Faith Baptist Church Inc v Chief Commissioner of State Revenue

[2007] NSWADT 199

CITATION:	Faith Baptist Church Inc v Chief Commissioner of State Revenue [2007] NSWADT 199
DIVISION:	Revenue Division
PARTIES:	APPLICANT Faith Baptist Church Inc RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	066102
HEARING DATES:	23 July 2007
SUBMISSIONS CLOSED:	23 July 2007
DATE OF DECISION:	30 August 2007
BEFORE:	Verick A - Judicial Member
CATCHWORDS:	Duties Act - charitable or benevolent body
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Associations Incorporation Act 1984 Duties Act 1997
CASES CITED:	Association of Franciscan Order of Friars Minor v. City of Kew [1967] VR 732 Benjamin v. Downs & Another [1976] 2 NSWLR 199 Central Bayside General Practice Association Ltd v. Commissioner of State Revenue [2006] 229 ALR 1 Chesterman v Federal Commissioner of Taxation (1925) 37 CLR 317 Keren Kayemeth Le Jisroel Limited v. Commissioner of Inland Revenue [1931] 2 KB 465 Minister for Aboriginal Affairs v. Peko-Wallsend Ltd (1986) 162 CLR 24 Municipal Council of Sydney v. Campbell [1925] AC 338 The Commissioners for Special Purposes of the Income Tax v. John Fredrick Pemsel (1891) AC 531
REPRESENTATION:	APPLICANT M L Robertson, barrister RESPONDENT I Mescher, barrister
ORDERS:	The objection decision under review is affirmed

1 The applicant seeks a review of the respondent’s decision to disallow the applicant’s objection to the respondent’s decision not to allow the applicant an exemption from duty under the Duties Act 1997 (“the Act”) in respect of the purchase by the applicant of two adjacent blocks of land situated at Lots 41 and 42 “Regency Green”, Chisholm Road, Regents Park (“the Regents Park property”).

Factual Background

2 The applicant is a church incorporated under the Associations Incorporation Act 1984. It operates under a Constitution and Governing Rules adopted on 21 November 2004.

3 The objects for which the applicant as a Church has been established are as set out in its Constitution and Governing Rules.

4 On 14 December 2005 the applicant purchased the Regents Park property. Prior to the purchase of the Regents Park property, the applicant conducted its activities from premises situated at Croydon Park (‘the Croydon Park property”).

5 The Croydon Park property has since been sold and currently the applicant has rented a couple of office rooms to conduct its educational activities and its church services are conducted at rented community halls.

6 On 21 February 2006, solicitors acting for the applicant sought an exemption from duties payable under the Act on the contract and transfer of the Regents Park property on the grounds that “the land is being purchased to build an Educational Centre”. A fairly detailed “ Educational Centre Building Proposal” was attached to the request for exemption.

7 In the “Introduction” to the Building Proposal it was claimed that the applicant as a “Church has two (2) separate and distinct arms. That is, an educational arm and a worship/ministry arm”. The introduction also set out the following background:

“The Educational Centre Building will be used for the purpose of providing structured educational courses the aim of which will be to prepare students for Community Service and Christian Ministry. Whilst the resources and facilities of the Church may be used by both arms (worship and education); they will be predominantly used in connection with the educational arm.

The purpose of educational arm is to provide a balanced Christian education which will fully equip students with Scriptural teachings and truths that is distinctively Baptistic, and also to provide hands-on training through the local church, which will prepare each individual to effectively reach and impart the word with the Gospel of Jesus Christ. This is done by providing training in a professional and structured environment where students are encouraged to grow and be ready to serve others in our community for the glory of God.”

8 The proposal also set out in some detail the “Bible Institute Courses”, “Language Courses” and “Sunday School Courses for children” that it was proposing to conduct, Times and Schedules for the courses, “Staff Profiles” and a “Proposed Schedule of Facility Regular Weekly Usage”.

9 On 24 February 2006, the respondent informed the applicant that the respondent could not grant an exemption under s 275(3)(b) of the Act for the Contract for Sale and Transfers of the Regents Park property “because the property is not being used for charitable or benevolent purposes, nor for promotion of education as required by the exemption guidelines.” The applicant was required to pay a duty of $122,990.

10 The applicant’s solicitors lodged an objection against this decision on 11 April 2006, which was disallowed by the respondent on 11 May 2006. The applicant’s solicitors made a further submission on 23 June 2006 seeking a review of the objection decision but the respondent on 14 July 2006 confirmed the original objection decision. On 11 September 2006, the applicant filed an application in the Tribunal seeking a review of the respondent’s objection decision.

11 In addition to the documents made available by the respondent to the Tribunal under section 58 of the Administrative Decisions Tribunal Act 1997, the applicant’s senior pastor, Pastor Bill Nabeel Zaydan gave evidence by affidavit and orally at the hearing. The Pastor confirmed the background and also clarified a few matters; in particular that at the time the Regents Park property was purchased, the applicant was predominantly a church carrying on its religious activities at the Croydon Park property. He also indicated that about twenty-six part time students attend religious education at the Church and about 250 parishioners attend Sunday and other church services.

Relevant Legislative Provisions

12 Chapter 11 of the Act provides for various general exemptions from duty. Relevantly, section 275 of the Act provides as follows:

“ 275 Charitable and benevolent bodies

(1) Duty under this Act (other than vendor duty) is not chargeable on a transfer, or an agreement for the sale or transfer, or lease, of dutiable property to, or a declaration of trust over dutiable property held or to be held on trust for, or a mortgage given by or on behalf of, an exempt charitable or benevolent body.

(1A) Duty under section 58 (Establishment of a trust relating to unidentified property and non-dutiable property) is not chargeable on an instrument that declares a trust over property held or to be held on trust for an exempt charitable or benevolent body.

(2) Vendor duty is not chargeable on a transfer, or an agreement for the sale or transfer, of land-related property by, or a declaration of trust over land-related property held or to be held on trust for, an exempt charitable or benevolent body.

(2A) Land rich duty is not chargeable on the acquisition or disposal of an interest in land rich landholder by an exempt charitable or benevolent body.

(3) In this section:

exempt charitable or benevolent body means:

(a) any society or institution for the time being approved by the Chief Commissioner for the purposes of this paragraph whose resources are, in accordance with its rules or objects, used wholly or predominantly for:

(i) the relief of poverty in Australia, or

(ii) the promotion of education in Australia, or

(b) any society or institution that, in the opinion of the Chief Commissioner, is of a charitable or benevolent nature, or has its primary object the promotion of the interests of Aborigines and if;
(i) (in the application of this definition for the purposes of subsection (1) or (1A)) the dutiable transaction or instrument is for the purposes as the Chief Commissioner may approve in accordance with guidelines approved by the Treasurer, or

(ii) (in the application of this definition for the purposes of subsection (2)) the land-related property was used or, in the case of a declaration of trust, is to be used by the society or institution for such purposes as the Chief Commissioner may approve in accordance with guidelines approved by the Treasurer, or

(iii) (in the application of this definition for the purposes of subsection (2A)) the land holdings of the landholder are being used or are to be used for such purposes as the Chief Commissioner may approve in accordance with guidelines approved by the Treasurer.”

13 The applicant submitted that there were three issues to be considered in this matter and made submissions both in writing and viva voce in respect of the issues.

14 The first issue identified by the applicant was that the “Church should be approved as an exempt charitable or benevolent body under the para (a) definition in s 275(3)”. In relation to this issue, the applicant relied on the recent decision of the High Court in Central Bayside General Practice Association Ltd v Commissioner of State Revenue [2006] 229 ALR 1 and made the following submissions:

“19. Parliament did not intend to exclude two of the four Pemsel’s case categories of charity (religious and other benevolent bodies) by its definition of “exempt charitable or benevolent body”. It intended to allow all four categories of charitable body the benefit of the exemption if the body’s resources are used wholly or predominantly for the identified purposes.

20. The inquiry required by Parliament is a factual inquiry into the use of resources, not an inquiry into the status of the charitable institution.

21. Here the Church’s resources are used predominantly in pursuit of education. Almost all its resources are dedicated to the Education Centre and the pursuit of educational courses to be taught there. And there is no question that in pursuing this course the Church is acting according to, not contrary to, its rules and objects.

22. Finally, there is no warrant to exclude religious education as a category of education. It is not for the Commissioner to judge the quality of the education; the task is simply to inquire whether it is education.”

15 Alternatively, it was argued by the applicant, that the “purpose for purchase of the Education Centre should be approved in accordance with guidelines approved by the Treasurer under para (b)(i) of the definition of exempt charitable or benevolent body in s 275(3)”. In support of this issue, the applicant also relied on the High Court decision in Central Bayside General Practice Association Ltd and submitted that -

“24. This definition, unlike the para (a) definition, is directed to the specific transaction that would otherwise be dutiable.

25. The Commissioner correctly formed the opinion the Church was an institution of a charitable nature under para (b). The dispute concerned approved purposes under subpara (i).

26. In Revenue Ruling DUT 7 the Commissioner states at par [9]:

Even if the society or institution is of a charitable or benevolent nature, the transaction must be for such charitable or benevolent purposes of the organization as are approved. The following are purposes which may be approved in accordance with guidelines approved by the Treasurer:

The relief of poverty

The relief and prevention of sickness and disability

The relief of suffering and distress caused by old age

The promotion of education

The establishment of organizations to assist sections of the community with special needs

The relief of distress caused by natural disasters or sudden catastrophes.

27. He continues at para [13]
Property acquired by religious organizations must be used for approved charitable and benevolent purposes of the organization and not for predominantly religious purposes.
28. The validity of the proscription of religious purposes is considered at issue 3. Here the Church considers that in fact the transaction – the purchase of the land for the Education Centre – did fall within an approved purpose, being the promotion of education.

29. Again, the Commissioner’s assertion that the purpose of the transaction – the promotion of religious education – is not the promotion of education but the promotion of religion should be rejected.

30. The purpose of the transaction is not to acquire a church where some casual bible study group will meet over tea and biscuits after a service. The Education Centre is a dedicated educational facility that will be used to facilitate the teaching of comprehensive educational courses as set out in the detailed material.”

16 The applicant submitted that the third issue was that, to the extent DUT 034 precludes religion as being a charitable purpose, it is, ultra vires the provisions of section 275(3). But that this issue was only necessary to be considered if “the promotion of religious education is not the promotion of education, but the promotion of religion”. In relation to this issue, the applicant’s arguments were as follows:

“32. Parliament did not empower the Treasurer to approve the proscription of religious purpose as he has done.

33. Just what limitations are imposed on the Treasurer’s prima facie wide power of approval depend on the subject matter, scope and purpose of the section. (Minister for Aboriginal Affairs v. Peko-Wallsend Ltd (1986) 162 CLR 24)

…

35. In this regard, the overcharging purpose of para (b) of the definition of “exempt charitable or benevolent body in s 275(3) is to confer exemption from duty for charitable or benevolent bodies. The Treasurer is only given power to work out what transactions of those bodies can be approved.”

17 In summary, the respondent submitted as follows:

‘(a) the Applicant has not shown that it comes within the definition of “exempt charitable or benevolent body” in Section 275(3(a) of the Act and the provisions of Revenue Ruling DUT 034;

(b) If the submission in paragraph (a) is not accepted then the Applicant has not shown that it complies with the requirements of the definition of “exempt charitable or benevolent body” in Section 275(3)(b)(i) of the Act and Revenue Ruling DUT 034.’

18 In disagreeing with the applicant’s views in relation to the first and second issues, the respondent made the following submissions:

‘35. The Applicant has submitted that Parliament, for the purposes of section 275 of the Act, has not excluded the advancement of religion as a charitable purpose. However, the Applicant has overlooked the fact that Parliament has expressly defined in section 275(3) what is meant by “exempt charitable or benevolent body”. This is an exhaustive and not inclusive definition. This statutory definition, for the purposes of s.275 (3)(a), does not include two of the Pemsel categories – i.e. the advancement of religion and any other purpose beneficial to the community. The Pemsel categories only have a very limited relevance for the purpose of ascertaining the meaning of “charitable or benevolent nature” in s. 275(3)(b) of the Act. These categories are irrelevant to s. 275(3)(a) and to the “purposes” of the dutiable transaction referred to in s. 275(3)(b)(i).

36. Accordingly, unlike the provisions of Section 10(1)(bb) of the Payroll Tax Act 1971 (Victoria) considered by the High Court in Central Bayside General Practice Association Limited v. Commissioner of State Revenue (2006) 229 ALR 1 at para [18], footnote 6, the meaning of “charitable” or benevolent” has almost entirely been defined by legislation. In the absence of a statutory definition of “exempt charitable or benevolent body” (i.e. absent section 275(3) Act) then the Pemsel categories would, as a starting point, apply. In which case, the advancement of religion and purposes beneficial to the community could be included within the meaning of the term “charitable”. However, given the express absence of the advancement of religion and other purposes beneficial to the community from the definition of “exempt charitable or benevolent body” in s. 275(3), the submission that Parliament had not intended to exclude the advancement of religion under s. 275(3)(a) and s. 275(3)(b)(i)-(iii), has no force.”

19 The respondent also submitted that the above reasoning would equally apply to the second issue raised by the applicant -

“The intent of both the Treasurer and the Commissioner in DUT 034 is likewise to exclude religion as an approved purpose of the dutiable transaction under s. 275(3)(b)(i).”

20 In relation to the third issue, the respondent submitted that the guidelines and the respondent’s Ruling DUT 034, which precludes religion as being a charitable purpose, are not ultra vires the provisions of section 275(3) of the Act.

Findings and Reasons for Decision

21 The applicant is a “congregation of believers as an incorporated association” and is known as “Faith Baptist Church Inc.” The objects of the applicant are set out in clause 4 of its “Constitution & Governing Rules” as follows:

“(1) To exalt and glorify the Lord Jesus Christ. (Colossians 1:16-19)

(2) To edify the believers in the Church through the Ministry of the Word of God, the practice of New Testament Ordinances, Public Worship and Prayer, Fellowship of Believers, and any other ministries that the Church may be led of God to establish. (Hebrews 10:24-25; 1 Corinthians 11:2; Ephesians 4:11-16).

