Northern NSW Football Ltd v Chief Commissioner of State Revenue  NSWCA 51
|Date of judgement||15 March 2011||Proceeding No.||2010/132630|
|Judge(s)||Allsop P, Handley AJA, Gzell J|
|Court or Tribunal||NSW Court of Appeal|
|Legislation cited||Administrative Decisions Tribunal Act 1997
Duties Act 1997, ss 259 (1)(c), 267(2)
Payroll Tax Act 2007, s 48(1)(c)
Statute of Charitable Uses (1601) 43 Elizabeth 1
|Catchwords||Payroll Tax – exemption for a non-profit organisation having as its sole or dominant purpose a charitable purpose – whether a non-profit amateur sporting association such as the appellant having as its purpose the promotion and management of football in a particular geographic area falls within the exemption – consideration of the law of charities in the context of payroll tax
TAXATION - payroll tax - exemption - non-profit organisation - whether dominant charitable purpose - promotion of soccer - not charitable purpose
CHARITY - promotion of sport - not charitable
|Cases cited||Australian Council of Social Service Inc v Com of Pay-roll Tax (NSW) (1985) 1 NSWLR 567
AYSA Amateur Youth Soccer Association v Canada (2007) 287 DLR (4th) 4
Commissioners for special purposes of Income Tax v Pemsel  AC 531
Commissioner of Taxation v Word Investments Ltd  HCA 55; (2008) 236 CLR 204
Federal Commissioner of Taxation v Launceston Legacy 87 ATC 4,635
Incorporated Council of Law Reporting (Qld) v Federal Commissioner of Taxation  HCA 44; (1967-1971) 125 CLR 659
Perpetual Trustee Co v Federal Commissioner of Taxation (1931) 45 CLR 224
Re Laidlaw Foundation (1984) 13 DLR (4th) 491
Re Nottage  2 Ch 649
Royal National Agricultural and Industrial Association v Chester (1974) 3 ALR 486, 48 ALJR 304
In 2009, the appellant in these proceedings, Northern NSW Football Ltd (NNSWF) succeeded in an application to the ADT for review of a decision of the Chief Commissioner of State Revenue (Chief Commissioner) that it was not exempt from payroll tax. The Tribunal held that the dominant purpose of NNSWF was benevolent and/or charitable. Consequently, it was exempt from payroll tax under s 48 of the Payroll Tax Act 2007; and exempt from duties under ss 259(1)(c) and 276(2) of the Duties Act 1997.
On appeal by the Chief Commissioner, the Appeal Panel of the ADT held that the dominant purpose of the NNSWF was the promotion of football, and it was not exempt from payroll tax. The determination of whether the NNSWF satisfied the requirements for exemption under ss. 259(1)(c) and 267(2) of the Duties Act 1997 (NSW) was referred back to the ADT.
The Court of Appeal affirmed the decision of the Appeal Panel.
The main questions before the ADT, the Appeal Panel and the Court of Appeal were whether NNSWF was entitled to exemptions from payroll tax and duties by virtue of being a non-profit organisation with a "charitable" purpose under s.48(1)(c) of the Payroll Tax Act 2007 (NSW).
Judicial Member Hole found for the NNSWF, holding that the dominant purpose of the entity (as per the requirement of the legislation) was "to provide and promote football as an undertaking which benefits communities, the benefit being the improvement in the health and general wellbeing of participants…". which was ultimately a charitable purpose.
ADT Appeal Panel Decision
The Chief Commissioner appealed the ADT decision primarily on two grounds:
First, that the Tribunal, by following the reasoning of the Canadian decision of Re Laidlaw, had ignored Australian High Court and Supreme Court authority which establish the general rule that sporting organisations are, without more (such as being part of an educational institution), not charitable.
Second, the Tribunal had, when looking to the purpose of the NNSWF, misapplied the requirement to look to its actual activities as opposed to its objects stated in its Constitution. In this regard, the actual purpose of the NNSWF was simply to promote and manage football throughout Northern NSW. The fact that an incidental outcome is the promotion of health does not detract from the dominant, or overarching, purpose of promoting football.
NNSWF argued the Tribunal was not bound by the Australian decisions as they could be distinguished from the present facts while, at the same time, the principle that a gift for sport is not charitable had, through generalisation, wrongly emerged. NNSWF also argued that, as per the objects in NNSWF's constitution, the actual activities of the organisation were charitable, being the promotion of health and sport.
The Appeal Panel found that the dominant purpose of the NNSWF was the promotion of football "which incidentally has the attribute of being beneficial to the community", and it could not be classed as charitable, agreeing that the Tribunal and Appeal Panel are bound by Australian decisions establishing the principle that "to encourage sport is not charitable".
The proceedings were remitted back to the Tribunal for determination of whether the NNSWF satisfies the requirements of ss. 259(1)(c) and 267(2) of the Duties Act 1997 (NSW), those provisions involving a slightly different test.
Court of Appeal Decision
In its appeal to the New South Wales Court of Appeal, NNSWF submitted that its dominant purpose should be ascertained by reference only to its constitutional objects and without any significant reference to its activities because the relevant inquiry is limited to the purpose of the organisation and not its actions. However, the Court of Appeal stated that is inconsistent with what was said by the majority in Commissioner of Taxation v Word Investments Ltd  HCA 55.
The appeal was dismissed. The Court unanimously held that:
The promotion of a healthy sport, such as soccer, although beneficial to the participants and the public is not a charitable purpose: Re Nottage  2 Ch 649 CA and The Royal National Agricultural and Industrial Association v Chester (1974) 48 ALJR 304 followed; and
The promotion of a sport was not a benevolent purpose: Australian Council of Social Service Inc v Commissioner of Pay-roll Tax (NSW) (1985) 1 NSWLR 567 applied.
Links to decisions
- Northern NSW Football Ltd v Chief Commissioner of State Revenue  NSWADT 113
- Chief Commissioner of State Revenue v Northern NSW Football Ltd (RD)  NSWADTAP 28
- Northern NSW Football Ltd v Chief Commissioner of State Revenue  NSWCA 51