The AAT has held that Home Health Pty Ltd (Home Health) was not a “public benevolent institution” for the purposes of endorsement as an income tax exempt entity under Div 50 of the ITAA 1997.
Home Health is a proprietary limited company that was incorporated on 9 June 1997 and trades under the name “Tender Care”. The AAT noted that one person was presently the sole director, and company secretary and a shareholder of Home Health. The organisation claimed it was a service provider of a holistic range of non-clinical, community mental health services.
The Commissioner found that: (i) Home Health was established for needs that require benevolent relief, (ii) relieves needs by directly providing services to people, (iii) has a dominant purpose of providing direct benevolent relief, but was not an “institution”.
Home Health sought a review of the Commissioner’s objection decision which disallowed in full its objection against the Commissioner’s decision in July 2012 to refuse to endorse Home Health as a “public benevolent institution” (and, therefore, a “charitable institution”) under item 1.1 of the table in s 50-5 of the ITAA 1997, on the basis that Home Health was not an “institution”. The consequence was that it was not “entitled to be endorsed” (pursuant to s 50-110) by the Commissioner (under s 50-105) as an income tax exempt entity.
After reviewing the evidence, the AAT was of the view that, due to its “small and exclusive membership” and the fact that it was “controlled” by one man, who is also one of only 2 members, Home Health could not be described as an “institution” for the purposes of the expression “public benevolent institution”. That is, while the Tribunal considered that, based on the facts and evidence before it, Home Health was both “public” and “benevolent”, it was not an “institution”. Consequently, the Tribunal found that Home Health failed to satisfy the meaning of all 3 terms within the composite phrase “public benevolent institution” and accordingly, was not “entitled to endorsement” as an income tax exempt entity (and “charitable institution”) under item 1.1 of the table in s 50-5.
(AAT Case [2013] AATA 458, Re Home Health Pty Ltd and FCT, AAT, Walsh SM, Ref No: 2012/4823, 1 July 2013.)
[LTN 127, 4/7/13]