Vibrational Individuation Programme Inc and Commissioner of Taxation
[2003] AATA 158
•13 February 2003
DECISION AND REASONS FOR DECISION [2003] AATA 158
Administrative
Appeals
Tribunal
ADMINISTRATIVE APPEALS TRIBUNAL )
) No ST2002/01
TAXATION APPEALS DIVISION ) Re Vibrational Individuation Programme Inc Applicant
And
Commissioner of Taxation
Respondent
DECISION
Tribunal Mr DJ Trowse (Member) Date13 February 2003
PlaceAdelaide
Decision The Tribunal, pursuant to Section 43 of the Administrative Appeals Tribunal Act 1975, sets aside the decision of 7 November 2001 and in substitution therefor, decides that the applicant is a public benevolent institution and that as such it should be endorsed as a deductible gift recipient under subdivision 30-BA of the Act.
(signed)
D.J Trowse(member)
CATCHWORDS
Income Tax – Deductible Gift Recipient – Public Benevolent Institution – Organisation offering nutritional advice to assist with Remedial Care and Attention – Decision Set Aside
Income Tax Assessment Act 1997 sub-division 30-BA, S30-120, S30-125, S30-15, S30B Taxation Determination TD 93/11
Perpetual Trustee Company Ltd v Federal Commissioner of Taxation (1931) 45 CLR 224
Maughan v Federal Commissioner of Taxation (1942) 66 CLR 388
Marriage Guidance Council of Victoria v Commissioner of Pay-roll Tax (Vic) 90 ATC 4770
Commissioner of Pay-roll Tax (Vic) v Cairnmillar Institute 90 ATC 4752
Australian Council of Social Service Inc & Anor v Commissioner of Pay-roll Tax (NSW) 85 ATC 4235
REASONS FOR DECISION
13 February 2003 Mr D.J. Trowse (Member) 1. The question to be determined in this reference is whether the Commissioner of Taxation (the Commissioner) was correct in disallowing an application lodged by Vibrational Individuation Programme Incorporated (the applicant) for endorsement as a deductible gift recipient. It would appear that the applicant had previously been granted deductible gift recipient status but, due to legislative changes introduced in 1999, all entities previously entitled to this standing as at 30 June 2000 were required to apply for an endorsement under subdivision 30 – BA of the Income Tax Assessment Act 1997 (the Act). More particularly, this matter raises the issue of whether the applicant meets the criteria of being a public benevolent institution.
2. The Tribunal received into evidence the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, together with seven exhibits. Additionally the Tribunal heard evidence from Ms K Harte and Ms E Biedrzycki who are members of the applicant. At the hearing the applicant was represented by Ms K Harte and Ms E Biedrzycki. The Commissioner was represented by one of his officers.
3. The fact that the parties had agreed that the issue to be decided is whether or not the applicant is a public benevolent institution overcomes the need to consider the provisions of sections 30-120, 30-125, 30-15 and 30B of the Act. Although the phrase public benevolent institution is not defined in the legislation, the Commissioner, in reliance of pronouncements made by the courts in the case of Perpetual Trustee Co. Ltd v FCT (1931) 45 CLR 224 and others, has stated in Taxation Determination TD 93/11 his own definition in the following terms –
‘A public benevolent institution is defined as one which:
a.has as its main or predominant object, the relief of poverty, sickness, suffering, distress, misfortune, destitution or helplessness:
b. is carried on without purpose of private gain for particular persons;
c. is established for the benefit of a section or class of the public;
d.the relief is available without discrimination to every member of that section of the public which the organisation aims to benefit; and
e. the aid is given directly to those in need.
4. Although accepting that the requirements of (b) and (d) are satisfied, the Commissioner is of the view that, by its actions, the applicant is seeking to do no more than improve the general wellbeing of its members and to promote its concepts and philosophy to the wider community. For this reason, the Commissioner has concluded that the applicant is only concerned in an abstract sense with the relief of distress. In maintaining the opposite view that the services rendered for and on its behalf come within those described in paragraph (a) of the Commissioner’s definition, the applicant proffered a favourable comparison of its advisory role with those of the Asthma Foundation and the Diabetes Association.