(3) To evangelise the unsaved by the public proclaiming of the Gospel of the Lord Jesus Christ in accordance with the great commission. (Matthew 28:19-20)

(4) To minister by serving others and community in deed and in trust (Matthew 22:39; 1 John 3:18)

(5) To establish and maintain through Sunday and Weekday schools, Christian Education in a manner consistent with the Holy Scriptures. (Proverbs 22:6)”

22 It has functioned essentially as a Church according to the evidence given by the Pastor of the applicant. But the Pastor has a future “vision”, which was set in the Pastor’s affidavit as follows;

“15. My vision for Faith Baptist and plan for the future as far as my role in relation to Faith Baptist was concerned can be described as follows:
(a) First, to lay the foundation for the promotion of religion, community work and educational activities;

(b) To grow the church and ministry through outreach and educational programs;

(c) To set up Faith Baptist to be able to provide internship programs in order to teach students generally and to provide training ground for students to come up and practice as pastors and ministers in churches of like faith and practice as pastors/teachers, and to be able to provide vertical streams of education with Christian and Biblical ethos; and

(d) To ensure a smooth transition of Faith Baptist to the next generation upon my retirement as senior pastor/teacher.”

23 Section 275 of the Act provides that duty under the Act is not chargeable on a transfer or an agreement for sale or transfer of dutiable property to an exempt charitable or benevolent body. In the present matter the applicant sought an exemption of duty payable on the contract and transfer of the Regents Park property.

24 “Exempt charitable or benevolent body” is defined in s 275(3) of the Act. Relevantly, the provision provides for two alternative definitions of “exempt charitable or benevolent body”.

25 The first issue in this matter relates to the interpretation of the provisions found in s 275(1)(3)(a), which sets out a definition of “exempt charitable body”. The applicant has submitted that the Tribunal should define the words “charitable body” by giving them their technical legal meaning as set out in the judgment of Lord Macnaghten in the celebrated Pemsel’s case ([1891] AC 531) to include “advancement of religion” as a charitable purpose.

26 In Pemsel’s case, Lord Macnaghten (at page 583) made the following observation, which remains good law in Australia (cf Chesterman v. Federal Commissioner of Taxation (1925) 37 CLR 317 and Central Bayside General Practice Association Ltd):

“Charity” in its legal sense comprises four principal divisions: trusts for 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 preceding heads.

27 The respondent takes a different view and submits that the definition of the words “exempt charitable or benevolent” is expressly defined in s 275(3(a) to exclude two of the Pemsel categories – the advancement of religion and any other purpose beneficial to the community.

28 Both have relied on the decision of the High Court in Central Bayside General Practice Association Ltd, in particular, on the following footnote (footnote 6) of the decision of the majority (per Gleeson CJ, Heydon and Crennan JJ):

‘The Tribunal, the four judges of the Supreme Court of Victoria, and counsel in their arguments in this Court proceeded upon the assumption that “charitable” in s 10(1)(bb) was used by the Victorian Parliament in its technical sense – that is, as defined by Lord Macnaghten in Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531 by reference to the spirit and intendment of the preamble to the Statute of Charitable Uses Act 1601 . That assumption reflected the general rule that, the word “charitable” being a word that has a technical meaning, when it is used in a statute it should be understood in its legal sense unless a contrary intention appears. It was not suggested that a contrary intention appears in the statute presently under consideration. It is not easy to see a basis upon which such a suggestion might have been made with any degree of plausibility. The general rule just mentioned has been accepted as the law in this country at least since the decision of the Privy Council in Chesterman v Federal Commissioner of Taxation (1925) 37 CLR 317. The word is commonly used in statutes. It is reasonable to assume that parliamentary counsel, taxpayers, revenue authorities, settlors, testators and others have acted on the faith of an understanding that the general rule applies. It is the understanding that has been acted upon by those who have presented, argued and decided the present case. It accords with principle and with fairness. There is no occasion to call the rule in question, especially in the absence of any formulation of a reasonably clear alternative, and an examination, by the usual procedures of adversarial litigation, of its implications.”

29 The words that are defined in s 275(3)(a) are “exempt charitable or benevolent body”. It is important to note that the provision is dealing not with just a “charitable body” but expressing the meaning of the words “exempt charitable body”. In that sense, the words “exempt charitable body” are given a statutory meaning. It means any society or institution for the time being approved by the Chief Commissioner whose resources are, in accordance with its rules or objects, used wholly or predominantly for (i) the relief of poverty in Australia, or (ii) the promotion of education in Australia.

30 As recognised by the High Court in the footnote cited, there is clearly in the relevant legislation a “contrary intention” to depart from reliance on the general rule that, the word “charitable” should be understood in its legal sense.

31 In Central Bayside General Practice Association Ltd the provision under consideration was s 10(1)(bb) of the Victorian Pay-roll Tax Act 1971 which relevantly provides that:

Exemption from pay-roll tax

(1) The wages liable to pay-roll tax under this Act do not include wages paid or payable -

(bb) by a charitable body (other than a school or educational institution or an instrumentality of the State) to a person during a period in respect of which the body satisfies the Commissioner that the person is engaged exclusively in work of the body of a charitable nature …

32 The Victorian legislation did not attempt to define the words “charitable body” or “body of a charitable nature”. The revenue in that case had denied the exemption to the taxpayer on the grounds that as it acted at the behest of the Commonwealth it was not a “charitable body”. The High Court held it did not act at the Commonwealth’s behest and that it was a charitable body. Factually, the case has little relevance to the present matter. The case, however, provides guidance as to the legal technical meaning of “charitable body” and in what circumstances a statutory meaning can be given to those words.

33 In the present matter, the definition found in s 275(3)(a) is, as submitted by the respondent, “an exhaustive and not inclusive definition” and excludes for purposes of the exemption given by s 275(3)(a), two of the divisions (the advancement of religion and other purposes beneficial to the community) that should be included under the legal technical meaning of the word “Charity” or “Charitable”. This provision only allows exemption in respect of relief of poverty or promotion of education.

34 In the present matter, in order to obtain the benefit of the exemption under s 275(3)(a), the applicant had to establish by way of evidence that:

(a) its rules or objects include the promotion of education in Australia; and

(b) its resources are used wholly or predominantly on the promotion of education in Australia.

35 The respondent’s case is essentially that the applicant, who has the onus, has failed to establish that its resources are used wholly or predominantly on promotion of education in Australia. The Tribunal agrees with the respondent.

36 The applicant relies almost entirely on two similar submissions, “Faith Baptist Church – Educational Centre Building Proposal”, one prepared for the Australian Taxation Office to get deductions for donations for the applicant’s building fund and one for the respondent to obtain exemption from duties under the Act. To a lesser extent it relies on the affidavit and evidence of the Pastor of the applicant.

37 The Pastor’s evidence given at the Tribunal was that at the relevant time when the Regents Park property was purchased, the applicant was a Church carrying on predominantly religious activities. He also clarified that only 26 part-time students were undertaking religious studies and that more than 250 “believers” attend Sunday and other church services. Other than the Pastor himself, the other teachers are part- time volunteers.

38 The first 14 paragraphs of the Pastor’s affidavit deal with his own background. Paragraph 15 sets out his vision, which he described as follows:

“(a) First, to lay the foundation for the promotion of religion, community work and educational activities;

(b) To grow the Church and ministry through outreach and educational programs;

(c) To set up Faith Baptist to be able to provide internship programs in order to teach students generally and to provide training ground for students to come up and practice as pastors and ministers in churches of like faith and practice as pastors/teachers, and be able to provide vertical streams of education with Christian and Biblical ethos; and

(d) To ensure a smooth transition of Faith Baptist to the next generation upon my retirement as senior pastor/teacher.”

39 Paragraphs 16 to 24 set out more personal background of the Pastor. The Pastor than sets out in paragraphs 26 to 38 the history of the applicant, in particular the background to the purchase and sale of the Croydon Park property and the purchase of the Regents Park property. Among the documents annexed to his affidavit is a copy of the minutes of a meeting held on 18 January 2006 with the Auburn Council town planners and the Pastor and another member of the applicant, which is described by the Pastor in his affidavit as a meeting “to consider the possibility of building a multi-purpose education centre/church for Faith Baptist” on the Regents Park property. Another attachment is a letter from the Auburn Council also referring to the proposal as “Proposed multi-purpose, educational church facility”.

40 Paragraphs 36 to 38 refer to the agreement by members of the applicant to sell the Croydon Park property and to the purchase of the Regents Park property. In paragraph 39 he refers to his “plan to expand the educational activities of Faith Baptist” as set out in the “Faith Baptist Church – Educational Centre Building proposal” document which was submitted to the respondent.

41 In paragraphs 40 to 42, the Pastor deals with correspondence with the respondent in seeking an exemption from duty in respect of the purchase of the Regents Park property. Paragraphs 42 to 45 set out some details of his recent work as a Pastor.

42 In the final paragraph, paragraph 46, the Pastor claimed that from “the outset I have always envisaged Faith Baptist as applying or at least seeking to apply most of its resources towards the provision of education and charitable purposes for the benefit of the greater communities” and concludes by saying that “our resources have been used predominantly for the promotion of education through the creation of the Education Centre”.

43 A copy of the applicant’s balance sheet as at 31 December 2006 and a copy of “the budget for the various areas and activities of Faith Baptist” for the years 2005, 2006 and 2007 were also annexed to his affidavit. The balance sheet merely reveals the global financial position of the applicant. It only sets out the applicant’s current assets and liabilities. It does not contain any details of resources used for education. The budget statement is not supported by any evidence of the amounts assigned to various expenses and no attempt was made by the Pastor to explain how the percentages for expenses were calculated.

