The Buddhist Society of Western Australia Inc
13 January 2022
The dispute surrounded the Commissioner's revocation of his endorsement of the Dhammaloka Buddhist Centre Building Fund's status as a deductible gift recipient (DGR), and his subsequent disallowance of the Society's objection ('objection decision').
The Dhammaloka Buddhist Centre is the main teaching and administrative centre for the Buddhist Society of Western Australia ('the Society').
The Centre hosts a broad range of activities, including guided meditation, children's Dhamma classes, chanting, study groups, and online video teachings.
The Commissioner revoked his endorsement of the Fund's DGR status on the grounds that only the children's Dhamma classes constituted a 'school' activity. In classifying the other activities as 'non-school', they relied on factors outlined in Tax Ruling 2013/2 (TR 2013/2) and Australian Airlines. Because the children's Dhamma classes only represented 5% of the building's use, the Commissioner ultimately concluded that buildings were not being used as a school.
The Society sought to bring both an appeal against the objection decision under the Taxation Administration Act 1953 (Cth) (TAA) and an application for judicial review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR) in a single proceeding. The Commissioner opposed this, citing several procedural arguments including mutual inconsistency.
The Court allowed both causes of action to proceed as a matter of efficient case management.
The appeal failed for evidential reasons. The Society did not adduce any evidence beyond that which the Society had originally provided the Commissioner. The Society was therefore unable to discharge the burden of proving that the taxation decision should have been made differently, as is required by the TAA.
The principal question for the Court's consideration in the review was whether the Commissioner's interpretation of the word 'school' was consistent with law.
The Court analysed and affirmed a string of Australian authorities that set down the ordinary meaning of 'school' (Cromer Golf; Leeuwin; Australian Airlines). Their key findings were as follows.
First, the ordinary meaning of 'school' is any place where people come together for the purpose of being instructed in an area of knowledge or activity. It does not require that the instruction provided be 'regular, ongoing or systematic'.
Secondly, the factors in Australian Airlines and TR 2013/2 are not essential requirements of the ordinary meaning
These include:
These factors are relevant to, but not determinative of the question of whether an entity is a school. The absence of any of these factors will not disqualify an entity from being a school.
Thirdly, the ordinary meaning of 'school' does not require the course of education to be vocational as opposed to recreational. Entities providing instruction on so-called 'recreational' pursuits, such as ballet or drama, can properly be described as schools. Statements to the contrary in TR 2013/2 are inconsistent with Australian law.
Lastly, and more specifically to the question of DGR status for a school building fund (s30-25(1) Item 2.1.10 ITAA97), in determining whether a building is 'used, or to be used' as a school, regard must be had to:
This question is not to be determined by attributing percentage values to the time that a building is used for school and non-school activities.
The Commissioner relied on an incorrect definition of school. The objection decision was therefore made under an error of law. Accordingly, the Commissioner was required to decide the matter again, according to law.
The final hearing dealt with the Court's orders in the previous judgement related to the Commissioner's remaking of the objection decision, and to costs.
The society sought a direction restricting the material upon which the Commissioner could remake the decision ('Further Direction') to the information he had when making the original decision.
The Court declined to make the Further Direction. There is to be no fetter on the ordinary exercise of statutory powers given to the Commissioner by legislation. The Commissioner is entitled to use the same powers in remaking the objection decision as in their initial consideration of the objection.
The Commissioner has a statutory power to request further information when determining a tax objection. This cannot be removed or limited by the Court in ordering the Commissioner to remake their decision.
The Court held that it was immaterial that the power to request further information was not exercised in the initial decision-making process.
The Commissioner sought a reduced costs order in recognition of the Society's failure in one of the two causes of action.
It is an established principle that a party may be awarded a portion of its costs in situations where they win overall but fail in one or more causes of action or issues that they raise.
The Court rejected several of the Society's arguments made in an attempt to secure a complete costs order. These included:
The Court instead found that the evidential issue was a substantive one, and that there was no unreasonableness on the part of the Commissioner in raising it.
Ultimately, the Court awarded the Society two-thirds of its costs. This reflected their loss in a major limb of the proceeding, while still recognising their overall success.
Authors: Geoffrey Mann, Partner, Bronwyn Kirkwood, Counsel
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