John XXIII College v Commissioner for Act Revenue (Administrative Review)
[2016] ACAT 152
•21 December 2016
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
JOHN XXIII COLLEGE v COMMISSIONER FOR ACT REVENUE (Administrative Review) [2016] ACAT 152
AT 41/2016
Catchwords: ADMINISTRATIVE REVIEW – stamp duty – whether entity charitable organisation entitled to concessional duty – charitable purposes – primary purpose – student residential accommodation purpose –ancillary purpose – religious purpose – education purpose – objects and activities
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 9, 68
Charitable Uses Act 1601
Duties Act 1999 (in force 1 July 2015 – 24 November 2015) ss4, 7, 10, 11, 12, 64
Payroll Tax Act 1987
Taxation Administration Act 1999 ss 104, 108A
Subordinate
Legislation: ACT Civil and Administrative Tribunal Procedure Rules 2009 (No 2) r 7
Residential Colleges Affiliation Statute 2013 cl. 6, 8, 9
Cases cited:Aid/Watch Incorporated v Commissioner of Taxation (2010) 241 CLR 539
Australian Institute of Management(Vic) v Commissioner of State Revenue (1995) 95 ATC 2179
Australian National University Union v Commissioner for ACT Revenue [1997] ACTAAT 214
Chesterman and Others v The Federal Commissioner of Taxation (1925) 37 CLR 317
Commissioners for Special Purposes of Income Tax v Pemsel (1891) AC 531
Federal Commissioner of Taxation v Word Investments Ltd (2008) 236 CLR 204
Inland Revenue Commissioners(UK) v McMullen [1981] AC 1
Law Institute of Victoria v Commissioner of State Revenue [2015] VSC 604Roman Catholic Archbishop of Melbourne v Lawlor (1934) 51 CLR 1
Stratton v Simpson (1970) 125 CLR 138
Thompson v Federal Commissioner of Taxation (1959) 102 CLR 315
Tribunal: Presidential Member E Symons
Date of Orders: 21 December 2016
Date of Reasons for Decision: 21 December 2016
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AT 41/2016
BETWEEN:JOHN XXIII COLLEGE
Applicant
AND: COMMISSIONER FOR ACT REVENUE
Respondent
TRIBUNAL: Presidential Member E Symons
DATE:21 December 2016
ORDER
The Tribunal orders that:
The decision under review is confirmed.
………………………………..
Presidential Member E Symons
REASONS FOR DECISION
Background
The applicant purchased Block 27 Section 75 O’Connor in the ACT (‘the property’) in August 2015. In September 2015 the applicant lodged the contract and related transfer with the respondent together with documents from the Australian Charities and Not-for-profits Commission and a copy of the applicant’s constitution. The applicant submitted that the duty charged on the contract under the Duties Act 1999 (‘the Duties Act’) should be $20.00 as the applicant taxpayer is a charitable organisation.
The respondent assessed ad valorem duty on the transfer of the property to the applicant in the sum of $60,850.00. The notice of assessment was dated 7 October 2015 (‘the decision’). The duty concession under the Duties Act, subsection 64(2), chargeable to a charitable organisation was not granted.
The applicant, through its solicitors, JS O’Connor & Co, (‘the solicitors’) objected to the decision by letter dated 2 December 2015 on the basis that the transfer falls within subsection 64(2) of the Duties Act as in force between 1 July 2015 and 24 November 2015 and contended that the transfer of land was to a charitable organisation and concessional duty of $20.00 is chargeable.
By letter dated 1 June 2016 to the applicant the respondent informed the applicant’s solicitors that it had disallowed the objection “because John XXIII College is not a charitable organisation under the Duties Act 1999 and so is not entitled to a duty concession on the purchase of [the property]”[1] (‘the reviewable decision’). The respondent enclosed a copy of their reasons statement.
The Proceedings
[1] Exhibit R1, page 21
On 15 July 2016 the applicant lodged with the tribunal an application for review of the reviewable decision and an application for interim or other orders in which they sought an extension of time for lodging the application for review.
On 19 July 2016 the tribunal ordered pursuant to rule 7 of the ACT Civil and Administrative Tribunal Procedure Rules 2009 (No 2) that the time for making the application for review of the decision be extended to 15 July 2016.
On 22 August 2016 directions were made for the filing of statements of facts and contentions, witness statements and any other material each party intended to rely on at the hearing and a list of authorities. The matter was set down for hearing on 8 November 2016.
Both parties filed statements of facts and contentions. The applicant filed a witness statement by Head of College, Geoffrey Johnston, dated 15 September 2016.
Ms A. Irving of counsel instructed by JS O’Connor & Co appeared at the hearing on 8 November 2016 for the applicant. Ms K. Katavic of counsel instructed by the ACT Government Solicitor appeared for the respondent. Mr Johnston gave evidence and was cross examined. At the conclusion of counsel’s submissions the Tribunal reserved the decision.
In this decision the Tribunal hearing the matter is referred to as the Tribunal. All other references to the tribunal are to the ACT Civil and Administrative Tribunal in general.
Agreed facts
The following facts are not in dispute :
(a)The applicant operates a fully catered men’s and women’s residential college affiliated by Statute[2] and Rules[3] with the Australian National University (‘the ANU’) and which stands within the land controlled by the ANU.
[2] Residential Colleges Affiliation Statute 2013 Annexure B to witness statement of Geoffrey Johnston (Exhibit A1)
[3] Residential Colleges Affiliation Rules 2013 Annexure B to witness statement of Geoffrey Johnston (Exhibit A1)
(b)The applicant is, as a consequence of being subject to the Affiliation Statute, also subject to the ANU Discipline Statute and its rules and to ANU policy and procedures.