5. In order to better understand the motive force of the applicant, it is appropriate to quote the following from one of its publications –
‘How the VIP provides answers to many health problems – and it starts with the individual.
The Vibrational Individuation Programme (VIP) is a complementary health programme which uses correct nutrition to restore the body back to health. It is based on spiritual principles and supported by sound scientific knowledge and research. Some concepts of the Programme include:
· Eating is the most fundamental function, common to every person, that has an effect on health.
· The physical body is made up of an integrated body, mind and soul which has unlimited potential to heal and regenerate itself – given the correct nutrients.
· Food, thoughts and attitudes cause chemical reactions in the body which can heal, or cause disease.
· Each body is unique and utilises food differently. What is ‘good’ for one person to eat may be detrimental for another.
· Symptoms are the way the body communicates that something is not working as it should.
However there is more to health than a focus on food and the physical body. As our name acknowledges, everything in the Universe is interdependent, living vibrating matter undergoing constant reactions and change – and each person is evolving and learning to achieve their own individual expression as part of the Natural Law and Order that exists.
What does VIP offer?
· Education sessions.
· Individual consultations and food programme from VIP Educator.
· Group/individual support sessions.
· Monthly newsletter.
· Educators and Support Team who work within a Christian framework.
· Respite accommodation.
· Get togethers and fundraising activities which can be used to promote community spirit, or to share ideas or concerns.
· Opportunity to help people in the wider community by promoting the principles of VIP.
What can be gained?
· Regain your spiritual, physical and mental health.
· A greater understanding of the integrated body.
· A greater understanding of self, growth and awareness.
· Empowerment and individuation.
6. The management of the applicant is controlled by a support team whose role, according to the Constitution, is to advance the education of members, to support members and to promote and to apply the principles in accordance with stated objects. The support team, which is elected annually by members, is comprised of members, one of who is a practitioner in Applied and Educational Kinesiology and is referred to as a VIP Educator. The VIP Educator is charged with the obligation to provide ongoing education to those of the support team studying as non-practising educators. Although the Constitution states that membership is available to any person who has undergone a current nutrition test from a VIP Educator and who pays a membership fee, the support team has the authority to waive those requirements. It would appear from the evidence that the need to take a nutrition test is not strictly adhered to. However, when testing is performed, the results of which, in the Tribunal’s understanding, may indicate nutritional deficiencies and/or biochemical imbalances, the concerned party is dealing directly with the VIP Educator in his private capacity and not with the applicant. Current membership is in the order of seventy.
7. The objects stated in the Constitution of the applicant are to –
‘3.1Work together within a Christian framework to restore physical, mental and spiritual health and healing through correct nutrition.
3.2Make the Association accessible to any member of the public and to promote participation by choice.
3.3Assist with remedial care and attention, counselling, education and support for people suffering mental and physical diseases and addictions to behaviours and substances.
3.4Play an active role in current health issues concerning the wider community and to exchange ideas with professionals and community groups.
3.5Assist with temporary respite care and/or accommodation for people in crisis and suffering debilitating health-related problems.
3.6Promote and encourage exchange of ideas and thereby establish a sense of community, joy and spirit.
3.7 Participate in prayer for the highest good for the world at large.
3.8Promote the principle of individuation by developing the conscious and the unconscious physical and spiritual aspects of an individual through learning to know, respect and accommodate one another by reconciling Man, God and the Living Universe and identifying with the Natural Law and Order of the Universe and fostering responsibility in and for all individuals.
3.9Take as guidance the Sacred and Holy Law of God and to seek reconciliation, understanding, knowledge and wisdom by taking counsel from the Law of God through vibrational testing by VIP Educators in any decisions or disputes relevant to any or all Members and in the presence of two or more members of the Support Team.
8. The following extracts taken from earlier submissions made by the applicant to the Commissioner are offered as a further clarification of the applicant’s motivational direction –
‘VIP Inc. is a community organisation made up of volunteers who have overcome illness, disease and poverty who are committed to helping people in the general community irrespective of whether they have a food programme [current nutrition test] or are members of the association. The community centre is open to all members of the public.’
