Commissioner of Taxation v Polla-Mounter, Craig
[1995] FCA 982
•30 NOVEMBER 1995
CATCHWORDS
INCOME TAX - Exemptions - Scholarships - Whether taxpayer received payments on condition that he would render services to the payer - Whether services rendered to another constituted services rendered to the payer - Matter remitted for reconsideration.
ADMINISTRATIVE APPEALS TRIBUNAL - Appeal to Federal Court - Orders - Error of law found - Whether matter should be remitted for reconsideration or disposed of by the Court.
Income Tax Assessment Act 1936 (Cth), s.23(z).
Commissioner of Taxation v Ranson (1989) 25 FCR 57.
Federal Commissioner of Taxation v Hall (1975) 6 ALR 457.
Harradine v Secretary, Department of Social Security (1989) 25 FCR 35.
Minister for Immigration and Ethnic Affairs v Gungor (1982) 63 FLR 441.
Morales v Minister for Immigration and Ethnic Affairs, unreported, Federal Court of Australia, Sackville J., 24 November 1995.
COMMISSIONER OF TAXATION v CRAIG POLLA-MOUNTER
NG 248 of 1995
Sackville J.
Sydney
30 November, 1995
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) NG 248 of 1995
GENERAL DIVISION )
ON APPEAL FROM A DECISION OF THE TAXATION APPEALS DIVISION
OF THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY
SENIOR MEMBER BARBOUR
BETWEEN:
COMMISSIONER OF TAXATION
Applicant
AND:
CRAIG POLLA-MOUNTER
Respondent
CORAM: SACKVILLE J.
PLACE: SYDNEY
DATE: 30 NOVEMBER 1995
MINUTES OF ORDER
THE COURT ORDERS THAT:
The decision of the Administrative Appeals Tribunal, made on 17 March 1995, be set aside.
The matter be remitted to the Administrative Appeals Tribunal to be determined according to law.
The respondent pay the applicant's costs.
NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) NG 248 of 1995
GENERAL DIVISION )
ON APPEAL FROM A DECISION OF THE TAXATION APPEALS DIVISION
OF THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY
SENIOR MEMBER BARBOUR
BETWEEN:
COMMISSIONER OF TAXATION
Applicant
AND:
CRAIG POLLA-MOUNTER
Respondent
CORAM: SACKVILLE J.
PLACE: SYDNEY
DATE: 30 NOVEMBER 1995
REASONS FOR JUDGMENT
Introduction
This is an appeal under s.44 of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") against a determination of the Taxation Appeals Division of the Administrative Appeals Tribunal ("AAT"), constituted by Mr B.A. Barbour, Senior Member, given on 17 March 1995. The AAT set aside an objection decision made by the present applicant ("the Commissioner"), disallowing an objection by the respondent ("the taxpayer"). The taxpayer had objected to the inclusion in his assessable income of certain payments made to him by the Canterbury-Bankstown League Club Limited ("the League Club") for the taxation year ended 30 June 1992.
The AAT found that the payments were exempt from income tax since they answered the description of "income derived by way of scholarship, bursary or other educational allowance or assistance...by a student receiving full-time education at a...university", within the meaning of s.23(z) of the Income Tax Assessment Act 1936 (Cth) ("the Tax Act"). The AAT also found that the payments were not amounts "received by the student from a person...upon condition that the student... will...render...services to that person" within the meaning of s.23(z)(i) of the Tax Act. Thus s.23(z)(i), which qualifies the exemption conferred by s.23(z), did not apply to the payments and they did not lose their character as exempt income. The Commissioner appealed to this Court against the AAT's decision.
The Commissioner's notice of appeal identified ten grounds of appeal, each of which identified an error of law said to have been made by the AAT. Most of these grounds were not pressed by Mr Gibb, who appeared on behalf of the Commissioner at the hearing of the appeal. The scope of the appeal was narrowed further when Mr Edmonds, SC, who appeared for the taxpayer, conceded that the AAT had failed to make material findings of fact in relation to contentions put by the Commissioner and that this failure reflected an error of law. Mr Edmonds argued that the appeal should, nonetheless, be dismissed because, even if findings of fact favourable to the Commissioner had been made, the result of the application for review heard by the AAT could have been no different. He therefore invited me to dismiss the appeal under the powers conferred by s.44(4) of the AAT Act.
The Legislation
Section 25(1) of the Tax Act provides as follows:
"25(1) The assessable income of a taxpayer shall include:-
(a)where the taxpayer is a resident:
the gross income derived directly or indirectly from all sources whether in or out of Australia; ...
which is not exempt income...".
Section 23 of the Tax Act provides that certain income shall be exempt from tax, including the following:
"(z) income derived by way of a scholarship, bursary or other educational allowance or educational assistance...by a student receiving full-time education at a school, college or university, but not including-
(i)an amount received by the student from a person or authority upon condition that the student will (or will if required) render, or continue to render, services to that person or authority...".
The powers of the Court on an appeal on a question of law from the AAT include those set out in s.44(4) and (5) of the AAT Act:
"(4) The Federal Court of Australia shall hear and determine the appeal and may make such order as it thinks appropriate by reason of its decision.
(5)Without limiting by implication the generality of sub-section (4), the orders that may be made by the Federal Court of Australia on an appeal include an order affirming or setting aside the decision of the Tribunal and an order remitting the case to be heard and decided again, either with or without the hearing of further evidence, by the tribunal in accordance with the directions of the Court."
The Factual Background
The League Club is a company limited by guarantee. Its objects include the following:
"(a)To provide for members and for members' guests a social and sporting Club with all the usual facilities of a Club including residential and other accommodation liquid and other refreshment libraries and provision for sporting musical and education activities and other social amenities.
(b)To assist generally in the promotion conduct and propagation of Rugby League Football in the Rugby League Football District of Canterbury-Bankstown or elsewhere and to provide or assist in the provision of training and conditioning and teaching facilities for football played in accordance with the rules of the New South Wales Rugby League Limited.
...
(l)To render aid either financial or by other means to clubs or associations in the Rugby League Football District of Canterbury-Bankstown or elsewhere which clubs or associations are playing or conducting football played in accordance with the rules of the New South Wales Rugby League Limited."
The Canterbury-Bankstown District Rugby League Football Club Ltd ("the Football Club") was incorporated in 1980. Prior to that date it was an unincorporated association of members, formed in 1934, known as the Canterbury-Bankstown District Rugby League Football Club. The Football Club is also a company limited by guarantee. Its memorandum of association includes the following objects:
(a)To support and promote the game of rugby league football in the Canterbury and Bankstown Municipalities and elsewhere.
(b)To control the playing of the game of rugby league football within such boundaries as may be determined by the New South Wales Rugby Football League...".
The Football Club fields a rugby league team in the competition conducted by the New South Wales Rugby Football League.
Over a long period, the League Club has made substantial grants to the Football Club. In the year ended 30 October 1991 its grants, excluding scholarships, totalled $2,561,403 out of a trading profit of $3,197,865; in the 1992 year, the grants to the Football Club, excluding scholarships, totalled $2,526,231 out of a trading profit of $4,812,285.
In 1970 the Board of Directors of the League Club established what was described as a "scholarship scheme", to provide financial assistance to members of the Football Club undertaking full-time courses of education at universities and other tertiary institutions. The AAT found that the guidelines for the scheme, strangely enough, had never been reduced to writing. However, the AAT accepted evidence that the guidelines
"provide that the candidate: has to be an active playing member of the Football Club; has to be of good character and preferably from a 'strong family background'; has to be undertaking full-time tertiary studies leading to an award or qualification; has to have reasonable prospects of success at the course; has to have above average potential at playing rugby league."
Once awarded by the League Club, a scholarship continued unconditionally until the player completed or terminated his course, unless it was revoked by the League Club because of "conduct...unbecoming a scholarship holder" or because of poor attitude to studies.
The administration of the scheme seems to have been somewhat informal. The award of a scholarship was completely at the discretion of the League Club's Board of Directors. Only players recommended by the Football Club and who satisfied the directors that they were within the guidelines were accepted. There were no application forms and no provision for detailed reporting on progress, although the Chief Executive Officer of the League Club gave a very brief report annually on whether each scholarship holder was performing satisfactorily.
The taxpayer is a professional rugby league player and has played under contract with the Football Club each year since 1991. Towards the end of his final school year, in 1990, he was approached by representatives of the Football Club, who
wished to secure his services as a player. Discussions were also held with his parents and teachers. The taxpayer, at the time, wished to study physical education on a full-time basis. The availability of the scholarship scheme influenced his decision to sign with the Football Club.
On 9 October 1990 the taxpayer signed a contract with the Football Club. This agreement provided that the taxpayer should play rugby league for the Club and should receive payment for his services. The relationship between the taxpayer and the Football Club was expressed to continue until 31 October 1994.
On 1 December 1990 the Board of the League Club resolved that the taxpayer "be awarded a Sporting Scholarship of $866.66 per month commencing 1st February 1991 until 31st October 1994".
On 23 December 1990, the League Club sent the taxpayer a letter as follows:
"I wish to inform you that the Board of Directors of Canterbury-Bankstown League Club Limited has granted you a Sporting Scholarship for $866.66 per month commencing 1st February 1991.
Congratulations Craig and best wishes for your studies and may I add that there are no services to be rendered by you in return for this payment."
It will be noted that the last sentence of this letter is written with a keen appreciation of the language of s.23(z)(i) of the Tax Act.
In 1991, the taxpayer enrolled as a full-time student at Sydney University, in a course leading to a Bachelors degree in Education. From 1 February 1991 the taxpayer was paid $866.66 per calendar month by the League Club. These payments ceased in December 1992, when the taxpayer discontinued his course.
The Objection
On 29 July 1993, the Commissioner issued an amended assessment to the taxpayer for the year ended 30 June 1992, which included in his assessable income the sum of $11,646 in relation to "Scholarship payments received from the Canterbury-Bankstown League Club". The taxpayer lodged a notice of objection on 23 August 1993, claiming that the payments were exempt income in the taxpayer's hands pursuant to s.23(z) of the Tax Act.
On 23 February 1994, the Commissioner disallowed the objection, on the grounds that the scholarship income was assessable under s.25(1) of the Tax Act (or, alternatively, s.26(e) of the Tax Act), and was not exempt under s.23(z) of that Act. On 18 April 1994, the taxpayer applied to the AAT for review of the decision to disallow his objection.
The AAT's Reasons
At the hearing before the AAT oral evidence was given by the taxpayer and by Mr McIntyre, the President and Chairman of the Board of Directors of the League Club. Each was cross-examined by counsel for the Commissioner.
The AAT made a number of findings. These included the following:
The scholarship payments had the character of income for the purposes of the Tax Act.
The League Club, as the scholarship provider, had a dual purpose in making the scholarship available. One purpose was to secure the services of players for the Football Club. The other was educational in character. The latter objective was more than ancillary. Accordingly, the test of whether payments were "by way of scholarship, bursary or other educational allowance" in s.23(z) was satisfied. This was because it had been held in Commissioner of Taxation v Ranson (1989) 25 FCR 57 (FCA/FC), at 64, per Davies and Hill JJ., that the provider of the scholarship could have an educational purpose in making the payments, even though the provider also had in mind some "collateral advantage".
The taxpayer, despite his modest academic record, was "receiving full-time education at a... university" during the year of income, within the meaning of that phrase as used in s.23(z) of the Tax Act.
The AAT then addressed the question of whether the scholarship payments were received by the taxpayer
"from a person or authority upon condition that the student will (or will if required) render, or continue to render, services to that person or authority",
for the purposes of s.23(z)(i) of the Tax Act. The Commissioner argued that the League Club had acted as the agent for the Football Club. It followed (so it was argued) that the payments received by the taxpayer were from the Football Club, upon condition that he would render services to that Club. Alternatively, the Commissioner submitted that the payments were made by the League Club upon condition that the applicant render services by playing for the Football Club. Those services were rendered to the League Club within the meaning of s.23(z)(i) of the Tax Act, because they benefited that Club. Accordingly (so it was argued) even if the scholarship amounts were paid to the taxpayer by the League Club and not on behalf of the Football Club, they were nonetheless received by the taxpayer upon condition that he would render or continue to render services to the League Club. Thus the terms of s.23(z)(i) were satisfied and the exemption created by s.23(z) did not apply.
The AAT dealt with these arguments in this way:
"53.I am satisfied that the payments made to the applicant were received from the Leagues Club. The letter of offer is from the Leagues Club, the payments came from the Leagues Club funds, and the applicant collected his monthly scholarship cheque from the Leagues Club.
54.I am also satisfied that the amounts were received from the Leagues Club without condition that the applicant would, or would if required, render services to the Leagues Club. This finding is based particularly upon the following evidence which I accept: the applicant's evidence as to his understanding concerning the scholarship conditions and his evidence that he had never been required to render services to the Leagues Club; his separate employment and remuneration by the Leagues Club during the University vacation; the letter of offer from the Leagues Club that specifically states that the applicant is not required to render services to the Leagues Club; and the oral and written evidence of [the President of the League Club] as regards the unconditional nature of the scholarship.
55.I am also satisfied that the amounts were not paid by the Leagues Club on condition that the applicant render, or render if required, services to the Football Club. On this point I am persuaded particularly by the evidence of [the President of the League Club] as regards two other scholarship holders who ceased to play for the Football Club, and yet continued to receive the scholarship. While being an active playing member of the Football Club is a criteria of eligibility for a scholarship, I am satisfied that should a scholarship holder no longer play for the Football Club, the scholarship could continue, and that it would only be in circumstances of misbehaviour or academic slothfulness that a scholarship would be discontinued.
56.Given this finding, it is not necessary for me to express an opinion as to whether "that person or authority" at the end of paragraph 23(z)(i) of the Income Tax Assessment Act 1936 should be narrowly construed so as to refer only to the person or authority who pays the scholarship."
The AAT then rejected the Commissioner's contention that the League Club acted as the Football Club's agent in making the payments. While there was a close relationship between the two clubs, it was not such that the League Club was the Football Club's agent. Nor was the decision to grant the scholarship anything other than an independent act by the League Club.
The AAT concluded that the payments were received by the taxpayer without a condition that he would render, or continue to render, services to the League Club, or anyone else. Thus the payments were exempt income under s.23(z) of the Tax Act. Accordingly, the Commissioner's objection decision could not stand.
The Issues on the Appeal
On the appeal, the Commissioner abandoned the contention that the payments were made by the League Club as agent for the Football Club. Mr Gibb's primary argument was that the payments were received by the taxpayer on condition that services would be rendered to the Football Club and that this was sufficient to establish, in the circumstances of the case, a condition that services would be rendered to the League Club. The argument, as I followed it, involved a number of steps:
a condition that the student receiving scholarship payments will render services to the person or authority from whom the payments are received, may be imposed expressly or by implication;
as a matter of construction the phrase "render services" in s.23(z)(i) of the Tax Act is not confined to services provided under a contract with the person or authority making the payment;
the time at which to determine whether an amount is received by the student upon a condition of the kind caught by s.23(z)(i) is the time at which the scholarship is granted Commissioner of Taxation v Ranson, at 70-71, per Jenkinson J.;
the evidence in the present case inevitably led to the conclusion that, at the time the scholarship was granted (December 1990), the scholarship amounts were to be received by the taxpayer on condition that he would render services to the Football Club;
the services to be rendered to the Football Club by the taxpayer were also to be rendered to the League Club, because the League Club intended that the services should be rendered to the Football Club and obtained benefits from the provision of those services to the Football Club.
Mr Edmonds, as I understood him, accepted steps (i), (ii) and (iii) in the Commissioner's argument. He did not dispute step (iv), although I do not think he expressly conceded it. However, he did dispute step (v).
In relation to step (iii), Mr Edmonds conceded that the position was correctly stated by Jenkinson J. in Commissioner of Taxation v Ranson, at 70-71. His Honour said this:
"But I do not consider that the futurity of tense of the verbs in s.23(z)(i) has reference to the time of receipt of the amount contemplated by that paragraph. I would understand the phrase "upon condition that" in the sense "upon a condition in the terms that", or "upon a condition providing that". The phrase being understood in that sense, the futurity of tense has reference to the time at which the condition came into existence. The "amount received" would, if that construction of the paragraph were adopted, be received "upon" such a condition as the paragraph specifies if it were such an amount, or an amount of such a character, as had been at the time the condition came into existence declared, expressly or impliedly, to be payable subject to the condition."
I should add that the parties informed me that this passage had not been cited to the learned Senior Member of the AAT.
As Mr Edmonds accepted, it follows from the concessions made by him, that paragraph 55 of the AAT's reasons reveals an error of law. In that paragraph, the AAT concluded that the amounts were not paid to the taxpayer on condition that he render services to the Football Club. It was for this reason that the Commissioner's argument, which depended upon the proposition that amounts were received by the taxpayer on condition that services were to be rendered by him to the Football Club, was rejected. The AAT's conclusion was expressly based on the finding that, if a scholarship holder no longer played for the Football Club, the scholarship would continue so long as he pursued full-time education. But the construction of s.23(z)(i) adopted by Jenkinson J. in Commissioner of Taxation v Ranson made this finding quite irrelevant to the critical question, namely, whether the amounts were received by the taxpayer upon condition that he would render services to the Football Club. That question was to be decided, not at the time of receipt of the payment, but at the time the condition came into existence. It was also to be decided by reference to what was in the contemplation of the parties at that time. Of course, at that time, the first criterion for eligibility under the scholarship scheme was that the candidate had to be an active playing member of the Football Club.
Mr Edmonds also conceded that, if the correct conclusion was that the payments were made upon condition that the taxpayer would render services to the Football Club, the AAT was required to consider whether such a condition was capable of amounting, in the circumstances, to a condition that the taxpayer would render services to the League Club. The AAT simply did not address this issue in its reasons. As I have explained, the AAT's conclusion that it did not have to address this issue stemmed from an erroneous construction of s.23(z)(i) of the Tax Act.
Having regard to this error of law and the AAT's failure to make findings on the issues to which I have referred, Mr Gibb submitted, on behalf of the Commissioner, that the only course open was to remit the matter to the AAT for determination according to law. Mr Edmonds, however, argued that, despite the error of law, the appeal should be dismissed. He submitted that, on the evidence before the AAT, it was not open to it to conclude that, even if there were a condition that the taxpayer would render services to the Football Club, this could amount to a condition that the taxpayer would render services to the League Club, within the meaning of s.23(z)(i). Since it was inevitable that the AAT would conclude that s.23(z)(i) did not apply to the payments to the taxpayer, the appropriate course was to dismiss the appeal.
Matter to be Remitted
The difficulty facing Mr Edmonds' submission is that the AAT has simply not made findings of fact on all issues that may be important in determining whether a condition that services be provided to the Football Club was capable of amounting to a condition that services be provided to the League Club. The general principle is that, if the Court decides that the AAT has erred in law in its consideration of a matter, the decision should be set aside and the matter remitted for determination according to law: Harradine v Secretary, Department of Social Security (1989) 25 FCR 35 (FCA/FC), at 36 per Wilcox J. It is not the function of the Court to determine whether the decision appealed from is the correct or preferable decision (Director-General of Social Services v Hangan (1982) 70 FLR 212 (FCA/FC), at 223, per Toohey J.), nor indeed to make findings of fact on issues not explored by the AAT.
It must be remembered that an appeal under s.44 of the AAT Act is limited to errors of law. The Court is not empowered by s.44(4) to make any order it sees fit, but only "such order as it thinks appropriate by reason of its decision". As Sheppard J. observed in Minister for Immigration and Ethnic Affairs v Gungor (1982) 63 FLR 441 (FCA/FC), at 454-455, the Court has no power to substitute what it sees as the correct decision, unless to do so is the appropriate order by reason of its decision on the point of law raised in the particular proceedings. See also Director-General v Hangan, at 223.
This is not to say that the Court must remit a matter to the AAT when it would be manifestly futile to do so. As I noted in Morales v Minister for Immigration and Ethnic Affairs, 24 November 1995, unreported, if the Court hearing an appeal finds an error of law in the reasons of the AAT, but nonetheless considers that the decision was clearly correct on the material before the AAT, it is open to the Court to dismiss the appeal: see, for example, Austin v Deputy Secretary, Attorney-General's Department (1986) 12 FCR 22 (FCA/FC), at 26-27; State Rail Authority of New South Wales v Collector of Customs (1991) 33 FCR 211 (FCA/FC), at 217. Ordinarily this course will not be adopted unless only one result could have been reached by the AAT, had it correctly
applied the law: Secretary, Department of Social Security v McKenzie (1992) 31 ALD 55 (FCA/Ryan J.), at 58. This will be the case, for example, if the parties have agreed that a question of construction is the only issue in the case (Harradine v Secretary), or if the AAT has made it clear that, even if it had not adopted the view of the law found to be erroneous, it would have reached the same result: Secretary, Department of Community Services and Health v Theologidis (1991) 33 FCR 186 (FCA/FC).
It is true that, as Mr Edmonds pointed out, the AAT made certain findings in the present case that would be relevant to the issues left unresolved by reason of the error of law. The AAT made these findings in connection with the Commissioner's argument (now abandoned) that the League Club acted as the agent of the Football Club in awarding the scholarship. For example, the AAT found that at the time of the grant of the scholarship, the Football Club controlled only three of the seven positions on the Board of the League Club and that the Football Club was not the parent of the League Club.
But there are other issues, in respect of which the AAT may have made findings or reached conclusions, had it given consideration to the Commissioner's alternative argument. For example, the AAT found "promotional material" (which seems to be a reference to a glossy publication entitled Sydney Bulldogs) treated the scholarships as the "Football Club's scholarships". The AAT concluded that this fact did not establish an agency relationship between the two Clubs. However, it did not consider the significance of this finding for the Commissioner's argument that a condition that services be rendered to the Football Club was, in the circumstances, equivalent to a condition that services be rendered to the League Club. Nor did the AAT make findings as to the precise benefits, if any, flowing to the League Club from the award of the scholarships, other than that the scholarships promoted the objects of the League Club. Findings on these issues may be important in determining the outcome of the application for review, should the matter be remitted to the AAT.
In my view, it is inappropriate for this Court to decide whether s.23(z)(i) of the Tax Act is capable of applying to the award of the scholarship in the present case until the AAT has made relevant findings of fact concerning the relationship between the two Clubs and the benefits, if any, flowing to the League Club from the award of the scholarship to the taxpayer.
The position might be different if s.23(z)(i) of the Tax Act could not conceivably apply in a case where the arrangement between the provider and the taxpayer is that the taxpayer will render services under a contract entered into (or to be entered into) with someone other than the provider of the scholarship moneys. That s.23(z)(i) can apply to such a case is shown by the observations of Rath J. in Federal Commissioner of Taxation v Hall (1975) 6 ALR 457 (SCt NSW/Rath J.). In that case a charitable foundation, whose objects included research into asthma, wished to have survey information analysed and prepared for publication. The taxpayer was a physician who intended to undergo training in epidemiology, for the purposes of obtaining a doctorate in medicine. The foundation offered the taxpayer an appointment as a research fellow, to be attached to a particular University, in order to complete the survey. Subsequently, the University accepted a grant from the foundation for two years to support a research fellowship to be offered to the taxpayer. The University then made an offer of a "scholarship" to the taxpayer, which was duly accepted by him.
Rath J. decided that the terms of s.23(z) were not satisfied, since the money could not be regarded as derived by way of scholarship or educational allowance. Rath J. also held that, even if this conclusion were wrong, s.23(z)(i) applied to the "scholarship" payments and the income was not exempt. His Honour found that the money was not paid to the doctor by the University acting as the agent of the foundation. Rath J. said this (at 469-470):
"But the University received the money from the Foundation under an obligation to pay it to a specific person for specific purposes. It was answerable as a trustee for the money to the Foundation. This interposition of the University as a trustee, in my opinion, would not prevent the exception from applying. Assuming, then, that the income is to be treated as received by Dr Hall from the Foundation, the question is, was it an amount Dr Hall received upon condition that he would (or would, if required) render, or continue to render, services to the Foundation? On the evidence I think Dr Hall should be regarded as receiving the money on the conditions laid down by the Foundation in their letter to him. It is a sufficient acceptance of those conditions that he accepted the Foundation's money, because the Foundation had communicated its conditions to him, and could reasonably regard his conduct as acceptance. Although the Foundation was not itself carrying out the collation and analysis of data from the survey, and may not have been authorised by its memorandum of association to do so, it was concerned to ensure that the work of collation and analysis was done, and had the power to make a grant for that purpose. In those circumstances it seems to me that the person receiving the grant for those purposes is receiving it upon the condition of rendering services to the Foundation. There is work being done, and that work is being done in furtherance of a survey conducted for the Foundation at its expense. This seems to me, in the circumstances of this case, to be work done for the Foundation of such a kind as to constitute the rendering of services to it (cf Employers' Mutual Indemnity Association Ltd v Federal Commissioner of Taxation (1943) 68 CLR 165, per Latham C.J. at 174; Revesby Credit Union Co-operative Ltd v Federal Commissioner of Taxation (1965) 112 CLR 564, at 577-8)."
There are differences between the facts of FCT v Hall and the present case. The nature and significance of those differences will depend upon the precise findings made by the AAT after the matter has been remitted. I am not suggesting that the observations of Rath J. compel a particular outcome in the present case. The point is simply that, until the AAT makes the necessary findings of fact, it cannot be said with certainty what result would have been reached had the AAT not made an error of law.
Conclusion
It has been conceded by the taxpayer that the AAT made an error of law in the present case. In my view, the appropriate course is that the decision of the AAT should be set aside and the matter remitted to the AAT for determination according to law. My present view is that the taxpayer should pay the Commissioner's costs. However, I shall give the parties an opportunity to make submissions on costs should they wish to do so.
I certify that this and the preceding 21 pages are a true copy of the Reasons for Judgment of the Honourable Justice Sackville.
Associate:
Dated:30 November, 1995
Heard:17 November, 1995
Place: Sydney
Decision:30 November, 1995
Appearances: Mr S.W. Gibb, instructed by the Australian Government Solicitor, appeared for the applicant.
Mr R.F. Edmonds SC, instructed by G.J. McIntyre & Co, Solicitors, appeared for the respondent.
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