(c)The ‘Memorandum of Sublease’[4] (‘sublease’) between the ANU and the Dominican Fathers (‘the lessee’) includes the following covenant:
[4] Witness statement of Geoffrey Johnston Annexure A
2. The Lessee covenants with the University as follows:
(a)…
(b) to use the demised premises for a Residential College within the University affiliated with the University and any necessary ancillary buildings and for access roads, parking bays and sports facilities for the use of the members of the College and for no other purposes whatsoever;
(c) to use the College:-
(i) during term periods as a Residential College only; and
(ii) …
(d)The applicant’s constitution states that the objects of the applicant are[5]:
[5] T documents page 37
(i) to conduct the residential college presently known as John XXIII College which is affiliated with the ANU and which was sponsored by the Dominican Fathers (a religious congregation of the Roman Catholic Church in Australia). The College is sited on land leased from the Australian National University at Canberra;
(ii) to provide for the students of the ANU and other eligible persons, whether as residents or non-residents, the facilities and encouragement for study and research and for them to obtain pastoral support and religious, educational, cultural, social and recreational opportunities;
(iii) to promote the Dominican charism and the Catholic identity of the College generally; and
(iv) to use the College facilities, premises and accommodation for residential and non-residential conferences, seminars and similar functions and activities.
(e)The applicant is a not for profit organisation registered as an Australian charity with the Australian Charities and Not-for-profits Commission and is listed on the Australian Business Registry as a charitable organisation.[6]
Issues
[6] T documents pages 124 - 126
The issue for determination is whether or not the applicant falls under the definition of a charitable organisation in section 64(2) of the Duties Act.
Tribunal’s jurisdiction and Powers
Section 9 of the ACT Civil and Administrative Tribunal Act 2008 (‘ACAT Act’) provides:
A person may apply to the tribunal if an authorising law provides that the application may be made.
Section 108A of the Taxation Administration Act 1999 (‘TAA’) provides that the taxpayer in relation to whom a reviewable decision is made may apply to the tribunal for review of the decision.
The tribunal’s powers in applications for administrative review are set out in section 68 of the ACAT Act. Section 68 provides:
Review of decisions
(1) This section applies if the tribunal reviews a decision by an entity.
(2) The tribunal may exercise any function given by an Act to the entity for making the decision.
Note A reference to an Act includes a reference to the statutory instruments made or in force under the Act, including regulations (see Legislation Act, s 104).
(3) The tribunal must, by order—
(a) confirm the decision; or
(b) vary the decision; or
(c) set aside the decision and—
(i) make a substitute decision; or
(ii) remit the matter that is the subject of the decision for reconsideration by the decision-maker in accordance with any direction or recommendation of the tribunal.
The reviewable decision before the Tribunal is the respondent’s decision to disallow the applicant’s objection pursuant to section 104 of the TAA. Subsection 104(1) provides:
(1)The commissioner must consider an objection and either allow the objection in whole or in part or disallow the objection.
The Duties Act, relevantly, provides[7]:
(a)dutiable property includes land in the ACT and a Crown Lease (section 10);
(b)an agreement for sale or transfer of dutiable property constitutes a dutiable transaction for which duty is charged (section 7);
(c)a liability for duty is charged when a transfer of dutiable property occurs or if a transfer of dutiable property is effected by an instrument, when the instrument is first executed (section 11); and
(d)a transferee is liable to pay duty (section 12).
[7] Respondent’s statement of facts and contentions [12] – [15]
At the time the transfer of the property was lodged with the respondent, 1 September 2015, subsection 64(2) of the Duties Act then stated:
64 Transfer of land to certain authorities and other bodies
……(2)Duty of $20 is chargeable in respect of a grant or transfer of land to a hospital school or charitable organisation or to trustees in trust for a hospital, school or charitable organisation.
Charitable organisation is defined in section 4 of the Duties Act as follows:
“Charitable organisation” means an association, society, institution or body carried on for a religious, educational, benevolent or charitable purpose, other than one carried on for the purpose of securing pecuniary benefits to its members.
Applicant’s Contentions
In the statement of facts and contentions the applicant contends that it is a charitable organisation pursuant to the Duties Act as it is an organisation carried on for a religious purpose and for an educational purpose.
In support of its contention that it is carried on for a religious purpose the applicant refers to and relies on the following:
(a)John XXIII College (‘the applicant’) is sponsored by the Dominican Fathers (a religious congregation of the Roman Catholic Church in Australia).
(b)The applicant provides pastoral support and religious, educational, cultural, social and recreational opportunities.
(c)The applicant’s facilities promote the Dominican charism and Catholic identity of the college.
(d)Respect for Christian values is presumed of all college members; the Board of Directors comprises of Friars and Sisters of the Dominicans.
(e)The applicant has chaplaincy services and the college chaplain is Fr Laurie Foote who is also the ANU Chaplain.
(f)The applicant has two chapels, the larger John XXIII College of the Evangelist Chapel and the smaller chapel on the southern side of the Evangelist Chapel.
(g)Mass is offered daily.
In support of its contention that it is carried on for an educational purpose the applicant refers to and relies on the following:
(a)The applicant is sited on land leased from the Australian National University.
(b)The applicant is to provide facilities and encouragement for study and research for the students of the ANU and other eligible persons.
(c)Academic success is the primary focus of the college and is achieved through spiritual, cultural, sporting and social development.
(d)The applicant offers academic support to residents.
(e)The applicant has an academic scholarship program.
(f)Residential contracts are attached to full time university enrolment.
(g)The applicant operates in accordance with the academic calendar.
(h)Residents must make continual progress towards conferral of their degrees to be eligible for residency at the college.