‘VIP Inc. is not a treatment programme, however because we believe food plays a vital role in the health or sickness of a person, our focus is on providing information and education relevant to food which provides the added dimension of support with the aim to healing and health. Certainly, people have the option of consulting a VIP Educator who practises educational kinesiology and provides nutrition tests. However, this is up to each individual to seek the treatment they feel comfortable with.’
9. The Community and Education Centre (the Centre), located at the corner of Whitmore Square and Wright Street in the City of Adelaide, consists of, areas utilised by members for meetings and for the counselling of people with a variety of problems, a library that contains literature that is supportive of the views and activities of the applicant and an opportunity shop.. To ensure that callers seeking assistance are catered for, a member of the support team is usually in attendance.
10. The applicant is non-denominational. The Tribunal was informed that the word Christian appearing in the Constitution is no more than a reference to the ethos of brotherly care and understanding. Even so, in a letter tendered into evidence and written by an Anglican priest, it emerges that the author –
· shares a belief in the interrelationship between the physical, emotional and spiritual aspects of healing and wellness
· has offered spiritual support to those involved at the Centre and
· has held one Taize style service at the Centre and, by agreement, is planning some opportunities for spiritual growth and education.
These observations should not be perceived as an impediment to the claim that people of all religious persuasions are welcome.
11. In turning to a consideration of the activities engaged in on behalf of the applicant, the Tribunal begins with the comment that most, but not all, of its functions are focused on correct nutrition. Next, it is clear that the range of tasks undertaken in the name of the applicant has to some degree been extended in accordance with the experiences and resources of its membership. Then, there is the belief that the benefits offered are of particular advantage to those people who have not been assisted by conventional medicine. Finally, the activities will be detailed under the headings of Education, Counselling, Respite and Emergency Centres, Fundraising and Social Functions, and Sundry.
EDUCATION
12. In order to further educate its members - who, besides being the public face of the organisation, also encounter in their daily lives people with a variety of medical complaints -and to better acquaint non-members with the benefits of correct nutrition, the applicant has had prepared the following publications –
(a)A series of leaflets espousing the health benefits to be gained by making changes to one’s diet. These brochures contain an invitation to the reader to either call at the Centre or to make contact by telephone.
(b)Regular newsletters which, in addition to the recommendation of certain nominated foodstuffs, contain articles on such matters as, the use of drugs and their over prescription, instances of misdiagnosis by the medical profession and the need for people to accept responsibility for their own health. These periodicals, which are distributed to members and non-members alike, also set out details of social and fundraising activities.
(c)Recipe Books
13. Information sessions are also available to members and, at times, to a combination of members and the public. On those occasions when the public is invited, a suburban hall is hired for the purpose. Generally, the sessions are conducted by a VIP Educator and have as their theme the subject of better nutrition. While no entrance fee is charged, donations are gratefully received.
COUNSELLING
14. On a daily average, one to two people suffering from a wide range of physical and mental conditions visit the Centre in search of assistance. It seems that most callers have learnt of this facility by word of mouth. The types of conditions experienced by these visitors include such things as asthma, diabetes, autism, high blood pressure, alcoholism, multiple chemical sensitivity and behavioural problems. Also there have been cases where stressed relatives of afflicted people have sought advice. Relief is offered in the form of counselling by a member of the support team.
15. While the method of counselling varies between counsellors and their personal appraisal of the person seeking assistance, certain elements of the process are common. In recognition of the requirement that a person must first accept responsibility for his or her own health and the wide diversity of conditions and causes, there is an initial hesitancy in the provision of specific comment or opinion. On that basis, the interchange proceeds with the counsellor carrying out a listening role and, yet, in the Tribunal’s understanding of the evidence, that position is normally expanded in accordance with the particular circumstances. In some cases, the counsellor will refer to various options which, for example, may be in the form of a suggestion that the adoption of a nutritional programme may be helpful. In such an event, it is likely that the person concerned would be handed relevant leaflets of the kind earlier described. Additionally, he may be referred to pertinent publications in the library. If, in the course of the session, the person expresses an interest in participating in a food programme, he may be referred to the private practice of the VIP educator. Mention is also made of situations where persons are perceived to be suffering conditions linked to food allergies. In those cases, the person is referred to a body of information contained in the library and dealing specifically with that subject.
