The National Institute of Dramatic Art v Chief Commissioner of State Revenue [2016] NSWSC 1471

Date of judgement 17 October 2016 Proceeding No. 2015/80895
Judge(s) White J
Court or Tribunal Equity - Revenue List
Legislation cited Income Tax and Social Services Contribution Assessment Act 1936-1962 (Cth)

Pay-roll Tax (Further Amendment) Act 1977 (NSW)

Payroll Tax Act 1941 (Cth)

Pay-roll Tax Act 1971 (NSW)

Pay-roll Tax Act 1971 (Vic)

Payroll Tax Act 2007 (NSW)

Pay-roll Tax Assessment Act 1966 (Cth)

Public Works Act 1912 (NSW)
Catchwords TAXES AND DUTIES — Payroll tax — Exemption — Clause 12(1)(c) of Sch 2 of the Payroll Tax Act 2007 (NSW) — Whether plaintiff is a school or college within the meaning of cl 12(1)(c) — School-type activities the predominant and characteristic activity of the plaintiff — Wages paid or payable by the plaintiff not exempt wages
Cases cited Commissioner of Taxation v Australian Airlines Ltd (1996) 71 FCR 446

Commissioner of Taxation v Leeuwin Sail Training Foundation Limited (1996) 68 FCR 197

Cromer Golf Club Ltd v Downs [1972-73] ALR 1295; (1973) 47 ALJR 219

Federal Commissioner of Taxation v Word Investments Ltd (2008) 236 CLR 204

Inco Europe Ltd v First Choice Distribution [2000] 2 All ER 109

Incorporated Council of Law Reporting (Qld) v Federal Commissioner of Taxation (1971) 125 CLR 659; [1971] HCA 44

Jones v Wrotham Park Settled Estates [1980] AC 74

Lawrence v South County Freeholds Ltd [1939] 1 Ch 656

Re Ku Ring Gai Co-operative Building Society (No. 12) Ltd (1978) 22 ALR 621

Re Trade Practices Tribunal; Ex Parte St George County Council (1974) 130 CLR 533; [1974] HCA 7

State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282; [1982] HCA 77

Taylor v Owners - Strata Plan No 11564 (2014) 253 CLR 531; [2014] HCA 9

United Firefighters Union of Australia v Country Fire Authority [2015] FCAFC 1; (2015) 315 ALR 460


The National Institute of Dramatic Art (NIDA) (the taxpayer) argued that its wages were exempt wages for the purposes of the Payroll Tax Act 2007 (NSW) under cl 12(1)(c) of Sch 2 to that Act.  This is a savings clause that applies principles in the former Pay-roll Tax Act 1971 to religious institutions, public benevolent institutions, non-profit and charitable organisations whose constitution has not changed since the repeal of that Act on 1 July 2007.  The taxpayer sought a refund of $2,540,040.

It was common ground that NIDA is a non-profit organisation and there was ultimately no dispute that NIDA has a charitable purpose. The Chief Commissioner rejected the application for a refund on the ground that NIDA is a school or college within the meaning of cl 12(1)(c) and therefore the exemption does not apply.


NIDA did not dispute that it conducts a school or college but argued that this was only part of its activities and that it carried out other activities through various divisions, including the NIDA Open Program, Vocational Education and Training, NIDA Corporate and Venue Hire. NIDA argued that it should not be characterised as a college or school. Rather, its essential character is that of a promoter of the arts.  NIDA contended that this is a charitable purpose and that all of its activities are directed towards that purpose and therefore all of its wages are exempt.

The Chief Commissioner argued that NIDA is a school or college within the meaning of cl 12(1)(c) because all or most of its activities are ancillary to the conduct of a drama school.   The Chief Commissioner argued that the meaning of “school” is broad and that an institution where people, whether young, adolescent or adult, are instructed in some area of knowledge or activity is a school. Not only NIDA’s undergraduate and graduate programs involve the conduct of a school or college, but its broader activities such as its Vocational Education and Training Division and NIDA’s Open Program, also involve the conduct of a school or college. The Commissioner also argued that if NIDA can otherwise bring itself within cl 12(1)(c) by avoiding the exclusion of being a school or college, it is not sufficient that the employees’ work advances the charitable purpose of NIDA. The work itself must be charitable work, or have an intrinsically charitable character.


The Court found that, having regard to the meaning of “school” that has been adopted in various authorities, NIDA conducts a school through its undergraduate and graduate programs and its Vocational and Education Training Programs, and in parts of its Open Program.   The Court concluded that the Chief Commissioner correctly refused NIDA’s application for an exemption from payroll tax from 1 July 2009 and for a refund of payroll tax paid because NIDA was a school or college within the meaning of cl 12(1)(c). The wages paid or payable by it were therefore not exempt wages.


White J ordered that the taxpayer’s summons be dismissed, and prima facie, the taxpayer should pay the Chief Commissioner’s costs.

Link to decision

The National Institute of Dramatic Art v Chief Commissioner of State Revenue [2016] NSWSC 1471

Last updated: 13 March 2018