Charity Payroll Tax exemptions – Chamber of Commerce and Industry of WA case

The Chamber of Commerce and Industry of Western Australia (“CCI”) applied for charity payroll tax exemptions under the Payroll Tax Assessment Act 2002 (WA) (“PTAA”) either as a public benevolent institution or a charitable institution. These submissions were both rejected by the Commissioner. CCI brought an appeal to the State Administrative Tribunal which had to decide whether the CCI was a “charitable body or organisation” within the meaning of s 41 of the PTAA, and therefore entitled to payroll tax exemptions.

In coming to a conclusion, the Tribunal applied Word Investments to determine that the Western Australian Chamber of Commerce was a “charitable body or organisation’ for the purposes of s41 of the PTAA because its main or dominant purpose was charitable. This was despite the Commissioner’s contention that activities carried out were for the benefit of private members and not the public at large.

In deciding whether CCI operated primarily for charitable purposes, the Tribunal followed and applied Word Investments, stating that “it is necessary to have regard to the main or dominant purpose (or to use the expression of the trial judge in Word Investments, the ‘institution’s essential object’) for which CCI is established and carried on. That involves an examination of its constitution, and of activities which it carries out under the constitution.”

In its submissions, CCI  described that its “central and dominant purpose” was “to ‘make it easier to do business’ through pursuing a competitive and responsible free enterprise economy” and “the charitable purpose of promotion of industry and commerce in Western Australia and Australia”.

The Tribunal found that the objects of CCI’s constitution, amended in 2001, supported this proposition.

In assessing CCI’s activities, it was shown that CCI engaged in ‘policy forums’ (such as problems employers faced with labour shortages), maintained specialist committees which advised and advocated the business industry, and provided a wide range of services for members on a fee-for-service basis. Amongst numerous others these services included running courses and events, publications and an online system to link buyer and suppliers for major Australian projects. From 2009 – 2011 the annual service fee income accrued approximately $80 million.

It was held that although the institution engaged in providing commercial services (with significant revenue), this was CCI’s means by which to achieve the end of pursuing and promotion a free enterprise and a strong business community in Western Australia. While the end did not fall under the first three limbs of Pemsel – for the relief of poverty, advancement of education or advancement of religion – CCI did fall under the fourth limb of the Pemsel as a “purpose beneficial to the community”.  

The subsidiary issues of payroll tax on all wages were referred back to the Commissioner in light of the finding that CCIWA was a charitable institution. The refund was to act retrospectively to cover the whole period for which the tax exemptions were sought.

Amending legislation in Western Australia has now been passed removing charities that “promote trade, industry or commerce” however the case operates to illustrate the application of Word Investments.

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