(i)Residents must be enrolled in at least three subjects per semester to be eligible to reside in the college.
(j)The applicant reviews academic performance of residents who fail more than 25% of their study load.
(k)Residents will be placed on academic probation if they continue to fail subjects.
Respondent’s Contentions
The respondent contends[8] that the applicant is carried on for the primary purpose of providing on-campus residential student accommodation at ANU.
[8] Respondent’s statement of facts and contentions at [24]
The respondent further contends that the applicant does not satisfy the definition of charitable organisation in the Duties Act as it is not carried on for either a religious purpose or an educational purpose as the applicant claims or for a benevolent purpose or a charitable purpose.
In relation to the applicant’s contention that it is carried on for a religious purpose the respondent contends:
(a)that the main and dominant object of the applicant is not religious purposes;
(b)that the matters advanced by the applicant (see [19]) as supporting this contention
(i) ignore the primary purpose of the applicant which is to provide student accommodation;
(ii) are concomitant or incidental or ancillary objects to the non-charitable purpose of providing student accommodation;
(iii) that it is not enough that those matters arise out of or have a connection with a faith, a church, or a denomination, or that they are considered to have a tendency beneficial to religion or to a particular form of religion;
(c)that it is insufficient that the applicant has an affiliation and sponsorship with the Dominican Fathers; and
(d)that there must be more than merely a connection with the Roman Catholic Church for the applicant to be carried on for religious purposes that must be for “…the spread or strengthening of spiritual teaching within a wide sense, the maintenance of the doctrines upon which it rests, the observances that promote and manifest it.”[9]
[9] Roman Catholic Archbishop of Melbourne v Lawlor (1934) 51 CLR 1, 32; respondent’s statement of facts and contentions at [30]
In relation to the applicant’s contention that it is carried on for an educational purpose the respondent contends:[10]
[10] Respondent’s statement of facts and contentions at [31] – [34 ]
(a)that the matters advanced by the applicant to support this contention:
(i) ignore the primary purpose for the establishment of the applicant is to provide student accommodation; and
(ii) are concomitant or incidental or ancillary objects to the non-charitable purpose of providing student accommodation.
(b)that the applicant’s main and dominant object is to provide student accommodation;
(c)that the applicant does not educate students, it provides limited and confined resources to students as part of their enrolment at the ANU;
(d)when construed in a wide sense, the applicant is not carried on for educational purposes because it does not offer a “balanced and systemic process of instruction, training and practice containing … both spiritual, moral, mental and physical elements, the totality of which in any given case may vary with, for instance, the availability of teachers and facilities, and the potentialities, limitations and individual preferences of the pupils”[11], and in any event, is restricted to a private group.[12]
Consideration
[11] Inland Revenue Commissioners (UK) v McMullen [1981] AC 1; respondent’s statement of facts and contentions at [35]
[12] Thompson v Federal Commissioner of Taxation (1959) 102 CLR 315 (affirming Davies v Perpetual Trustee Co [1959] AC 439); respondent’s statement of facts and contentions at [35]
The task of the Tribunal is to arrive at the correct or preferable decision.
In considering the issue before it the Tribunal is required to determine whether the applicant is a charitable organisation as stated in subsection 64(2) of the Duties Act. This, in turn, requires the Tribunal to determine whether the applicant meets the definition of charitable organisation as defined in the Duties Act, and in relation to this matter, whether the applicant is an organisation, society, institution or body carried on for a religious purpose or for an educational purpose. The issue turns on whether the applicant, as a body with the objects set out above and carrying on the activities set out in the witness statement and evidence of Mr Johnston, falls within the definition of ‘charitable organisation’.
There is no dispute that the applicant is an organisation, society, institution or body and therefore meets that part of the definition of charitable organisation. There is also no dispute that the College is carried on for the purpose of providing student residential accommodation.
In the sublease from the ANU the applicant covenants with ANU:
to use the demised premises for a Residential College within the university affiliated with the University… and for no other purpose.[13]
and in clause 2(c) –
to use the College:-
(i) During term time as a Residential College only; …
[13] Clause 2(a) of the Memorandum of Sublease being annexure A to the witness statement of Geoffrey Johnston (Exhibit A)
The respondent contends that the provision of student accommodation on the ANU campus is the applicant’s main purpose as evidenced in the applicant’s covenants set out in the previous paragraph and in the objects at clause 2(a) of the applicant’s constitution and that the educational object or purpose in clause 2(b) and the religious object or purpose in clause 2(c) are both ancillary to the main object or purpose.
Does the applicant have a charitable purpose?
As set out in the reviewable decision[14] the Duties Act does not expressly state whether the term ‘charitable’ is used in the popular sense involving the idea of assisting poverty or destitution or in the technical or legal sense as in the Statute of Elizabeth or Charitable Uses Act 1601 (43 Eliz. 1 c4) (‘the 1601 statute’) in which the legal meaning of charitable purpose has its origins.
[14] T-documents page 25
In Chesterman and Others v The Federal Commissioner of Taxation[15] the Privy Council said:
In approaching this question the starting point is found in Commissioners for Special Purposes of Income Tax v Pemsel (1891) A.C. 531 … in Lord Macnaghten’s words at p. 580: ‘In construing Acts of Parliament, it is a general rule … that words must be taken in their legal sense unless a contrary intention appears.’
[15] (1925) 37 CLR 317, 319
Counsel for the respondent referred to the High Court decision of Aid/Watch Incorporated v Commissioner of Taxation [16] and urged the Tribunal to apply the legal understanding of the term ‘charitable organisation’ rather than the common usage.
