Aid/Watch Incorporated and Commissioner of Taxation
[2008] AATA 652
•28 July 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 652
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2007/1792
TAXATION APPEALS DIVISION )
Re AID/WATCH INCORPORATED
Applicant
And COMMISSIONER OF TAXATION
Respondent
DECISION
TribunalJustice Downes, President
Date28 July 2008
PlaceSydney
DecisionAid/Watch is a charitable institution within the meaning of those words in s 50 of the Income Tax Assessment Act 1997 (Cth). The objection decision is set aside and the objection is upheld. The matter is remitted to the Commissioner in accordance with a direction that he implement this decision and its consequences.
..............[sgd]............................
Garry Downes
President
CATCHWORDS
TAXATION – tax exemption – charitable institution – organisation researching, monitoring, and campaigning on delivery of overseas aid – relief of poverty – advancement of education – other purposes beneficial to the community – organisation is a charitable institution
A New Tax System (Goods and Services Tax) Act 1999 (Cth) s 176-1(1)
Associations Incorporation Act 1984 (NSW)
Environment Protection and Biodiversity Conservation Act 1999 (Cth)
Export Finance and Insurance Corporation Act 1991 (Cth) ss 7(1)(c), 8(b)(iii).
Fringe Benefits Tax Assessment Act 1986 (Cth) s 123E(1)
Income Tax Assessment Act 1997 (Cth) ss 50-1, 50-5
Statute of Charitable Uses 1601 (UK) (Statute of Elizabeth 1601 (UK) [43 Eliz I c 4])
Taxation Administration Act 1953 (Cth) ss 14ZL, 14ZZ, 426-60
Attorney-General for New South Wales v The New South Wales Henry George Foundation Ltd [2002] NSWSC 1128
Belcher, re [1950] VLR 11
Bowman v Secular Society Ltd [1917] AC 406
Commissioner for Special Purposes of Income Tax v Pemsel [1891] AC 531
Commissioner of Taxation v Triton Foundation (2005) 147 FCR 362
Hopkins’ Will Trusts, re [1965] Ch 669
Incorporated Council of Law Reporting (of Queensland) v Federal Commissioner of Taxation (1971) 125 CLR 659
Inland Revenue Commissioners v McMullen [1981] AC 1
Inland Revenue Commissioner v Yorkshire Agricultural Society [1928] 1 KB 611
McGovern v Attorney-General [1985] Ch 321
National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31
Pleasants, re (1923) 39 TLR 675
Public Trustee v Attorney-General of New South Wales (1997) 42 NSWLR 600
Shaw, re [1957] 1 WLR 729
REASONS FOR DECISION
28 July 2008
Justice Downes, President
Summary
1. Aid/Watch does what its name suggests. It researches, monitors and campaigns about the delivery of overseas aid. Its objective is to promote aid programs that are environmentally sound and effectively delivered. The question is whether Aid/Watch is a “charitable institution”. If it is, its income will not be taxed. I have decided that it is a charitable institution.
2. The legal rules determining charitable status are perplexing. They begin with the words of an English statute more than 400 years old and long since repealed. The question is whether the claimant honours the spirit and intendment of the words. The task is assisted by referring to a summary of the elements of charitableness given by a Law Lord more than one hundred years ago. In the body of these reasons I will need to apply these principles.
3. For the moment, however, I will indulge myself in a broader analysis of the issues. I do this in the knowledge that an important element of charitable status is public benefit and that relieving poverty and advancing education are charitable pursuits.
4. Aid is fundamentally associated with the relief of poverty. Research, where the results of the research are disseminated, will often be for the advancement of education. The problem in this case is twofold. First, can an institution which researches, monitors and campaigns about aid but does not, itself, distribute aid, be charitable? Secondly, does the fact that a fundamental part of its work is campaigning, very often against government, mean that its purposes, which might otherwise be charitable, lose that status, because they are political purposes?
5. The object of Aid/Watch is to promote the effectiveness of aid, both by ensuring that it is delivered where it is intended and by ensuring that its delivery is environmentally effective. The test of charitableness is whether activity advances or promotes a charitable object. Taking steps to ensure that aid provided by others is provided in such a way as to maximise the public benefit would seem to be charitable in itself. This must be so even if the purpose is the sole purpose of the charity and is not incidental to actual aid delivery.
6. An institution which promotes a political party or seeks changes in the law will not be charitable if these are its main objects. However, Aid/Watch has no such objects. The provision of overseas aid is authorised by the Parliament and is important government policy. So is the protection of the environment. A purpose of promoting the efficient delivery of aid, or of promoting its delivery in an environmentally effective way, is not opposing government policy, but encouraging it. Proposing to government different priorities for purposes already part of government policy neither seeks a change in the law nor even of policy. Whether an activity is charitable depends upon the activity not the actor. Accordingly, private institutions promoting government activities which have objects which are objectively charitable will not cease to be charitable because the activities they are promoting are activities of government.
7. In summary, the work of Aid/Watch, as provided for in its objectives and as carried out in practice, combines the charitable objects of relief of poverty and advancement of education. To the extent that its main objects are outside these objects they are otherwise beneficial to the community. The objects are charitable notwithstanding the fact that Aid/Watch does not itself provide aid and it is not deprived of charitable status because it seeks to influence the amount of government aid and the way it is distributed.
Introduction
8. Aid/Watch is a body incorporated under the Associations Incorporation Act 1984 (NSW). Its objectives specified in its constitution relevant to these proceedings are as follows:
“2. Objectives
AID/WATCH monitors, researches, campaigns and undertakes activities on the environmental impact of Australian and multinational aid and investment programs, projects and policies.
The main objectives of the Association are to seek to ensure that:
·Aid projects and development programs and projects are designed to protect the environment and associated human rights of local communities in countries that receive Australian aid.
·There is increased aid funding for environment programs with specific attention to renewable energy, end-use efficiency and energy conservation, small scale irrigation schemes and sustainable agriculture, land rehabilitation programs, waste management, and protection of biodiversity.
·There are complete environmental impact assessment (sic) according to the highest standards for all projects, incorporating meaningful public/community participation.
·Aid and development projects and programs incorporate the principles of ecologically sustainable development.
·There is respect for the rights of indigenous people and a recognition of their expertise in ecological management.
·Aid agencies, development banks and export credit agencies conduct full and regular consultations with community organisations, regarding the identification, planning, implementation, monitoring and evaluation of projects.
·There is accountability and transparency in the Australian aid and export credit programs including freedom of information on all aspects of projects and programs of development agencies and multilateral development banks.
·There is greater recognition of women’s needs and greater involvement of women on development projects, and greater gender equity at all levels of the development process, including in consultancy firms contracted to implement aid programs and projects.
·There is a halt to structural adjustment programs that contribute to environmental degradation and dislocate or damage the poorest populations.
·There is an increased proportion of appropriate professional staff in Australia’s official overseas development agency (currently AusAID), official Export Credit Agency (currently EFIC) and multilateral development agencies and consultancy firms contracted for aid programs and projects and the development banks.
·There is increased funding of development education activities within Australia and an increased public awareness of the environmental and social impact of the Australian Overseas Development Assistance Program and related private investment, including input into environmental and developmental studies.
·There is a public fund to which gifts of money or property are to be made which will be used only to support AID/WATCH’s key purposes. This fund will be named the AID/WATCH fund.”
9. Aid/Watch claims to be a charitable institution. Section 50 of the Income Tax Assessment Act 1997 (Cth) provides, relevantly:
“50-1 Entities whose ordinary income and statutory income is exempt
The total ordinary income and statutory income of the entities covered by the following tables is exempt from income tax. In some cases, the exemption is subject to special conditions.
50-5 Charity, education, science and religion
Charity, education, science and religion
Item
Exempt entity
Special Conditions
1.1
charitable institution
see sections 50-50 and 50-52”
The special conditions do not apply to Aid/Watch.
10. On 14 July 2000 the Commissioner of Taxation endorsed the applicant as exempt from income tax pursuant to s 50-5 of the Act. Also, effective from 1 July 2005, the Commissioner endorsed Aid/Watch as a charitable institution under s 123E(1) of the Fringe Benefits Tax Assessment Act 1986 (Cth) and s 176-1(1) of A New Tax System (Goods and Services Tax) Act 1999 (Cth).
11. On 2 October 2006, apparently as the result of a change of mind, the Commissioner revoked each of the endorsements on the basis that Aid/Watch did not qualify. Aid/Watch objected to the revocation pursuant to s 426-60 of the Taxation Administration Act 1953 (Cth). The objection was disallowed on 6 March 2007. Pursuant to ss 426-60, 14ZL and 14ZZ Aid/Watch has sought review of the decision by the Administrative Appeals Tribunal.
12. The parties are agreed that the sole question in the review is whether Aid/Watch is a “charitable institution”.
“Charitable Institution”
13. The question may be simple, but the course which must be followed in answering it, is not. Whether a body is in law a charitable institution is determined by whether the body has purposes which are charitable within “the indications contained in the preamble to the Statute of Elizabeth 1601 [43 Eliz I c 4] and the classifications in Lord Macnaghten’s speech in Commissioner for Special Purposes of Income Tax vPemsel [1891] AC 531 at 583” (Incorporated Council of Law Reporting (of Queensland) v Federal Commissioner of Taxation (1971) 125 CLR 659 at 666 per Barwick CJ).
14. The Statute of Elizabeth was entitled “An Act to redress the unemployment of lands, goods, and stocks of money heretofore given to charitable uses”. It contained the following list of charitable objects:
“the relief of aged, impotent, and poor people; the maintenance of sick and maimed soldiers and mariners, schools of learning, free schools and scholars of universities; the repair of bridges, ports, havens, causeways, churches, sea-banks and highways; the education and preferment of orphans; the relief, stock or maintenance of houses of correction; marriages of poor maids; supportation, aid and help of young tradesmen, handicraftsmen and persons decayed; the relief or redemption of prisoners or captives and the aid or ease of any poor inhabitants concerning payments of fifteens, setting out of soldiers, and other taxes.”
15. In Pemsel’s case Lord Macnaghten said this (at 583):
“‘Charity’ in its legal sense comprises four principal divisions: trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not falling under any of the preceding heads.”
The legal concept of charity is different from its popular meaning. It is not confined to giving to the needy.
16. There have been various attempts to describe what it is to be within the spirit and intendment of the Statute of Elizabeth. Public or community benefit is at the heart of it. The absence of private gain is important. Barwick CJ, in the Law Reporting Case (at 669), referred to “a broad concept… of the kind of object of public utility which will satisfy the quality of charity”. He instanced “the provision of some of the indispensables of a settled community as charitable”. He referred to charitableness including “fundamentals of the society seen to be within the concept of charitable public benefit as much as assistance to the needy and as education of the generations”. Fullagar J, speaking of Lord Macnaghten’s fourth division, in re Belcher [1950] VLR 11 at 13 referred to:
“… purposes whose fulfilment may reasonably be thought to minister to the safety or happiness or well-being or good conscience of the community and which might reasonably be the subject of outlay at the public expense.”
17. While the essential characteristics of charitable purposes do not change, what will satisfy those purposes changes with society (National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31 at 69 per Lord Simonds and Inland Revenue Commissioners v McMullen [1981] AC 1 at 15 per Lord Hailsham). What is charitable is to be determined in accordance with contemporary community values. A contemporary activity may be charitable now, though it would not have been charitable a century ago, or less.
18. Community expectations of government have changed in recent times. The role of elected governments is no longer simply to govern for their terms of office. Most government deliberations no longer take place in secret. Openness and transparency are the watchwords. But this is not an end in itself. Community expectations extend to having the opportunity to influence government. Effective influence needs to be informed.
19. Ideals of open government have led to significant legislative changes in recent decades. Important changes in government policy are now almost always preceded by the publication of papers and reports which invite public submissions. The Commonwealth reforms of administrative law in the 1970’s were part of this process. Freedom of information legislation and requirements that many executive decisions should be made in writing provided the community with information. Extended merits review and judicial review of government decisions, along with the creation of ombudsmen, gave the means to influence. Many of these changes were directed to private rights, but the changed regime led to increasing influence in areas of public interest as well. The media, in particular, has used the obtaining of documents through freedom of information processes as a potent vehicle to influence government, often with success. None of these processes would have taken place without community support.
20. A timely example is the present government’s announced changes to the freedom of information legislation by which Ministers will no longer have power to issue so called “conclusive certificates” protecting documents from release. It is also to be noticed that the announcement proposes consultation and to seek public comment on broader reform.
21. Rules established a century ago relating to what is charitable need to be revisited in this light. If seeking to influence government to deliver more effective aid may improve the quality of the aid, may that not be charitable? If it is government policy to furnish aid to less developed countries, why would seeking to increase or redirect the aid not be charitable because the purpose is political? Why would similar considerations not apply to protection of the environment? If there was a time when robust attempts to influence government policy could not themselves be charitable, is that still the position? The answer should not be that successful influence may not actually achieve public benefit. Otherwise, an educational trust might fail because it cannot be known if its education methods are beneficial.
Aid/Watch
22. Activities associated with the delivery of foreign aid are at the heart of the objectives in Aid/Watch’s constitution. However, there is no provision for Aid/Watch to itself distribute aid. The objectives provide that it “monitors, researches, campaigns and undertakes activities” relating to aid and investment programs. Two threads run through the description of the detailed objects of those activities. The first is to ensure local community involvement in the planning and implementation of aid projects. The second is to ensure that aid is delivered in an environmentally effective manner.
23. There is no particular emphasis in Aid/Watch’s formal objectives on relieving poverty. The emphasis is rather on respecting the rights of aid recipients and including them in the process. However, it may be taken that the object of relieving poverty is so fundamental to aid that its presence as a major objective of Aid/Watch needs no express statement.
24. Dr James Goodman is the chairperson of Aid/Watch. He also chairs the Aid/Watch committee of management. The committee of management, which meets monthly, makes all decisions relating to the activities of Aid/Watch. Strategy meetings are held once a year. Dr Goodman made two affidavits and gave oral evidence. He was extensively cross-examined.
25. Dr Goodman gave the following summary, which I accept, of the work of Aid/Watch:
“We undertake to monitor the Australian aid program in terms of how much is delivered, where it is delivered and its quality. We seek to assess whether it does reach those who need it and whether it meets their needs and whether it is environmentally sustainable, whether that process of aid delivery is actually environmentally sustainable. As part of that we seek to assess whether local people are involved in decision-making about how aid is delivered and ask whether there are – if there are negative environmental impacts whether there are mitigation measures and management measures put in place to minimise those impacts. The way we go about doing that is three ways. One I’ve mentioned, monitoring, two, researching and, three, campaigning and the monitoring is very much about looking at what the aid agencies themselves say about their aid programs. It’s very much tracking the funds and where they go and who receives them, what the purpose is and so on. The researching is slightly different in that it’s more on the ground research conducted generally in partnership with people that are recipients of the aid and non-government organisations that they perform, for instance, in Papua New Guinea or other contexts. That’s researching and through that research we will produce often major publications. So, for instance, one of our areas of concern which is export credit agencies we produced I think four or five major, in-depth, on the ground, researched reports of 30 to 40 pages each on specific projects that were being funded by Australian Export Credit Agency and a number of those reports were drawn up in conjunction with other organisations in Australia and also people, as it were, on the ground in those contexts. Those reports were then – this brings me to the third dimension of our activity, as it were – those reports were then published in Australia. So the information that we are gathering we gather generally in relation to impacts of aid programs offshore, as it were, and bring that into the Australian context by publishing these reports which are then obviously available publicly or generally for free on the net and we’ll have a launch of some sort, some public event, where we’ll draw together people, for instance, at a university or in some public venue, draw together our members and other interested people and publicise the event. Sometimes those launches will occur with participation of one or two people from the communities that have been recipients of the aid. We’ve done this a number of times. Often what we do is we bring someone over, as it were, into Australia in order to talk to the report when we release it publicly. That is our campaigning. That is what we understand campaigning to be which is to bring these issues to light in the Australian context into the Australian public sphere through, as I say, events, and through media releases and so on and that to perform an educative role, of course, to our members and others who would attend and also who would receive the media reports and in the process influence, of course, it may be aid practices in the ways in which aid is delivered on the ground, to improve the way aid is delivered on the ground in terms of meeting the needs of those that are aid recipients in terms of social needs but also in terms of environmental sustainability, impacts on their living environments of these aid programs… .”
26. The cross-examination of Dr Goodman addressed various aspects of the activities of Aid/Watch and, particularly, its campaigning. Dr Goodman accepted that Aid/Watch was concerned about what it describes as “commercialisation of aid” or “boomerang aid” by which, according to Aid/Watch, too much aid money “contributes to the profits of… private companies”. He agreed that this caused Aid/Watch to seek to persuade the Australian Agency for International Development (AusAID) to alter the way it administered aid programs. Cross-examination established that there was a time when Aid/Watch advocated the abolition of an Australian agency, the Export Finance and Insurance Corporation (EFIC). It severely criticised the World Bank. It opposed Australia’s Free Trade Agreement with the United States of America.
27. Dr Goodman wrote in the 2005 Annual Report of Aid/Watch:
“We are campaign focused and dedicated to pursuing global justice in partnership with Southern counterparts. We do this by targeting the policies and practices of inter-governmental institutions, transnational corporations, and, most especially, the Australian Government and its allies. We expose injustices, whether committed in the name of power politics or economic interest, and argue for alternatives based on the principles of sustainable livelihood, environmental justice and global equity.”
28. The Report shows that Aid/Watch ran a series of training courses entitled “Economics for Activists” and “Campaigning for Activists”. Dr Goodman explained, and I accept, that these courses were conducted primarily for members. The economics course, for example, was an introduction to economics conducted by a senior lecturer from the University of Sydney, with particular reference to economic principles relating to aid and development.
29. In 2006 the Australian Government produced a White Paper on the Australian aid program. As appears from its 2006 Annual Report, Aid/Watch was quick to respond. Inviting responses to the White Paper, whether favourable or not, would seem to have been the very purpose for the publishing of the White Paper. The process is part of the new openness of government and the willingness of government to receive policy submissions. Aid/Watch “applauded” parts of the paper and criticised other parts of it. It viewed favourably “broad commitments to radically increase health and education programs as well as boost Australia’s total aid expenditure”.
30. It was put to Dr Goodman that Aid/Watch engaged in lobbying. He would not accept that, preferring Aid/Watch’s own description of its activities as campaigning. To my mind the difference is that, primarily, Aid/Watch is concerned with publishing reports and assessments following its monitoring and research with the object that the reports and public response to them will influence government. It does not generally seek to influence government by direct contact.
31. Aid/Watch published a major report of more than 30 pages in May 2007. It was titled “Fighting Poverty or Fantasy Figures: The Reality of Australian Aid”. The report addressed Australia’s aid program generally but placed emphasis upon a conclusion that significant amounts of money, which were not directly related to aid, were reported as expended on the aid program. The report concluded with “a call to action” which was summarised as follows:
“This is a call to action to government to stop this insular approach to international aid, and get real with our aid program.”
32. “Fighting Poverty” is only one of a number of publications of Aid/Watch which are before me. Each of them contain adverse comments relating to Australian government policy and AusAID activities, in particular. Nevertheless, the publications are not mere political pamphlets and contain much research and scholarship.
33. The Aid/Watch Campaign Strategy for 2005/2006 specified three campaign streams. They were:
“1. Bilateral [Australian] Aid
“2.International Financial Institutions (Multilateral Aid, Export Credit Agencies)
“3. Financing [Environmental] Destruction”.
Entries under each heading included the following:
“1. Bilateral Aid
Goals
1. To expose the corporate beneficiaries of the aid programme,
2.To increase accountability and civil society control over the aid programme,
3. To expose the disparity between aid policy and practice,
4.To highlight the environmental and social impacts of the aid programme in particular with relations to climate change and palm oil,
5. To reveal Australian aid flows to communities in conflict.
Tools
The bilateral campaign will prioritise research and networking in particular national and in-country network building.
“2.International Financial Institutions (IFIs): Multilateral Development Bank and Export Credit Agencies
“2a. Multilateral Development Banks
Goals
§To strengthen national and regional IFI networks,
§To expose the corporate beneficiaries of IFI lending,
§To demand a complete phase out of all IFI support for extractive industries (oil, gas and mining),
§To demand core labour standards be adopted by all IFI as conditions of support,
§To halt the pro-privatisation of water policies at all IFIs,
§To increase civil society control over the IFIs.
Tools
The IFI campaign will focus on increasing our advocacy, outreach and grassroots education, impacted community assistance and most importantly, national and regional network building.
“2b. Export Credit Agencies
Goals
1.To ensure that EFIC implements common, harmonised, stringent environmental and social standards, and increased monitoring, accountability and transparency.
2. To support communities impacted by EFIC and ECA projects,
3.To achieve strengthened international, regional and national ECA network,
4.To demand a complete phase out of all IFI support for extractive industries (oil, gas and mining) and a portfolio shift to sustainable development.
Tools
The ECA campaign will focus on national, regional and international networking, impacted community assistance, grass roots education, advocacy and research.
“3. Financing Destruction
Goals
·To expose the environmental and social impacts of the Australian aid and trade programme,
·To support communities impacted by the Australian aid and trade programme,
·To link the Australian domestic climate impact (Australia is the largest per capita emitter of CO2 in the OECD) with our impact internationally through the aid and trade programs,
·To promote cross sector dialogue on the environmental impacts of the Australian aid and trade programme.
Tools
The main tools for this campaign will be research, in country solidarity work with communities, national, regional and international networking and grass roots education.”
34. The activities of Aid/Watch seem to me to accord with its formal objectives. Both its objects and activities are well described as monitoring, researching and campaigning to improve the effectiveness of aid delivery both from a beneficial and environmental perspective.
35. Some of Aid/Watch’s activities might be thought to be at the edges of appropriate conduct. For example, it sent derisory 60th birthday gifts to the World Bank suggesting it was time for the bank to retire. Some of its activities may be somewhat aggressive, for example, calls to action. However, charitableness will not depend upon the methods of the charity provided that the purpose remains charitable. Conduct may become so extreme that it loses its charitable quality, but I do not think that that is the case here, not in accordance with contemporary community values.
36. The question remains whether the objects and activities of Aid/Watch, as I have described them, are charitable.
Reasoning
37. Aid itself is at the heart of charity. It satisfies both the legal and popular meaning of the word. Virtually every purpose or activity of Aid/Watch is directed towards promoting the relief of poverty. The relief of poverty is not promoted solely by the act of giving itself. Many conventional charities engage in activities parallel to those of Aid/Watch. Charities concerned with social security promote increases in pensions and other social security payments and campaign against what are seen to be unfair administrative practices. For many charities these activities will be incidental to actual distribution of aid, but as the overwhelming provider of social security in Australia is the government this may not wholly be true.
38. Lord Macnaghten’s second and third divisions refer to “advancement” of the charitable objects of education and religion. They do not refer to teaching or proselytising or even to funding those activities. The cases are replete with references to the “promoting” of charitable objects (Inland Revenue Commissioner v Yorkshire Agricultural Society [1928] 1 KB 611 (“promotion of agriculture”), re Pleasants (1923) 39 TLR 675 (“promotion of horticulture”); Commissioner of Taxation v Triton Foundation (2005) 147 FCR 362 (“promotion of a culture of innovation and entrepreneurship in Australia, particularly among the young, by visibly assisting innovators to commercialise their ideas”)). I see no reason why an institution cannot be charitable under Lord Macnaghten’s first division although it does not itself distribute aid.
39. Many of the activities of Aid/Watch satisfy the test of advancement of education. Research and dissemination of the results of that research qualifies as advancement of education. Research alone may not be enough (re Shaw [1957] 1 WLR 729). However, a principal object of Aid/Watch is to publish the results of its research. Monitoring can be regarded as an aspect of research. The whole object of Aid/Watch is to influence public opinion by making the results of its research available, with the further goals of influencing public opinion and ultimately government agencies and government itself.
40. In re Hopkins’ Will Trusts [1965] Ch 669 Wilberforce J upheld as a charitable education trust a gift to be used for research into Shakespearean manuscripts thought to have been written by Bacon. Research relating to aid delivery seems to qualify for charitable status at least as much as narrowly focussed Shakespearean research.
41. It follows that the objects and activities of Aid/Watch largely satisfy the first and second divisions of Lord Macnaghten. Being so closely associated to two longstanding and fundamental tests of charitableness, it will not be surprising if they also satisfy the fourth division.
42. Not all beneficial purposes will satisfy the fourth division. However, it seems to me that promoting the most advantageous delivery of aid comfortably falls within the fourth division to the extent that it is outside the first and second divisions. I note, in passing, that much overseas aid goes towards public infrastructure projects of the kind directly covered by the Statute of Elizabeth.
43. Aid/Watch will therefore be a charitable institution unless disqualified by being political.
44. In Bowman v Secular Society Ltd [1917] AC 406 at 442 Lord Parker of Waddington said that trusts “for the attainment of political objects ha[ve] always been held invalid”. The reason he gave may be of doubtful validity. He said it was “because the Court has no means of judging whether a proposed change in the law will or will not be for the public benefit”. This remark may be apt for fourth division charities, but charities challenged as political are often sought to be supported as trusts for the advancement of education. It must be as difficult to know whether a particular form of education is for the public benefit as whether a reform of the law is for the public benefit. Nevertheless, Lord Parker’s broad principal has generally been accepted (eg McGovern v Attorney-General [1982] Ch 321 at 340) although it has been subject to criticism and may now less often render trusts invalid than in the past (see, eg Public Trustee v Attorney-General of New South Wales (1997) 42 NSWLR 600 and Attorney-General for New South Wales v The New South Wales Henry George Foundation Ltd [2002] NSWSC 1128).
45. Lord Parker’s statement was approved by the House of Lords in National Anti-Vivisection Society in which a society advocating the banning of all forms of vivisection, including the enactment of legislation to that effect, was held not to be charitable. Lord Simonds (at 62-3) embraced Lord Parker’s reason, although varying it slightly by emphasising the court’s functions of upholding law and not looking for benefit in changes to it. Both formulations fail to recognise the many occasions in which distinguished judges have suggested amendments to legislation to enhance the apparent object of the legislation.
46. The circumstances in which institutions have been denied charitable status because they have political purposes have not been confined to advocacy of changes to the law. The principle appears to extend to advocacy of change to government policy (eg McGovern at 340). This means the principle embraces advocacy of change at the executive as well as the legislative level.
47. For present purposes, however, it needs to be noted that governments at all levels in Australia support the grant of overseas aid and the protection of the environment. Australia has a significant overseas aid program administered by the Minister for Foreign Affairs and Trade. Protection of the environment is at the core of the Environment Protection and Biodiversity Conservation Act 1999 (Cth). The Export Finance and Insurance Corporation Act 1991 (Cth) imposes obligations upon EFIC relating both to aid (eg s 7(1)(c)) and Australia’s obligations under international agreements (eg s 8(b)(iii)). These include obligations relating both to the environment and to human rights. It follows that none of the objectives of Aid/Watch can be said to be contrary to government policy. The most that can be said is that Aid/Watch seeks to influence government policy as to the nature and extent and means of delivery of overseas aid.
48. Slade J, in McGovern, which related to the Amnesty International Trust, went so far as to include as a disqualifying purpose, a purpose “to procure a reversal of government policy or of particular decisions of governmental authorities in a foreign country” (at 340). However, that description must be seen in the context of the facts of the case. Although the objects of Amnesty International to promote the abolition of torture or inhuman or degrading treatment are laudable objects they do involve direct confrontation with the activities of certain foreign governments and authorities. That is not so in the present case. It is worth noting that Slade J would have upheld as charitable Amnesty International’s objects of “undertaking promotion and commission of research into the maintenance and observance of human rights” (329-30) and “[t]he dissemination of the results of such research” (330) if these objects “had been the only trust purposes contained in the trust deed” (at 353). Such a trust would have close parallels to Aid/Watch.
49. Because Aid/Watch does not have changes to the law as a main object it is not disqualified from charitable status by direct application of the principles enunciated in the Secular Society or National Anti-Vivisection Society cases. It may be disqualified if its objects and activities, although not overtly political, still place undue emphasis on attempts to influence government, particularly with respect to priorities and methods. The argument against charitable status may be enhanced because of its activist approaches and confrontational methods. However, I consider that Aid/Watch’s objectives and activities, as I have found them to be, fall short of disqualifying it from being a charity.
Conclusion
50. I conclude that Aid/Watch is a charitable institution within the meaning of those words in s 50 of the Assessment Act. The decision on the objection will be set aside and a decision substituted for it upholding both the objection and Aid/Watch’s claim to be a charitable institution. The matter will be remitted to the Commissioner for reconsideration in accordance with a direction that he take all necessary steps to implement this decision and its consequences.
I certify that the fifty (50) preceding paragraphs are a true copy of the reasons for the decision herein of Justice Downes, President.
Signed: ................[sgd].....................................................
Gregory Cooper, AssociateDates of Hearing: 17 March, 24, 25 June 2008
Date of Decision: 28 July 2008
Solicitor for the Applicant: Maurice Blackburn
Counsel for the Applicant: D L Williams SC and S Kaur-Bains
Solicitor for the Respondent: Australian Government Solicitor
Counsel for the Respondent: A Robertson SC and M Allars
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