KRISHNAMURTI AUSTRALIA INC. And COMMISSIONER OF TAXATION
[2011] AATA 512
•25 July 2011
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2011] AATA 512
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/5308
TAXATION APPEALS DIVISION ) Re KRISHNAMURTI AUSTRALIA INC. Applicant
And
COMMISSIONER OF TAXATION
Respondent
DECISION
Tribunal Senior Member D Letcher, QC Date25 July 2011
PlaceSydney
Decision The decision under review is affirmed. ....................[sgd].....................
D Letcher, QC
Senior Member
CATCHWORDS
INCOME TAX – deductible gift recipient – health promotion charity – principle activity – control and prevention – measurement of principle activity - decision under review is affirmed
Income Tax Assessment Act 1997 (Cth) subs 30-125(1), s 30-20 Item 1.1.6
Administrative Appeals Tribunal Act 1975 (Cth) subs 33(1)(c)
Evidence Act 1995 (NSW) s 79
Taxation Ruling TR 2004/8
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Healthy Cities Illawarra Inc. and Commissioner of Taxation (2006) AATA 522
Macquarie Australian Encyclopaedia Dictionary 2006
REASONS FOR DECISION
25 July 2011 Senior Member D Letcher, QC 1.Krishnamurti Australia Inc. (“KA”) is an association promoting the teachings of Jiddu Krishnamurti (1895-1986) an Indian philosopher and guru. KA is accepted as a “tax concession charity” by the Commissioner of Taxation but was refused “deductible gift recipient” status as a “health promotion charity”. KA seeks review of that refusal.
2.The Income Tax Assessment Act 1997 (Cth) (the Act) permits an entity to receive donations deductible from the donor’s taxable income if it satisfies subs 30-125(1) and item 1.1.6 of s 30-20 (the item). Item 1.1.6 requires an entity to be a “charitable institution” (which was not disputed here) but also that “its principal activity [be] to promote the prevention or control of diseases in human beings”.
3.Taxation Ruling TR 2004/8 at [8] defines “disease” as including '… any mental or physical ailment, [or] disorder …’. KA contends that it complies with item 1.1.6 in that its principal activity is the promotion of prevention and/or control of mental illness.
4.KA was not legally represented but appeared by its Vice President assisted by senior members of the association. Broadly, KA’s argument was that Krishnamurti’s teaching promotes enquiry into the processes of human thought and by understanding those processes, psychological conflict may be reduced or eliminated for every individual who follows that course.
5.The theory is that mental illness is the product of unresolved psychological conflict and thus the promotion of Krishnamurti’s approach has the result of preventing or controlling mental illness.
6.As I understand it, KA submitted that although Krishnamurti’s technique was applicable to everyone and was beneficial to every human being, the fact that it would or could benefit those suffering mental illness meant that KA’s activity fell within the item.
7.The Commissioner of Taxation argued that based on the evidence, the principal activity of KA was not prevention or control of mental illness. The Commissioner submitted that even if this were one of the subsidiary activities of the association it was a very minor component overall.
8.The “Public Officer” and member of the leadership group of KA gave written and oral evidence as to: the nature of Krishnamurti’s teachings; his subjective experience of being assisted in dealing with his own mental health issues; and, his own opinion of how the teachings could help others.
9.KA also tendered written statements and letters of 12 health professionals and others. KA submitted that the material was relevant to the assertion that a Krishnamurti approach was helpful in preventing or resolving mental health matters. The material did not directly address any other matter in issue. The Respondent initially objected to the tender on the grounds that the writers were not shown to be expert in a particular field or that they did not expose the reasoning which led to their conclusions (as in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705).
10.However, the Respondent also made it clear that for the purposes of this application, it did not dispute that the teachings of Krishnamurti might be of assistance to people either with or without mental illness. Once this approach was adopted by the Respondent (and taking into account subs 33(1)(c) of the Administrative Appeals Tribunal Act 1975 (Cth) whereby the Tribunal is not bound by the rules of evidence) the written material was admitted and KA did not seek to call oral evidence from the writers.
11.After this matter was clarified the main issue in the case became whether the promotion of: the control and prevention of mental illness was in fact the “principal activity” of KA.
12.On this point, KA’s evidence and submissions were that the Krishnamurti approach could help eliminate psychological conflict in each and every individual and reduce disorder in thinking. KA submitted that disorder could lead to mental illness in some and to conflict within or between other individuals.
13.I have no doubt that the writers of the material tendered and the oral witnesses for KA have a sincere and genuine belief that the teachings of Krishnamurti can in fact assist in the control and prevention of mental illness. I reserve judgment on whether these opinions are supported by evidence of courses of study or professional experience appropriate to qualify those persons as an expert within the meaning of s 79 of the Evidence Act 1995 (NSW). However, that was not a relevant consideration in the circumstances of this case where the material was tendered without objection.
14.“Principal” as an adjective has a dictionary definition of “first or highest in rank, importance, value etc., chief, foremost” as in the Macquarie Australian Encyclopaedia Dictionary 2006 (which follows closely the Oxford English Dictionary 2nd Edition 1989). This definition was accepted by Deputy President Block in Healthy Cities Illawarra Inc. and Commissioner of Taxation (2006) AATA 522 at [46] and I adopt the same definition.
15.The question then is: what evidence is there that control or prevention of mental illness was the main, most important or first priority activity of KA? I adopt Deputy President Block’s approach, as noted at [58] in Healthy Cities. This approach is that in deciding whether or not an activity can be termed “principal” one may evaluate activities in terms of measures, including but not limited to time or number of persons devoted; level of expenditure; and, income generated.
16.The Respondent referred to KA’s Constitution which relevantly states at [6] that KA:
“supports Jiddu Krishnamurti’s lifelong insights and observations, which seek to improve the ethics and well being of humankind. To this end the society is committed to making his works available to the general public of Australia by adherence to the following articles:
1. Krishnamurti Australia Inc is a charitable, non-profit ethical society established to disseminate to the general public of Australia, the works of Jiddu Krishnamurti.
…
3. The society will disseminate to the general public of Australia the works of Krishnamurti through the distribution and sale of books, DVDs and CDs and through other technological means as they become available.
The society will from time to time disseminate material through the internet, print media and/or other sources as deemed appropriate by the committee.
The society will regularly present to the public throughout Australia, recordings of Krishnamurti’s talks and conversation.
The society will organize and conduct public gatherings to enquire into the works of Krishnamurti.
4. The society will donate a selection of the works of Krishnamurti to Schools, Universities, Libraries, Prisons, Correction and Detention Centres and to other institutions approved by the committee.
5. The society will establish formal and informal Education Centres throughout Australia with a view to fostering universal understanding.
6. The society may from time to time:
a)Offer scholarships to the general public for individuals to attend Krishnamurti Centres worldwide;
b)Invite national and international speakers to address national gatherings and,
c)Organise State and Interstate seminars, gatherings, forums and discussion groups.”
17.I note that the first objective of the Constitution is making Krishnamurti’s works “… available to the general public of Australia …” (my emphasis) and “public” is repeated in later objects. I note that one object is to donate works to various institutions which do not include psychiatric hospitals, to foster “universal understanding” and to invite speakers to speak at large scale gatherings. There is nothing in these objects to indicate any emphasis on mental illness.
18.The KA website has hyperlinks and references to subjects of general concern – these do not include mental illness.
19.The financial statements for the relevant period show that most of KA’s income is derived from gatherings, discussion meetings and the sale of CD’s, books and videos concerning the general teachings of Krishnamurti. Most of KA’s expenditure is directed to the expenses of those meetings and production of that material. Only a small portion of the products have titles suggestive of attention to psychiatric illness e.g. Nature of the Mind – “Roots of Psychological Disorder” and “Psychological Suffering”. None appear to be directed towards control or prevention except possibly in the most general sense.
20.The evidence and submissions of KA to this Tribunal contained no material specific to mental illness nor specifying particular activities or allocation of resources directed to that subject. There was mention of mental health and the statements of psychological practitioners referred to the assistance they derived from the teachings, but that is largely irrelevant to the question of “principal activity”.
21.In Healthy Cities, Deputy President Block considered whether an entity complied with the same legislative provision. He found that the entity dealt with a very wide range of beneficial activities but there was no specific evidence enabling him to find any one activity to be “principal”. In the case of KA, I find that the principal activity is the dissemination to the general public of the philosophical teachings of Krishnamurti.
22.Neither by expenditure, allocation of resources, statements of objects, subject matter of publications, nor by any other measure, could it be said that control or prevention of mental illness was a principal nor even a subsidiary activity of any significance. The representatives of KA could not point to any specific passage or publication, activity or object which addressed the subject in a direct way.
23.Indeed, the submissions on behalf of KA stressed that its emphasis was to spread the teachings universally because each and every individual could profit from adoption of the Krishnamurti philosophy. Looking fairly at the array of evidence it is not possible to discern any particular directed concern with the control or prevention of illness, mental or otherwise.
24.In these circumstances, the decision under review must be affirmed.
I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member D Letcher, QC
Signed:...........[sgd]...................................................................
Casey Comans, AssociateDate of Hearing 16 February 2011
Date of Decision 25 July 2011
Advocate for the Applicant Christopher Waters
Counsel for the Respondent Mr Thomas
Solicitor for the Respondent Australian Taxation Office
1