[16] (2010) 241 CLR 539
The Tribunal notes that President Curtis of the then ACT Administrative Appeals Tribunal, the predecessor of the ACT Civil and Administrative Tribunal, considered the 1601 statute in Australian National University Union v Commissioner for ACT Revenue [17]and stated:
Notwithstanding the repeal in the Territory of the 1601 statute, the meaning to be ascribed to references to charity in Territory legislation remains to be determined according to the preamble to that statute – Imperial Acts Application Act 1986 section 7(2)(a).
[17] [1997] ACTAAT 214 at [8]
In Commissioners for Special Purposes of Income Tax v Pemsel[18] Lord Macnaghten set out the legal meaning of ‘charity’ as:
“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.
[18] (1891) AC 531, 583
Therefore, for subsection 64(2) of the Duties Act to apply in this matter, the applicant must be carried on for either a religious purpose or educational purpose or a benevolent purpose or charitable purpose.
Counsel for the applicant urged the Tribunal not to take a narrow perspective in looking at the applicant’s purpose. Counsel submitted that the applicant encompasses a range of systems that provide support in the advancement of education and the advancement of religion that the applicant preaches.
In support of the applicant’s religious purpose counsel contended that the applicant does not offer just affiliation with the Roman Catholic Church. Rather, it offers much more including pastoral support, bible studies, spiritual retreats, the annual Roncalli lecture, an association with St Vincent de Paul; it has a large chapel and the only chapel on the ANU site, masses are offered each weekday and on Sundays and the chapel is used by the applicant’s residents, the ANU community and other parishioners as well.
Counsel submitted that the College did not just provide accommodation adding if it did just that it would be called ‘Uni Lodge’ or a ‘Hall’ rather than a college.
Counsel also submitted that the first object of the constitution to conduct the residential facility, is the conduit between ANU and the College in order to have a building on site. However, in accordance with the second and third objects (education purpose and religious purpose) the College has provided further support than just the physical building; it has provided and continues to provide both the education and religious purposes which are essential aspects of the College.
The Tribunal is mindful of the submission by Counsel for the respondent that:
12. This does not mean that a charitable organisation can have only one charitable purpose. If an organisation can engage in more than one activity each of which is charitable, it is a charity.[19]
[19] Respondent’s submissions at [12]
In determining whether an organisation is charitable it is necessary to consider the objects and activities of that organisation. In Federal Commissioner of Taxation v Word Investments Ltd[20] the High Court stated:
That is, it is necessary to examine the objects, and the purported effectuation of those objects in the activities, of the institution in question. In examining the objects, it is necessary to see whether its main or predominant or dominant objects, as distinct from its concomitant or incidental or ancillary objects, are charitable.
[20] (2008) 236 CLR 204, 217 at [17]
Focussing on the main objects is particularly relevant. If an organisation has a main, non-charitable purpose then it does not matter whether the organisation has other main, charitable purposes or ancillary charitable purposes as an organisation with a main non-charitable purpose is not charitable. In the High Court decision of Stratton v Simpson[21] Windeyer J said:
[21] (1970) 125 CLR 138 at [9]
A gift to an institution that has several objects or purposes, some charitable some not, one or more of which it can lawfully pursue independently of others, is not a gift to charity. It does not become charitable simply because one of the objects, being charitable, is called the main object of the institution.
…
In Keren Kayemeth Le Jisroel Ltd. v. Inland Revenue Commissioners [1932] UKHL TC_17_27; (1932) AC 650 , Lord Tomlin said (1932) AC, at p 658 :
"I well appreciate the argument which says that if you
once find that the main object is charitable you cannot destroy
the charitable character of the main object, because the
ancillary powers, which are incidental to it, are, some of them,
in themselves, not charitable."And in this Court, Dixon C.J., McTiernan, Williams and Fullagar JJ. said in Thistlethwayte's Case (1952) 87 CLR, at p 442 :
"An institution is a charitable institution if its main purpose
is charitable although it may have other purposes which are
merely concomitant and incidental to that purpose."As stated by Digby J of the Victorian Supreme Court in Law Institute of Victoria v Commissioner of State Revenue[22]:
The (cases) all turn on their own facts.
[22] [2015] VSC 604 at [117]
The Tribunal has considered the witness statement from Head of College, Geoffrey Johnston, which was Exhibit A1 and his evidence and the Tribunal (‘T’) documents which were Exhibit R1. Mr Johnston’s witness statement and his evidence assisted the Tribunal in looking beyond the applicant’s constitution to see what the applicant actually does and determine whether it is being carried on for religious and/or educational purposes.
In his witness statement Mr Johnston set out in considerable detail, some of which the Tribunal has set out below, the applicant’s affiliation at the ANU, a description of the applicant, the applicant’s mission statement, the religious purposes and functions of the applicant.
The applicant’s mission statement states:
The Mission Statement of John XXIII, a College affiliated with the ANU, is to give its residents an opportunity to experience personal growth in a supportive academic environment in which they can flourish in their pursuit of learning. Through academic, cultural, social and sporting opportunities each student will be empowered to make wise life choices so that they can achieve their full potential.
This mission is supported by providing:· A dynamic College experience: living and learning in a safe, high-quality environment focused on academic excellence.
· Opportunities for personal growth via a range of academic, cultural, social and sporting activities.
· A caring community in the Catholic faith tradition.
· Resources for activities that encourage spiritual, faith-based and service focused growth.
· A student centred environment in which to live while studying at ANU.
Religious purposes
Mr Johnston said that[23] “The College was built and entirely funded by the Roman Catholic religious order known as the Order of Preachers or the Dominican Order. This religious order was founded to teach by St Dominic in the 13th century and has had an active apostolate in universities all around the world ever since.” The applicant’s sublease from the ANU[24] states that the lessee is the Dominican Fathers.
[23] Geoffrey Johnston, witness statement at [26]
[24] Annexure A to the witness statement of Geoffrey Johnston (Exhibit A1)
The applicant was incorporated by the Dominican Order in about 2000. It is formally owned by a company limited by guarantee, a not-for-profit entity. The company constitution provides that the members of the Provincial Council of the Order from time to time will be members of the company. The Provincial Council is a group of Roman Catholic priests who govern the Dominican Order and its works in Australia and are elected from amongst the priests every three years.
The powers of the members are set out at [11] of the constitution. Relevantly clause 11(b) provides:
11. The powers and functions of the Members of the Company assembled in general meeting will be as follows:
(a) …...
(b) To make the necessary arrangements to educate and familiarize the Members, Board members and staff with the philosophy and values of the Order by means of workshops, orientation days and group evaluations so that the members, Board members and staff will understand these values, will share them and will assist in implementing them.
(c) …Mr Johnston stated[25] that the board members include several suitable persons from the general community, often ex-students of the applicant, and a group of members of the Dominican Order and that these people are all unpaid volunteers. Presently the board includes Fr Kevin Saunders O.P., the ANU Chaplain Fr Laurie Foote O.P. (‘the Chaplain’), Fr Mannes Tellis O.P. and Sister Rosemary Lewins O.P. The ANU Roman Catholic Chaplain has always been a member of the Order and a resident member of the applicant.
[25] Geoffrey Johnston, witness statement at [30], [31]
The applicant’s buildings include a large chapel at the front which is capable of seating about 400 persons and a smaller chapel to one side. It is the only fully dedicated church building on campus and is the Roman Catholic Church for the ANU.
Mr Johnston is employed by the Board. He told the Tribunal that the applicant, being set up as a Catholic College, his role is to reflect the Catholic ethos and values throughout the operations of the college by developing policy and procedures that implement the ethos and values.
The Chaplain provides mass five days a week and on Sundays in the applicant’s chapel. He provides bible studies, Friday benediction, adoration, rosary services and religious counseling, teaching, welfare services and pastoral care to people from the college. A great deal of the Chaplain’s activities and face to face contact occurs with students within the College. Mr Johnston said that the Chaplain becomes part of the College’s pastoral care response to all its residents.
Religion is introduced to the applicant college at the beginning of each year with the start of year ecumenical prayer service held before the commencement dinner.
The Resident Handbook sets out the policies, guidelines and procedures that inform the Residential contract. It states that:
the College encourages Residents to read the Handbook carefully because it informs the expectations and norms that underpin the community that is John XXIII College and is part of your Conditions of Residence.[26]
[26] Exhibit R1, page 56
The applicant’s vision in the Resident Handbook states[27]:
John XXIII College is a fully catered men’s and women’s Catholic Residential College affiliated by statute with the Australian National University. Of the two independent Colleges at the University, it was the first to establish, affiliating with the ANU in 1967. John XXIII College has always enjoyed both an independence from and a healthy, collaborative partnership with the ANU. It is a community of scholars which enjoys a unique sense of purpose and ethos distinct from but complementing the broader university experience.
Respect for Christian values is presumed of all College members as is a serious commitment to learning and to fostering one’s intellectual growth, whether that growth comes of formal studies or through realizing the advantages of living within a scholarly community. At John XXIII College, Residents’ academic success is the primary focus, but this is achieved through the spiritual, cultural, sporting and social development of the whole person. Each plays a vital role in the community life enjoyed by College members. The College believes that academic success is borne of one nurturing one’s whole self which in turn sustains us as a uniquely independent community of Christian scholars at Australia’s premier university, living with the Four Pillars of our founding Dominican Fathers: Community, Spirituality, Learning and Service; and the principles of Catholic Social Teaching.
[27] Exhibit R1, page 56
The applicant provides a variety of religious activities within its organized social programs including spiritual retreats, talks on religious subjects and religious ceremonies. Each year the applicant hosts a prominent public person to give the Roncalli Lecture[28] which usually explains the speaker’s personal spiritual journey which led to their vocation. Speakers have included Mr Gareth Evans, Ms Penny Wong and Mr Patrick Dodson.
[28] Named for Pope John XXIII who was born Angelo Roncalli
The applicant has an affiliation with the St Vincent de Paul Society. The chapter originated in the college and then expanded to the whole of the ANU. This activity is fully integrated into the life of the college and a bursary is paid to a student who volunteers to be the coordinator of the group. The chapter offers activities during the year which students attend.
The applicant monitors an extensive pastoral care system for its students which is based upon the Roman Catholic social teaching. The applicant provides specific training and scholarship to student leaders who with staff regularly monitor the physical, emotional, medical and psychological wellbeing of the applicant’s residents and trigger interventions by the applicant when required. The applicant also runs a weekend spiritual retreat which is organized by Fr Laurie. The retreat is open to the applicant’s members and ANU members who attend the chapel.
As the applicant is forbidden by the ANU Affiliation Statute from imposing any religious test on membership[29], membership of the college has never been limited to persons of the Roman Catholic faith. Mr Johnston said that the applicant conducts all of its activities as a form of outreach to all people. As part of its general outreach and social work the applicant, in cooperation with the Aboriginal Centre at ANU, fully funds four annual scholarships for indigenous students from remote areas to study at ANU.
[29] Clause 8 of the Residential Colleges Affiliation Statute 2013 states:
The applicant’s students also run activities which the applicant supports. One student leader from the applicant takes on the community service role and with interested people, undertakes an immersion course for the Northern Territory. Once a year a group of about fifteen people from the applicant, including the deputy head, travel to Mutujulu in the Northern Territory and work and live with residents from there in their community. This work includes undertaking maintenance in the community. The applicant, together with the ANU, has assisted bringing aboriginal artists from there to ANU to put on a public art exhibit and provide workshops.
