|Date of judgement||15 March 2011|
|Court or Tribunal||NSW Court of Appeal|
Payroll Tax – exemption for a non-profit organisation having as its sole or dominant purpose a charitable purpose – whether a non-profit amateur sporting association such as the appellant having as its purpose the promotion and management of football in a particular geographic area falls within the exemption – consideration of the law of charities in the context of payroll tax
TAXATION - payroll tax - exemption - non-profit organisation - whether dominant charitable purpose - promotion of soccer - not charitable purpose
CHARITY - promotion of sport - not charitable
Re Laidlaw Foundation (1984) 13 DLR (4th) 491
In 2009, the appellant in these proceedings, Northern NSW Football Ltd (NNSWF) succeeded in an application to the ADT for review of a decision of the Chief Commissioner of State Revenue (Chief Commissioner) that it was not exempt from payroll tax. The Tribunal held that the dominant purpose of NNSWF was benevolent and/or charitable. Consequently, it was exempt from payroll tax under s 48 of the Payroll Tax Act 2007; and exempt from duties under ss 259(1)(c) and 276(2) of the Duties Act 1997.
On appeal by the Chief Commissioner, the Appeal Panel of the ADT held that the dominant purpose of the NNSWF was the promotion of football, and it was not exempt from payroll tax. The determination of whether the NNSWF satisfied the requirements for exemption under ss. 259(1)(c) and 267(2) of the Duties Act 1997 (NSW) was referred back to the ADT.
The Court of Appeal affirmed the decision of the Appeal Panel.
The main questions before the ADT, the Appeal Panel and the Court of Appeal were whether NNSWF was entitled to exemptions from payroll tax and duties by virtue of being a non-profit organisation with a "charitable" purpose under s.48(1)(c) of the Payroll Tax Act 2007 (NSW).
Judicial Member Hole found for the NNSWF, holding that the dominant purpose of the entity (as per the requirement of the legislation) was "to provide and promote football as an undertaking which benefits communities, the benefit being the improvement in the health and general wellbeing of participants…". which was ultimately a charitable purpose.
The Chief Commissioner appealed the ADT decision primarily on two grounds:
NNSWF argued the Tribunal was not bound by the Australian decisions as they could be distinguished from the present facts while, at the same time, the principle that a gift for sport is not charitable had, through generalisation, wrongly emerged. NNSWF also argued that, as per the objects in NNSWF's constitution, the actual activities of the organisation were charitable, being the promotion of health and sport.
The Appeal Panel found that the dominant purpose of the NNSWF was the promotion of football "which incidentally has the attribute of being beneficial to the community", and it could not be classed as charitable, agreeing that the Tribunal and Appeal Panel are bound by Australian decisions establishing the principle that "to encourage sport is not charitable".
The proceedings were remitted back to the Tribunal for determination of whether the NNSWF satisfies the requirements of ss. 259(1)(c) and 267(2) of the Duties Act 1997 (NSW), those provisions involving a slightly different test.
In its appeal to the New South Wales Court of Appeal, NNSWF submitted that its dominant purpose should be ascertained by reference only to its constitutional objects and without any significant reference to its activities because the relevant inquiry is limited to the purpose of the organisation and not its actions. However, the Court of Appeal stated that is inconsistent with what was said by the majority in Commissioner of Taxation v Word Investments Ltd  HCA 55.
The appeal was dismissed. The Court unanimously held that: