Racing NSW v Chief Commissioner of State Revenue [2019] NSWCATAD 172

Background

Racing NSW is a statutory body established under the Thoroughbred Racing Act 1996 (NSW) (“the Act”) with functions and powers as set out in the Act.

In 2011, the Thoroughbred Horse Rehabilitation Trust (“the Trust”) was established, and later that year Racing NSW became the Appointer (but not one of trustees, who were a number of individuals). The principal activities of the Trust was to provide money, property and services for the care and rehabilitation of thoroughbred horses which have ceased to be competitive or have ceased to race and have been mistreated or are without owners or are at risk of being killed or mistreated.

Racing NSW claimed the Duties Act exemption under ss275 or 275A on behalf of the Trust (also known from time to time as the Equine Welfare Fund Trust and the Equine Welfare Fund), although at the hearing Racing NSW also claimed that it was itself a charitable or benevolent body.

Racing NSW claimed that the activities which would take place on the land at Capertree were extended to enabling disadvantaged persons and armed service veterans to work with the horses in their retraining. It was asserted that the objects of the Trust included the promotion of education, relief for those suffering from disability, and assisting persons with special needs.

Racing NSW also relied on its Annual Reports and financial statements and expenditure reports to further the argument that Racing NSW itself is a charitable or benevolent body. In particular, it pointed to loans to country racetracks for the improvement of facilities for use by the general public, the Race Fields Funding Loans. Racing NSW asserted that the relevant activities were wholly or predominantly for the relief of poverty or the promotion of education.

The Chief Commissioner’s argument in summary, was that Racing NSW was the peak administrative body of a commercial sport whose main object is to regulate and administer that sport. He submitted that none of these elements are charitable.

The statutory framework

Section 275 of the Duties Act establishes a regime exempting certain instruments from duty, including an agreement for sale or transfer of land to an exempt charitable or benevolent body (including a trustee for such a body).

Section 275A establishes a regime for partial exemption from duty for a dutiable transaction by which an exempt charitable or benevolent body acquires land or an interest in land, where the land is used or to be used by a charitable or benevolent body partly for an exempt purpose.

Issues in the proceedings

1. Whether Racing NSW is a body corporate “of a charitable or benevolent nature”, so as to attract the opening words of paragraph (b) of s 275 (3) as well as s275A (7).
2. Were the agreements entered for a purpose approved by the Chief Commissioner in accordance with guidelines approved by the Treasurer, so as to attract s 275 (3)(b)(i).
3. Whether Racing NSW was acting in the capacity of trustee for the Trust in relation to the agreements.
4. Whether the Trust is “an exempt charitable or benevolent body” within s 275 (3) (b) so as to attract the exemption.
5. Whether either Racing NSW or the Trust is an “exempt charitable or benevolent body” within the meaning of s.275(3) (a);  this would require that the resources be used wholly or predominantly for the relief of poverty or for the promotion of education in Australia.
6. Whether s.275A of the DA applicable, so that the amount of duty chargeable by reason of the agreements should be reduced.

Decision

Racing NSW failed to make out its entitlement to an exemption or a partial exemption. The Tribunal found:

• Ss.275 and 275A are based on the nature or character of the purchaser of the land, so that the Applicant has to establish that it is an exempt charitable or benevolent body. The provisions are not restricted to registered charities; for a body to be a charitable one within the provisions, the main object or real nature must be charitable in the sense set out in  Tasmanian Electronic Commerce Centre Pty Ltd v Commissioner of Taxation [2005] FCA 439.
• Racing NSW does engage in activities that can reasonably be described as being of a charitable or benevolent nature;
• however Racing NSW is not a charitable trust under the four heads of charity identified in Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531, namely trusts for the relief of poverty, for the advancement of education, for the advancement of religion and for other purposes beneficial to the community;  its functions and powers overall are not charitable or directed to charitable objects or functions; it can only be regarded as “of a mixed character”  (see Royal Australian College of Surgeons v The Federal Commissioner of Taxation (1943) 68 CLR 436);
• the activities of the Trust do not constitute the main or prevalent activity of Racing NSW;
• the Race Fields Funding Loans which in some instances may be based on charitable or benevolent purposes are not such to reflect a dominant charitable purpose to Racing NSW or that charitable activities are its main or prevalent activities;
• a proper consideration of the Act and Racing NSW’s activities leads to the conclusion that its prevalent or main character is not charitable, but rather, concerned with the administration, promotion and regulation of thoroughbred horseracing in NSW.
• Racing NSW was not a trustee of the Trust, nor was there any evidence that it was acting in any capacity as trustee in relation to the purchase of the land;  on that basis, the Tribunal did not have to decide whether the Trust is a charitable or benevolent body.

The Tribunal found that neither Racing NSW nor the Trust is an exempt charitable or benevolent body and therefore a partial exemption from duty under s 275A is not available to either of them.

Orders

The Chief Commissioner’s decision under review is affirmed.

https://www.caselaw.nsw.gov.au/decision/5d5dc3e2e4b0c3247d711404