The applicant also runs community service programs to help underprivileged groups in the community, to raise money for charity or raise the awareness of the community to various issues.
Mr Johnston said in cross examination that the applicant was a Catholic college open to anyone but residents come knowing that the applicant is running Catholic activities. The applicant’s policies are reflective of Catholic teaching. It expects its residents to behave consistently with the objects and values of the Catholic faith.
The applicant does not teach religion. It provides Catholic opportunities to undertake religion which are issued on invitation and residents are not required to attend. These activities are voluntary activities. He agreed that a person could be a resident at the college but not go to Mass, not go to the chaplaincy services provided by Fr Laurie and not go to the Roncalli lecture.
Mr Johnston said that residents do not have to identify with the Roman Catholic faith but his aim is for the residents to have the experience of a church in action, that is, gain an insight into how, in the applicant’s case, Catholics view things and operate.
Mr Johnston told the Tribunal that the applicant is there to assist the university provide accommodation. This is the minimum ANU requirement; it is the reason the ANU wants the applicant there. He said if the sole purpose of the applicant being there was to provide accommodation the applicant would not be there and from the ANU perspective, if the applicant did not provide accommodation, then the applicant’s religious and other activities would be inconsequential. The applicant sees its religious and educational activities as being more important and the reason that the applicant is there. Mr Johnston asserted that the educational and religious activities are not incidental; that the applicant is there to provide that support and the means by which the applicant can do that is to provide accommodation.
Mr Johnston said that the applicant is doing far more than providing accommodation. It is there to help residents get through their studies. This is the applicant’s primary purpose. The applicant provides more than a ‘Hall of Residence’, it provides support, guidance and encouragement, all of which is set up to achieve the applicant’s goal of having as many graduating as possible. The applicant sees itself as providing collegiate accommodation. It is not running a motel.
Clause 2(c) of the objects in the constitution appears to be for the advancement of religion. The evidence from Mr Johnston appears to support, this. The question however, is whether the College’s religious purpose involves:
…the spread or strengthening of spiritual teaching within a wide sense, the maintenance of the doctrines upon which it rests, the observances that promote and manifest it.
…But, whether defined widely or narrowly, the purposes must be directly and immediately religious. It is not enough that they arise out of or have a connection with a faith, a church, or a denomination, or that they are considered to have a tendency beneficial to religion or to a particular form of religion.[30]
[30] Roman Catholic Archbishop of Melbourne v Lawlor (1934) 51 CLR 1 at 32
The respondent submits that the matters relied on by the applicant to support its contention that it is carried on for a religious purpose ignore the primary purpose of the applicant for the establishment of residential accommodation for the students. This is what is unequivocally set out in the sublease from the university and the applicant has covenanted with the university in the sublease that this will be the only purpose.
Further, the Tribunal notes that the applicant’s website includes this statement which acknowledges the applicant’s primary aim:
The College’s primary aim is to provide accommodation for students studying at the ANU, in an environment which provides support and encouragement such that they graduate with a balanced outlook on life consistent with the values expressed in the Gospels and by the Dominican Order.[31]
[31]Exhibit R1 at page 140
The Tribunal concurs with the respondent’s submission[32] that the connection between providing residential accommodation and religious pursuits are mutually exclusive and need not coexist. In other words, the provision of residential accommodation need not have any religious affiliation; it can exist without one as is the case with other residential accommodation at the university without any religious affiliation. The respondent also submits that
Absent the provision of accommodation the (College’s) religious pursuits would be redundant and of no consequence. Therefore they are ancillary or incidental to the provision of accommodation.[33]
[32] Respondent’s submissions at [40]
[33] Respondent’s submissions at [40]
The Tribunal is satisfied and finds that the applicant and the board have an affiliation and sponsorship with the Dominican Fathers and that the applicant has a religious purpose. However, the Tribunal is also satisfied and finds that the applicant’s religious affiliation and pursuits are not necessary for it to maintain its affiliation with the university.
The Residential Colleges Affiliation Statute 2013, clause 2(a) of the applicant’s constitution, Clause 2 of the sublease and clause 7 of the ‘Terms and Conditions of Residency’ clearly support the Tribunal finding that the applicant’s main purpose is the provision of student residential accommodation on campus. This purpose is not charitable. The provision of residential accommodation is not incidental to a religious purpose.
The Tribunal is also satisfied and finds that the applicant’s religious purpose, notwithstanding Mr Johnston’s statement that it and the education purposes were more important to the applicant than the accommodation purpose, is not the applicant’s main purpose.
Even if the Tribunal was satisfied that the applicant had two or more main purposes and one, namely religion, was charitable, and the other, accommodation was not charitable, as stated in [44] above, an organization does not become charitable simply because one of its objects being charitable, is called the main object of the institution.
Education purpose
As stated in [43] above, in determining whether an organisation is charitable it is necessary to consider the objects and activities of that organisation.
Counsel referred the Tribunal to the applicant’s entry in the ACNC Charity Register Summary (T124-26) where the registration details state that the entity type is ‘Charity’ and the sub-entity type is ‘Advancing education’. This is the certificate relied on by the ATO for the College to receive taxation benefits.
In his witness statement Mr Johnston set out the educational purposes and functions of the College. He stated in [12]:
The combination of the above two statutes (the ANU Residential Colleges Affiliation Statute and Rules and the Discipline Statute and Rules) means that the staff at the College are effectively an arm of ANU when creating College rules and dealing with disciplinary matters concerning the student members of the college.
Mr Johnston also stated in his witness statement[34] that, as a result of its affiliation, the applicant is subject to ANU policy and procedures in many other ways and that there are very few things which occur in the college which are not subject to its close integration with the university.
[34] Geoffrey Johnston, witness statement at [13]
Pursuant to clause 6 of the Affiliation Statute a resident member of the applicant must meet the criteria in clause 6.2. Clause 6 states:
6. Resident members
6.1 A residential college must not permit a person…to reside at the college unless the person is a resident member of the college.
6.2 A residential college must not admit a person to resident membership unless the person:
(a) is admitted to candidature in, or enrolled for, a program of study leading to an award of the University; or
(b) Is a member of the academic or general staff of the University; or
(c) is engaged in research at the University.….
Mr Johnston told the Tribunal that the majority of student members of the applicant are students at ANU. Their activities at college are fully integrated with, and immersed in, their activities and studies at ANU. He sees the academic network in the college as a significant part of what the applicant is about. A most significant part of his role at the applicant is to ensure academic focus. He details in his witness statement[35] the extensive academic support program the applicant runs for its members which includes:
i) To help 1st year students develop independent study skills and attain university-level research skills we provide academic tutorials based on individual academic disciplines and also general academic practices.
ii) For later year students the College organises tutorials around the most difficult of concepts in their chosen fields of study.
iii) Students who have particular academic problems, which are sometimes associated with personal difficulties in their lives, are counseled, tutored and sometimes special programs or areas of intervention are arranged with the ANU.
iv) Academic prizes are awarded by the College and academic activities are arranged.
v) Members who consistently fail to achieve academic results, or who ignore the advice and counsel, are sometimes required to leave College.
[35] Geoffrey Johnston, witness statement at [46]
He said that the applicant has tutorial rooms, computer rooms and study rooms suitable for informal and organised study sessions. The applicant allocates specific ‘Academic Nights’ each week when no social activities are programmed and the residents are expected to attend tutorials, conduct group study or engage in individual research. Academic support network leaders, who have been trained by the applicant and ANU, run two tutorials per week on academic nights, are required to be available for individual consultations and one on one tutorials in their rooms. The applicant also has a process separate from the ANU whereby if a resident starts failing a variety of monitoring processes are able to be put in place. The applicant looks to identify residents at risk of failing before the ANU does. If a resident fails to meet the applicant’s academic performance and is expelled that does not affect the resident’s enrolment at ANU. If ANU excludes a student from enrolling who is a resident at the applicant then the applicant also excludes that student.
The applicant runs a leadership development program in each year for its members going into second year and beyond which can culminate in invitation to become senior residents of the applicant. Subsequently a full-week training program takes place at the beginning of the following year for about 30 persons during which they are trained in a large number of skills running from first aid, to mental health crisis intervention and personal introspection.
The applicant also provides a general education program for its members by way of college-run events, and student-run events which include many cultural programs and externally sourced lectures. The applicant manages a wide variety of sporting teams drawn from its members who participate in the inter-College/Hall competitions. A residents association comprised of elected members of the student body runs social activities and other events inside the applicant. The applicant provides scholarships and training for the executive of these networks.
In his 18 months as Head of College Mr Johnston said his role has been to reflect the Catholic ethos and values throughout the operations of the applicant particularly in developing policy and procedures and to ensure an academic focus in the college. In his witness statement he said[36]:
… At John XXIII we try to improve our members’ academic results, general education and awareness of the world, ethical judgment, spiritual life, physical well- being, and their cultural and social awareness.
[36] Geoffrey Johnston, witness statement at [45]
Counsel for the applicant submitted that the applicant would not exist, but for the existence of the ANU. Clause 9 of the Affiliation Statute states:
9. Academic mentoring
9.1 A residential college must, if so required by the Vice-Chancellor or his or her nominee, establish and maintain a system of tutoring or academic mentoring for its resident and non-resident students to complement formal teaching provided by the University.
The applicant requires academic performance in order for its residents to continue to reside there. The applicant actively monitors its residents’ academic progress by having tutorials, lectures and programs in place to maintain the academic requirements of the ANU and of the applicant. It trains groups of leaders within the college who are drawn from second and third year students which allows them to offer tutorial academic support to the residents. The applicant awards academic prizes and scholarships to support the academic progress of its students.
In cross examination Mr Johnston said that the academic support provided by the applicant was exclusively for the applicant’s residents. Their academic advisors were second and third year students at the college who have been through the applicant’s training program, which he provides, and who usually worked with the first year students. These advisors do not get or have teaching qualifications. The applicant also has tutors whom they pay to come in to the college to assist students in years other than first year. He conceded that a resident at college could perform academically without attending a tutorial.
Mr Johnston admitted that the applicant does not have a formal teaching qualification and does not provide such a qualification.
The respondent contends[37] that the applicant does not educate students; rather it provides limited and confined resources to students as part of their enrolment at the ANU.
[37] Respondent’s Statement of Facts and Contentions at [31]
In determining what educational purpose means the Tribunal has considered the following case law.
In Inland Revenue Commissioners(UK) v McMullen[38] Lord Hailsham said of ‘education’:
When applied to the young it is complex and varied … It is a balanced and systematic process of instruction, training and practice containing both spiritual, moral, mental and physical elements, the totality of which in any given case may vary with, for instance the availability of teachers and facilities, and the potentialities, limitations and individual preferences of the pupils.
[38] [1981] AC 1, Lord Hailsham at 18
In the Administrative Appeals Tribunal of Australia (Victoria) decision of Re Australian Institute of Management(Vic) v Commissioner of State Revenue[39] Nettle GAA said:
The legal conception of education has been so expanded by a succession or judicial decisions as now to cover almost any form of worthwhile instructional cultural advancement. It is also to be observed that for the purposes of section 78 of the Income Tax Assessment Act 1936 the word ``education'' has been held to be a word of broad meaning importing a general understanding which connotes the sense of imparting knowledge or assisting and guiding the development of body or mind: see Chesterman v FC of T (1923) 32 CLR 362 at p. 386. The conception of education is therefore much wider than mere book learning and wider than any category of subjects which might be thought to comprise general education: see Lloyd v FC of T (1955) 93 CLR 645 at pp. 661 and 665.
[39] (1995) 95 ATC 2179 at 39
In the ACT Administrative Appeals Tribunal decision in Australian National University Union v Commissioner for ACT Revenue[40] which considered the Payroll Tax Act 1987 (ACT) which has the same definition of ‘charitable organisation’ as the Duties Act in this matter Professor Curtis said:
9. … As to whether the objects of the Union constitute a charitable trust for the advancement of eduction (sic), the test to be applied is an adaptation of the test applied by Brightman J in London Hospital Medical College v Inland Revenue Commissioners [1972] 2 All ER 113 at 119. The adaption would be as follows:
"If the Union exists to further and does further the educational purposes of the University, the Union is charitable notwithstanding the personal benefit conferred on the Union members. Whether the Union exists in order to further, and whether it does further, the educational purposes of the University are questions of fact."
10. I do not think the present case is distinguishable from the London Hospital case, in which a students' union associated with the College was held to be a charitable body. In Attorney-General v Ross [1985] 3 All ER 334, the students' union of the North London Polytechnic was held to be a charitable body. It appears to me that the Union in this case, as with the students' unions in those cases, exists primarily to further the educational purposes of the educational institution with which it is associated. The fact that it also exists to benefit its members does not, of itself, exclude it from being a charitable body. It might be noted that the students' unions in the 2 cases cited also included former students of the institution concerned.
11. If the Union is a charitable organisation carried on for an educational purpose it is not exempt from payroll tax. The exemption of a charitable organisation from payroll tax given by section 9(1)(b) of the Payroll Tax Act 1987 does not extend to charitable organisations carried on for an educational purpose, other than primary or secondary schools and colleges that are not technical schools or colleges.
[40] [1997] ACTAAT 214
The questions are whether the College exists in order to further, and whether it does further, the ANU’s educational purposes. These are questions of fact.
The Tribunal has considered all of the matters before it. While section 9 of the Residential Colleges Affiliation Statute 2013 mandates in (c) that a residential college establish and maintain a system of tutoring or academic mentoring for its residents and non-resident students the tutoring and mentoring is to complement the university’s formal teaching. Mr Johnston gave evidence of how the applicant complied with section 9.
Clause 10 of the Resident Handbook sets out the academic support offered which includes encouraging residents to avail themselves of the support of faculty heads and academic tutors who provide assistance in research methodologies, writing skills and exam techniques. This assistance is supplementary to the services facilitated by the ANU. The applicant provides financial bursaries, awards, academic scholarships and prizes. Clause 5.10.2 sets out the ‘Residency, Studies and Academic Progression Rules’ and appendix 10.8 provides that residents who fail to satisfy the academic progression policy may be asked to leave the applicant.
The Tribunal, having considered all of the matters before it, is not satisfied that the applicant exists primarily to further the educational purposes of the ANU. The applicant does not have teaching qualifications and does not provide its residents with any educational qualifications. Clause 2(b) of the objects in the constitution, while referring tho the provision for ANU students and other eligible persons of facilities and encouragement for study and research and for the opportunity to obtain pastoral support and religious, educational, cultural, social and recreational opportunities, is not an educational purpose. The Residential Colleges Affiliation Statute 2013 does no more than establish an affiliation with the ANU.
As stated above, the Tribunal is satisfied that the applicant provides accommodation. The Tribunal concurs with the respondent’s submission[41] that there is a degree of inseparability between the applicant’s provision of residential accommodation and academic supports, however without the provision of accommodation the academic supports would be redundant and of no consequence. The academic supports are incidental to the provision of accommodation.
[41] Respondent’s submissions at [30-31]
As stated in [77] above, even if the Tribunal was satisfied that the applicant had an education purpose and/or a religious purpose both of which are charitable as main purposes and also had a main purpose, accommodation, which is not charitable, as stated in [44] above, an organization does not become charitable simply because one of its objects being charitable, is called the main object of the institution.
Conclusion
For the reasons set out above, the Tribunal is satisfied that the main object of the applicant is to provide residential accommodation. While the applicant provided detailed evidence and Mr Johnston was an impressive witness the Tribunal is not satisfied, on the balance of probabilities that either or both of the applicant’s religious purpose and educational purpose are the main purpose or purposes of the applicant. Without providing accommodation the applicant would not exist.
………………………………..
Presidential Member E Symons
HEARING DETAILS
FILE NUMBER: | AT 41 of 2016 |
PARTIES, APPLICANT: | John XXIII College |
PARTIES, RESPONDENT: | Commissioner for ACT Revenue |
COUNSEL APPEARING, APPLICANT | Ms A Irving |
COUNSEL APPEARING, RESPONDENT | Ms K Katavic |
SOLICITORS FOR APPLICANT | J S O’Connor Harris & Co |
SOLICITORS FOR RESPONDENT | ACT Government Solicitor |
TRIBUNAL MEMBERS: | Presidential Member E Symons |
DATES OF HEARING: | 8 November 2016 |
8 No religious test
8.1 A residential college must not impose any religious test as a condition of membership of the college and must not require any member to participate in any religious observance.
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