16. Another important feature of the counselling procedure is the use made of the network of members who volunteer their services to the organisation. In the main, the membership is comprised of people who have suffered a cross section of medical conditions and who, reputedly, have benefited from their earlier counselling and the adoption of a nutritional programme. At the counselling stage, the person seeking assistance is offered the opportunity of conferring with a nominated member who in the past has shared a similar episode. The invitation, if accepted, creates the position where the person currently afflicted is able to learn, at first hand, how somebody else suffering that same affliction has successfully managed that condition.
17. As a result of the counselling and information received, the people seeking assistance generally adopt a defined food programme.
RESPITE AND EMERGENCY CENTRES
18. These centres, formerly at Alberton and Plympton and now at Balhannah, are conducted by the applicant for people who are unable to care for themselves because of some mental or physical impairment. Also there have been occasions when these centres have been used to house families subjected to matrimonial abuse. Whilst the premises at Alberton and Plympton were rented by the applicant, the property at Balhannah has been made available gratis to the applicant by one of its members. Membership is not a prerequisite to the use of these facilities, nor is there a requirement that the occupier pay rent.
19. Examples of people staying at these places include –
· a woman suffering from chronic fatigue syndrome who was very limited as to what tasks she could undertake in her general maintenance.. During her occupancy, she was helped by volunteers in such things as shopping and cooking and followed a food programme. In most respects, this lady is now able to care for herself.
· A person with behavioural problems of such severity that made the finding of alternative accommodation near impossible. After the selection and application of a food programme this person has now returned to the family home.
· An abused spouse and children who were in urgent need of a place to shelter.
FUND RAISING AND SOCIAL FUNCTIONS
20. Information contained in the newsletters indicates that most, if not all, of the social gatherings organised on behalf of the applicant have overtones of fund raising and membership education. Attendance at picnics, cooking demonstration days and other like events required the payment of a donation. The major fundraiser for the applicant is its opportunity shop, which operates out of the Centre. Other activities engaged in include the usual trash and treasure, raffles and film nights.
SUNDRY
21. Accounting statements prepared for the 2000 financial year show that the applicant advanced cash to members in necessitous circumstances. Depending on whether there is a promise to repay, a dissection of the monies advanced is made between loans and gifts..
22. Finally, the applicant, through one of its members, offers an advisory service to people due to appear before the Family Court. Evidently, the member concerned has had the personal experience of such an appearance and found the participation most stressful. In an effort to lessen that stress for others in a similar situation, the member, acting on the applicant’s behalf, makes herself available to confer with them on matters pertaining to the processes and procedures adopted by the Court. A notice erected at the front of the Centre refers to the provision of this particular service. No fee is payable.
23. The essential characteristics of a public benevolent institution were described by members of the High Court of Australia in the case of Perpetual Trustee Company Limited v Federal Commissioner of Taxation (1931) 45 CLR 224. At p. 232 Starke J stated –
‘In the context in which the expression is found, and in ordinary English usage, a “public benevolent institution” means, in my opinion, an institution organised for the relief of poverty, sickness, destitution, or helplessness.’
At p. 233, Dixon J, as he then was, concluded that the appellant did not come within the meaning of the compound description public benevolent institution because it was ‘neither promoted nor conducted for the relief of poverty, distress, suffering or misfortune.’ At pages 235 and 236 Evatt J made the following comments on organizations answering the description of benevolent institutions –
‘Such bodies vary greatly in scope and character. But they have one thing in common: they give relief freely to those who are in need of it and who are unable to care for themselves. Those who receive aid or comfort in this way are the poor, the sick, the aged, and the young. Their disability or distress arouses pity, and the institutions are designed to give them protection.’
24. Subsequent court decisions have shed further enlightenment on the following factors relevant to a consideration of whether an organisation fits the description of being a public benevolent institution –
· The issue is to be determined by reference to the objects and constitution of the institution as well as its activities – Marriage Guidance Council of Victoria v Commissioner of Pay-roll Tax (Vic) 90 ATC 4770
· A constitution which provides for those members of the public who are sufficiently interested in the work of the institution to subscribe to its funds and thereby become annual members and as such eligible to vote at the election of the controlling body creates a control which is public in nature – Maughan v Federal Commissioner of Taxation (1942) 66 CLR 388
· Poverty is not an essential pre-requisition in the notion of public benevolent institution - Marriage Guidance Council of Victoria v Commissioner of Pay-roll Tax (Vic) supra.
· The fact that an institution charges for its services does not preclude it from being characterised as a public benevolent institution – Commissioner of Pay-roll Tax (Vic) v Cairnmillar Institute 90 ATC 4752 and
· In determining whether the relief provided amounts to benevolence, one must be satisfied that the disability or condition is of such seriousness as to arouse community compassion and thus engender the provision of relief - Commissioner of Pay-roll Tax (Vic.) v Cairnmillar Institute – supra
25. The Tribunal pauses to contemplate two issues raised by the Commissioner in the presentation of his case. The first relates to the submission that an institute although concerned, in an abstract sense, with the relief of poverty and distress, and which manifests that concern by the promotion of social welfare in the community generally is not a public benevolent institution. While accepting the correctness of this statement, it should be noted that the view expressed has been extracted from the decision of Priestley J.A. in Australian Council of Social Service Inc. & Anor v Commissioner of Pay-roll Tax (NSW) 85 ATC 4235 and, thus, its factual context is worthy of consideration. That case concerned an association which provided information, advice and research material to its member organisations. It did not of itself directly dispense benefits to those requiring assistance. Because of that indirectness, the Court held that the association was not a public benevolent institution. The second point pertains to the apparent importance placed by the Commissioner on the premise that the services rendered on behalf of the applicant do not constitute either a diagnosis or a treatment. Seemingly, the Commissioner is of the opinion that those elements are essentials for the relief of poverty, sickness, suffering, distress, misfortune, destitution or helplessness. Furthermore, it became clear in the course of final submissions that the Commissioner was of the view that the word ‘aid’ as used in paragraph (e) of Taxation Determination 93/11 should be limited to assistance of a clinical nature rather than the provision of advice and information. As will be seen later in these reasons, the views expressed by the Commissioner are not shared by the Tribunal.
26. In returning to a consideration of the facts extant in the current reference, the Tribunal makes the following findings:-
· the activities engaged in by the applicant were in general accord with the objects stated in its Constitution
· in recognition of the pronouncement made by Williams J on the subject of membership and the right of control in Maughan v Federal Commissioner of Taxation, supra, the applicant is a public institution
Additionally, based on the evidence adduced before it, the Tribunal is satisfied that the applicant was established for the purpose of providing a service to a section or class of the public suffering a variety of medical conditions that would benefit from correct nutrition. Although it is true that this purpose was to be attained by the use of vibrational testing, it is accepted that this procedure was no more than a means to achieve the desired end of service.
27. The remaining issues are – whether the services provided result in the relief of sickness, suffering, distress, misfortune or helplessness – and, if so, does that relief amount to benevolence and, finally, can it be said that the services made available by the applicant constitute aid.
28. On the first of these issues, the Tribunal commences with the view that the means of relief may come in different forms. Diagnosis and the provision of a cure are but two of those forms. Also the relief need not be absolute. As long as there is some noticeable degree of easing in the symptoms and/or the condition which leads to a better quality of life, there is relief. The evidence before the Tribunal, which includes excerpts taken from two testimonials given by acute sufferers of asthma and diabetes, is that people afflicted with an assortment of medical conditions have benefited from their participation in the procedures provided by the applicant. Those procedures include, counselling by members of the support team, followed by conferences with members of the applicant who have suffered like conditions and, after due examination of all information made available by the applicant, the selection of a suitable food programme. On this basis, the Tribunal is satisfied that the applicant fulfils the requirement of providing relief of the kind referred to by the three learned judges in the case of Perpetual Trustees supra. In like manner, the Tribunal accepts that the functions of making available respite and emergency accommodation to those in need and the provision of advice to people appearing before the Family Court come within that same classification of relief. Furthermore, the Tribunal finds that the activities previously mentioned in this paragraph form a substantial and not insignificant part of those engaged in by the applicant.