44 There is a reference to resources in his last paragraph but little factual detail is provided as to what resources have been used in the promotion of education as required by s 275(3)(a). It is also important to note that the building proposal was referred to the Auburn Council as a “multi-purpose, educational/church facility but in the submission to the respondent and the Australian Taxation Office to obtain taxation concessions, it was merely referred to as the “Educational Centre Building Proposal”.

45 The concept design plan of the proposed building, as drafted by the applicant’s architects, indicates that a predominant amount of the space will be devoted to the Church activities of the applicant – the sports and recreation area, church auditorium and the car park for the members of the applicant when attending church services. The evidence of the Pastor also supports this conclusion. He accepted that the applicant at the time the Regents Park property was purchased was predominantly carrying out Church activities. There is no suggestion that the applicant would cease to carry on its religious church activities when the proposed building is built.

46 On the basis of simple common sense, it is not difficult to question the applicant’s position when it says that 26 part-time students doing religious studies as opposed to a facility for more than 250 believers of the faith attending Church services are predominantly using the resources of the applicant. In any case, no evidence was produced by the applicant to establish the use test. The case was in a sense argued by the applicant on the basis that, simply because the applicant will be building an educational centre, the Tribunal had to assume that its resources are being used wholly or predominantly for educational purposes.

47 The “Educational Centre Building proposal” which was essentially the principal submission to the respondent and on which the applicant placed a great deal of reliance at the hearing, deals only with the proposed educational activities of the applicant or as the applicant described it, “the educational arm” of the applicant. There is no information in the submission of the future activities of the “worship/ministry arm” of the applicant. In the introduction it states that the “purpose of the educational arm is to provide a balanced Christian education which will fully equip students with Scriptural teachings and truths that is distinctively Baptistic, and also to provide practical hands-on training through the local church, which will prepare each individual to effectively reach and impact the world with the Gospel of Jesus Christ”.

48 The Proposal next sets out the “three ministry objectives of the educational arm” of the applicant as follows:

“1. Instruction

To impart knowledge of the Scriptures

2. Comprehension

To impart an understanding of God’s plan leading to accountability in following God’s ways which establishes a philosophy of ministry.

3. Action

To apply the knowledge of the Scriptures and the understanding of God’s plan in the functioning of God’s church leading to an outlet for ministry.

Our goals are to:

Instruct people in Scriptural doctrines through teaching.

Involve people in service opportunities through practical ministries with hands-on training.

Impact people with the Gospel through outreach.

Include people in a loving church family through fellowship.

Inspire people to have a heart of God through service.”

49 The goals are “further detailed in the ministry objectives”, which are next dealt with in the proposal. Next, the proposal provides some background to the applicant’s “philosophy”. The proposal than deals with “eligibility for enrolment”, “graduation requirements and assessment procedure” and details of the “bible institute”, “language” and “children and youth institute” courses that are proposed for when the Educational Centre is built. Staff profiles of Bible Institute Teachers and Children and Youth Institute Teachers”, “Proposed Schedule of Facility regular Weekly Usage, “Proposed Schedule of Facility Other Usage”, “The Future”, “Clerical and Secretarial Courses” and “Educational Courses” are matters that are also dealt with in the proposal.

50 There is nothing in the Building Proposal that assists the Tribunal to determine if the resources of the applicant would predominantly be used for the promotion of education. There are a lot of “vision” and “future goals” but nothing to focus on the use of the resources of the applicant. As observed earlier, the “Building Proposal” only deals with the second arm of the applicant. It does not address the future of the applicant in its other role, of being a church. The proposal, the basis of its application for exemption, is not helpful, as it does not address two important issues. It makes no reference to the applicant’s role as a church and also does not attempt to factually demonstrate that its resources are or would be predominantly used for “the promotion of education”.

51 The Regents Park property, as was submitted by the respondent, remains vacant with “grass and dirt”. The building proposal and the statements in the Pastor’s affidavit about the future plans remain a “vision” and there is little reality before the Tribunal that the applicant’s resources are used or will be wholly or predominantly used for the promotion of education. This was a task for the applicant to establish with some precision that the resources were used as required. The applicant has, unfortunately, not produced any evidence to demonstrate that. The applicant has accordingly, failed to establish that it is entitled to the exemption under s 275(3)(a).

52 In this regard, it is important to note that the “objects” of the applicant as set out in its “Constitution & Governing Rules” in clause 4 require the applicant to be predominantly a Church with a role to “establish and maintain through Sunday and weekday schools, Christian Education in a manner consistent with the Holy Scripture”. In a sense, the grand visions of the Pastor, as set out in his affidavit and the Building Proposal, were outside or beyond those authorised objects. There was no evidence that the applicant was ceasing to be a church. On the contrary, the correspondence with the Auburn Council and the plan submitted to the Auburn Council by its architects support the view that what is being built by the applicant is a large complex with predominant facilities for the church services of the applicant.

53 As noted above, the Building Proposal for a church and education facility as presented to the Auburn Council, was referred to in the submission for exemption and to the Australian Taxation Office as an “Educational Centre Building Proposal”. In a sense, that was quite misleading and the whole proposal was “dressed” up to look like an educational facility. In this regard, the applicant’s advisers, taxation solicitors, may have played a role. The community is taken to believe that any donation they make is towards the building of an educational centre when in reality a church/associated scripture-learning centre for the Christian beliefs of the applicant will be built on the Regents Park property. Those not belonging to the faith promoted by the applicant could quite justifiably feel let down by the taxation laws of New South Wales and the Commonwealth if churches are supported by taxpayers in the way the applicant seeks the exemption from duties.

54 Next, the Tribunal has to consider the alternative submission, that the applicant is a charitable institution within paragraph (b) of the relevant definition in s 275(3). Relevantly, the alternative test provides that an “exempt charitable body” means any society or institution that, in the opinion of the Chief Commissioner, is of a charitable nature and if the dutiable transaction or instrument is for such purposes as the Chief Commissioner may approve in accordance within the guidelines approved by the Treasurer.

55 The current guidelines approved by the Treasurer are found in Revenue Ruling No. DUT 034 (Exemption from duty – Charitable and benevolent bodies) which was issued on 9 March 2007. Previously, these guidelines were set out in the respondent’s Revenue Rulings DUT 6 and 7. DUT 34 has consolidated the two rulings but essentially the guidelines remain in the form previously used by the respondent and approved by the Treasurer.

56 DUT 034 sets out what transaction or instruments are eligible for exemption, the meaning of “society or institution” and provides a detailed analysis of paragraphs (a) and (b) of s 275(3).

57 In relation to paragraph (b), the ruling sets out the following guidelines:

“17. The society or institution must be, in the opinion of the Chief Commissioner, of a charitable or benevolent nature, or have as its primary object the promotion of the interests of Aborigines. The wide scope of charitable purposes is evident in the case law, and OSR will generally follow the analysis in the Australian Taxation Office Taxation Ruling TR 2005/21. However, even if the society or institution is of a charitable or benevolent nature, the transaction, instrument or use of the property also must be for such charitable or benevolent purposes of the organization as are approved. The following are purposes, which may be approved in accordance with guidelines approved by the Treasurer:
the relief of poverty

the relief and prevention of sickness and distress caused by old age

the promotion of education

the establishment of organizations to assist sections of the community with special needs

the relief of distress caused by natural disasters or sudden catastrophes

18. The following additional guidelines apply:
(a) The transaction for which exemption is claimed must relate to property to be used for the charitable or benevolent purposes of the organization. It cannot be acquired for the purpose of being leased or sold for profit. (A transaction is not ineligible merely because the property is subject to an existing short term lease or a short term lease back to the vendor.)

(b) Property acquired for use as the headquarters of an approved organization will be eligible for exemption if the use of the property is part of continuing charitable and benevolent work.

(c) A transaction by which property is donated will be eligible for exemption if it is to be used for approved purposes, or is to be sold and the proceeds applied to a specific proposal that is for approved purposes.

(d) Property acquired by religious organizations must be used for approved charitable and benevolent purposes of the organization and not predominantly religious purposes.”

58 Paragraphs 19 to 21 deal with partial exemption under section 275A. No claim was made by the applicant for any partial exemption in this case.

59 In the remaining paragraphs of the Ruling, paragraphs 22 to 26, the respondent has prescribed “other requirements under paragraph (b) or section 275A”. Relevantly, paragraph 25 provides examples of institutions and purposes that may not be approved and includes the following:

“(a) Although most religious bodies are charitable institutions, property used for churches, residences or religious activities (including religious instruction or religious education) are not used for approved purposes.”

60 The drafting of paragraph (b) of s 275(3) seems a little odd that whilst it does not define “charitable nature”, the provision gives the respondent the discretion to determine if any society or institution is of a charitable nature. As correctly acknowledged by the respondent in his ruling, “the wide scope of charitable purposes is evident in the case law”. At least, the provision must necessarily include the technical legal meaning as defined by Lord Macnaghten in the Pemsel case (per the majority of the High Court in Central Bayside General Practice Association Ltd). The four Pemsel categories include the advancement of religion and the advancement of education.

61 But the second part of the provision gives the respondent a real discretion to determine what purposes he can approve subject to the policy guidelines approved by the Treasurer. The respondent’s Revenue Ruling No. DUT 034 sets out in paragraph 17 the purposes, which may be approved in accordance with guidelines approved by the Treasurer.

62 However, the respondent’s additional guidelines in paragraph 18 place certain important restrictions on the “purposes” that may be approved. Relevantly, paragraph 18 (d) states that property acquired by religious organizations must be used for approved charitable and benevolent purposes of the organization and not for predominantly religious purposes. Additionally, the respondent has in paragraph 25(a) of the Ruling expressed a clear policy of not approving transactions in respect of property acquired to be “used for churches, residences or religious activities (including religious instruction or religious education)”.

63 One of the objects of the applicant, set out in Rule 4(5) of its “Governing Rules” is “(T)o establish and maintain through Sunday and Weekday schools. Christian Education in a manner consistent with the Holy Scriptures”. It is under this objective that the applicant conducts the promotion of religious education. The respondent accepts that this would satisfy the requirement set out in paragraph 17 of his ruling in relation “the promotion of education” but has argued that the exemption is not available because his ruling and the Treasurer’s guidelines exclude religious education. The Tribunal agrees with the respondent and notes that the respondent’s views are consistent with judicial pronouncements in relation to what constitutes the advancement or promotion of religion.

64 For example, it has been held that the promotion of religion “means the promotion of spiritual teaching in a wide sense, and the maintenance of the doctrine on which it rests, and the observances that serve to promote and manifest it” (see Keren Kayemeth Le Jisroel Limited v. Commissioner of Inland Revenue [1931] 2 KB 465 at 477). The applicant’s activities under both “arms” would fall within this definition.

65 A similar observation was made by Lush J in Association of Franciscan Order of Friars Minor v City of Kew [1967] VR 732 at 733 -

“To advance religion means to promote it, to spread its message ever wider amongst mankind; to take some positive steps to sustain and increase religious belief; and these things are done in a variety of ways which may be comprehensively described as pastoral and missionary.”

66 In Benjamin v Downs & Another [1976] 2 NSWLR 199, Helsham J in considering whether “general religious teaching” enabled the teaching of the Christian religion in a general way, observed that the class or school assembly religious activity constituted general religious teaching. The reverse will also be true, that religious education is a religious activity.

67 In the present matter, the predominant purpose of the transaction to acquire the Regency Park property was for the promotion of religious activities which is a proscribed purpose in accordance with paragraphs 18(d) and 25(a) of the respondent’s ruling DUT 034. The Tribunal rejects the applicant’s argument that the transaction was predominantly for the promotion of education on the grounds that the evidence, when considered as a whole, supports the respondent’s submission that the applicant’s activities including the educational arm activities were for predominantly religious purposes.

68 The matter that remains is the submission by the applicant that, if the Tribunal rules that the exemption under s 275(3)(a) and (b) does not apply to applicant, to the extent that the respondent’s ruling DUT 034 precludes religion as being a charitable purpose, the guidelines in the ruling are ultra vires the provisions of section 275(3) of the Act.

69 The argument is essentially that there has been substantive ultra vires in excluding the promotion of religion.

70 The applicant’s only argument for this submission was that ‘the overarching of para (b) of the definition of “exempt charitable or benevolent body” in s 275(3) is to confer exemption from duty for charitable or benevolent bodies’ and that the ‘Treasurer is only given power to work out what transactions of those bodies can be approved’.

71 The respondent’s ruling accepts that the first limb of paragraph (b) of s 275(3) would allow any society or institution which is of a “charitable or benevolent nature” to be entitled to the exemption under this paragraph. But paragraph (b)(i), the second limb of the provision, gives a statutory power to the respondent to restrict the exemption of a dutiable transaction or instrument for “such purposes as the Chief Commissioner may approve in accordance with guidelines approved by the Treasurer”.

72 A statutory power must be exercised in accordance with purposes, which are expressed to be the purposes of the provision. Thus, in Municipal Council of Sydney v Campbell [1925] AC 338 which dealt with land resumed in Sydney ‘s Martin Place to defray the cost of road widening by reselling it at a profit, the relevant legislation stated that acquisition could only be for public purposes. The court held that when the purposes of the Act are not expressly stated, the court must construe the statute in order to determine such purposes.

73 In the present matter, the task of determining approved purposes has been given by the legislature to the Chief Commissioner subject to the guidelines approved by the Treasurer. No statutory restrictions are imposed on this power but it operates within the Government’s approved policy. There is ample statutory power that allows the Treasurer and the respondent, for s 275(3)(b)(i) purposes, to proscribe transactions by religious charities for predominantly religious purposes and religious education.

74 The Tribunal, accordingly, rejects the applicant’s submission that if a relevant society or institution can be characterised as being of a religious nature, that is of a charitable or benevolent nature, then all its dutiable transactions that are for religious purposes must necessarily be approved by the respondent under s 275(3)(b)(i). The legislative intent of the provision, which is clear, requires the society or institution to satisfy two tests. The first limb, paragraph (b), sets out the first test, which requires the society or institution to be of a “charitable or benevolent nature”. Having satisfied that test, the second limb found in subparagraph (b)(i) requires the dutiable transaction or instrument to be for an approved purpose. The applicant’s purchase of the Regents Park property is for a proscribed purpose and not for one of the purposes approved by the Treasurer’s guidelines.

75 For the foregoing reasons, the correct and preferable decision on this application is to affirm the decision of the respondent.

Order

The decision of the respondent is affirmed.