of s.275 of the Duties Act. The Chief Commissioner submitted that the relevant “institution” was the plaintiff in its capacity as trustee of the General Work Trust, and that the purposes of the General Work Trust were predominantly for the advancement of religion (rather than predominantly for the relief of poverty, which was required in order for the exemption to be satisfied).

Decision

Ward CJ found that “the plaintiff in its capacity as trustee is in reality acting ‘for’ the benefit or the purposes of The Salvation Army … It does not follow from the fact that two separate purpose trusts have been established – referred to as the General Work Trust and the Social Work Trust – that those are two separate ‘institutions’” (at [137]).

Having determined that the relevant “institution” was The Salvation Army Australian Eastern Territory, rather than each of the separate purpose trusts, Ward CJ then found that the institution satisfied the requirement in s.275(3) of the Duties Act that its resources were, in accordance with its rules and objects, used “wholly or predominantly” for the relief of poverty in Australia. In this regard Ward CJ stated that the “ordinary meaning of ‘predominantly’ in my opinion connotes that the specified purpose will be the most dominant of the purposes of the institution or organisation” (at [148]), and found this requirement was satisfied where 75% of the resources of The Salvation Army Australian Eastern Territory were devoted to the relief of poverty.

Further, her Honour found that the words ‘for the time being approved’ in s.275(3)(a) “connotes, in ordinary speech, a point in time or period of time that is not fixed but is open-ended” (at [151]), and requires a focus on the time at which the question of an exemption from duty arises, rather than requiring that the institution must have been approved as at the time at which the liability for duty arose.

Having made the above findings, her Honour concluded that the plaintiff was entitled to a duties exemption under s.275(1) of the Duties Act by virtue of it being an “exempt charitable or benevolent body” within the meaning of s.275(3)(c) read with s.275(3)(a). In this regard, Her Honour also rejected the Chief Commissioner’s submission that s.275(3)(c) should only apply to persons that hold property as a bare trustee, finding that there was nothing in the text of the legislation, or the extrinsic materials, to justify such an approach. Accordingly, Her Honour revoked the assessment.

In light of those findings, it was not necessary for Her Honour to determine the plaintiff’s secondary case (that the exemption in s.275(3)(b) should be available) and the plaintiff’s tertiary case (regarding the application of s.275A). Notwithstanding this, Her Honour indicated that:

  1. the plaintiff’s secondary case would have failed as one of the purposes of the transaction was a religious purpose, which was not a purpose approved by the relevant guidelines; and

  2. where s.275A requires that the land “is used or to be used by the charitable or benevolent body partly for an exempt purpose”, the current land usage is relevant to this inquiry, and one cannot look only at the intended use of the land at the time of the acquisition.

Orders

Justice Ward made the following orders:

  1. Revoke the assessment dated 15 August 2015 of the Chief Commissioner.

  2. Revoke the decision dated 30 August 2016 of the Chief Commissioner.

  3. Set aside the determination dated 10 October 2016 of the Chief Commissioner whereby the Chief Commissioner disallowed the plaintiff’s objection dated 6 October 2016.

  4. Allow the plaintiff’s objections in full.

  5. Order the Chief Commissioner to pay the plaintiff’s costs.

Link to decision

The Salvation Army (NSW) Property Trust v Chief Commissioner of State Revenue [2018] NSWSC 128

Last updated: 6 March 2018