|Date of judgement||16 February 2018|
|Judge(s)||Ward CJ in Eq|
|Court or Tribunal||Supreme Court of New South Wales|
Duties Act 1997, ss 6, 12, 275, 275A
Interpretation Act 1987, ss 21(1), 32
Stamp Duties (Further Amendment) Bill 1980
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
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”
Coles v Pack (1869) LR 5 CP 65
Ellison v Thomas (1862) 32 LJ Ch 32
McGarvie Smith Institute v Campbelltown Municipal Council (1965) 83 WN (Pt 1) (NSW) 191
Minister of National Revenue v Trusts and Guarantee Co. Ltd  AC 138
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.
Section 275 of the Duties Act provided (in part):
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).
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 ).
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 ), 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 ), 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:
Justice Ward made the following orders: