John XXIII College v Commissioner for Act Revenue  ACAT 152
On 21 December 2016 the Australian Capital Territory Administrative Tribunal (“the Tribunal”) handed down its decision in John XXIII College v Commissioner for ACT Revenue (Administrative Review)  ACAT 152.
The issue for review by the Tribunal was whether the Commissioner for ACT Revenue (“the Commissioner”) made an error when deciding that John XXIII College (“the College”), a registered charity, did not fall within the definition of a “charitable organisation” for the purposes of section 64(2) of the Duties Act 1999 (ACT) (“the Act”) in force at the time, and was accordingly assessed for stamp duty ad valorem rather than at the concessional rate of $20.
In a decision that could have far reaching consequences for similar organisations, the Tribunal decided that the College was not a charitable organisation for the purposes of the Act, and was therefore assessable for ad valorem stamp duty.
The take away
The “take away” from the decision is that State or Territory revenue bodies continue to separately determine whether an entity, registered at the national level as a charity with the Australian Charities and Not-for-profits Commission (“ACNC”) is a charity, under different State or Territory legislation. The case highlights the limited reach of the Charity Act 2013 definition of “charity” notwithstanding the hope that it could bring uniformity to the sector.
The College is registered as a charity with the ACNC with the purpose of Advancing Education, and operates a university residential college on behalf of the Dominican Fathers within grounds controlled by the Australian National University (ANU). The Dominican Fathers hold a a sublease from ANU , and a condition of the sublease is that the premises occupied by the College be used for the purpose of a Residential College “and for no other purpose whatsoever”.
Subsection 64(2) of the Act (in force between 1 July 2015 and 24 November 2015) relevantly provided:
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.
Section 4 of the Act defines charitable organisation as
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.
The College The College argued that it was a charitable organisation on the grounds the College was conducted for both its registered purpose of advancing education, and the further charitable purpose of advancing religion.
In support of this argument, the College led evidence describing its religious and educational activities, and submitted these were the primary reasons it operated the College.
The Commissioner argued that the College’s primary purpose was the provision of on-campus residential student accommodation because the College would not exist but for the fulfilment of this purpose.
In response to the College’s contentions in relation to advancing religion, it argued the College’s religious affiliation and pursuits were “not necessary for it to maintain its affiliation with the University” and were therefore incidental to the main purpose of providing accommodation.
In response to the College’s contentions in relation to advancing education, the Commissioner argued the College would need (and had failed) to demonstrate 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”.
On balance, the Tribunal preferred the arguments of the Commissioner and agreed that John XXIII College did not fall within the definition of “charitable organisation” because its main purpose was the non-charitable provision of student residential accommodation on campus, and that its stated goals of advancing education and religion were incidental to this main purpose.
At this time, no appeal has been lodged.