29. Next, the Tribunal moves to the issue of benevolence and, in turn, to the test prescribed by McGarvie J in Commissioner of Pay-roll Tax (Vic) v Cairnmillar Institute, supra.. As previously stated, the test to be applied is whether the relevant disability or condition is of such seriousness as to arouse community compassion and thus engender the provision of relief.
30. On this issue, the Tribunal is of the view that a member of the community witnessing the kind of following events, which, in the main are reflective of the various conditions suffered by those seeking assistance from the applicant, would look upon them as serious and worthy of support – an asthmatic suffering an attack – a diabetic going into either a coma or seizure – a person with autism displaying acute behavioural problems and a lack of social connectiveness – a person with behavioural problems in the midst of an episode – an alcoholic with delirium tremens and a person with a chemical sensitivity during a flare up. Bearing in mind the nature and extent of the condition suffered by the recipient, the potential consequences and the need for assistance, the Tribunal concludes that services rendered by the applicant are of a benevolent nature.
31. The final matter requiring attention relates to the Commissioner’s contention that the aid mentioned in paragraph (e) of the Taxation Determination excludes assistance of an advisory kind. While it is the understanding of the Tribunal that such a view emanates from comments made by McGarvie J in Commissioner of Pay-roll Tax (Vic) v Cairnmillar Institute supra, his qualifying remarks at pages 4763 and 4764 are apposite –
‘It is sufficient that I record that the information in the exhibit satisfies me that the counselling given by the institute is to be categorised as typically and substantially psychological treatment or psychotherapy rather than the provision of advice. That is not to say that everyone who is counselled needs and receives treatment, nor to deny that a great deal of advice is given which could not be categorised as treatment. In a similar situation, the fact that a general practitioner sees a number of patients who have no illness and need no treatment, and frequently advises patients on their lives, as a guide, philosopher and friend, does not indicate that the practice being conducted is other than that of a medical practitioner.’ (Tribunal’s emphasis)
32. The Tribunal is not attracted to the proposition that the word “aid” should be steadfastly restricted to exclude services of an advisory nature because they do not represent treatments. As the qualifying remarks of McGarvie J in Commissioner of Payroll Tax (Vic) v Cairnmillar Institute supra establish, there may well be instances where services of an advisory kind are correctly categorised as treatments. As an aside, it would appear that, if this was not the case, organisations such as those mentioned by the witnesses appearing on the applicant’s behalf would have difficulty in preserving their public benevolent institution status.
33. The word treatment has connotations of the provision of a service directed towards the cure or improvement of a medical condition. In the present matter, the facts confirm that, in the majority of cases, members of the community suffering a variety of medical disorders sought and received advice and guidance that resulted in an improvement in their medical condition. When those circumstances are considered in conjunction with the Tribunal’s understanding of the word ‘treatment’, the conclusion is that the services so provided are capable of coming within the unrestricted meaning of being treatments. On this basis, the Tribunal is satisfied that the applicant has given aid directly to those in need, that is to say, it has fulfilled the conditions stated in (e) of the Commissioner’s Determination.
34. Drawing these findings together, the Tribunal concludes, that the applicant is a public institute which has as its main object the relief of sickness, suffering, distress, misfortune and helplessness, that such relief amounts to benevolence, and that the aid is given direct to the public. All of the attributes necessary to qualify as a public benevolent institute are present. This is not a case where the relief manifests itself by the promotion of social welfare in the community generally. It is a situation where the applicant is freely supplying a service to a section of the community in need of it and which gains relief from that contribution.
35. For the above reasons, the Tribunal, pursuant to Section 43 of the Administrative Appeals Tribunal Act 1975, sets aside the decision of 7 November 2001 and in substitution therefor, decides that the applicant is a public benevolent institution and that as such it should be endorsed as a deductible gift recipient under subdivision 30-BA of the Act.
I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of Mr D.J Trowse (Member)
Signed: .......................................................................................
AssociateDate/s of Hearing 24 & 25 Oct 2002
Date of Decision 13 February 2002
Counsel for the Applicant In person
Solicitor for the Applicant -
Counsel for the Respondent An officer
Solicitor for the Respondent ATO
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