The AAT has affirmed the Commissioner’s decision that The Study and Prevention of Psychological Diseases Foundation Incorporated had not met the requirements for endorsement as an income tax exempt charity under Subdiv 50-B of the ITAA 1997.
The Foundation was incorporated in 2005 and had previously been granted tax-exempt status under s 50-110, was endorsed as a DGR on the basis that it was a health promotion charity under s 30-20 of the ITAA 1997, and was a charitable institution for GST purposes, and was a health promotion charity for FBT purposes. The ATO reviewed the Foundation’s endorsement as a tax-exempt charity and advised it in 2011 that it had not satisfied the requirements for the above endorsements. The Foundation sought AAT review.
The Tribunal said the Foundation’s members were described as both the researchers and the “guinea pigs”. They are not required to have any qualifications in psychology or social science. The activities of the members are said to be analysed over the cycle of a 24 hour day, 7 days a week, and were claimed to be research. The Tribunal said there was no evidence of any of the Foundation’s research or findings being published in the traditional sense. Nothing had made its way into, or even been submitted to, any medical or other journal. The Foundation’s publications were for internal purposes, the AAT said.
The Tribunal did not accept that the Foundation’s activities were research, but were ” predominately the ordinary activities of life”. The AAT concluded that it was not at any relevant time a charitable institution. The Tribunal was of the view that the Foundation’s activities, which it called research, were “predominately its members’ ordinary activities of life, carried out for their own benefit”. Its expenditure, in general, the AAT said, was for the personal benefit of its members.
The Tribunal considered the Foundation was not an institution in the relevant sense.
It also found it was not a health promotion charity and that its principal activity was not to promote the prevention or the control of diseases in human beings.
The Tribunal therefore held the Foundation was not entitled to any of the endorsements that had been granted to it.
(AAT Case [2013] AATA 919, Re The Study and Prevention of Psychological Diseases Foundation Incorporated and FCT, AAT, Molloy DP, AAT Ref: 2012/2088, 20 December 2013.)
[LTN 3, 7/1/14]