In Study and Prevention of Psychological Diseases Foundation v FCT [2015] FCA 1117, the Federal Court remitted this matter back to the AAT, to determine the date from which the taxpayer’s tax exempt endorsement as a charity should be revoked.
On being remitted, the AAT has now determined that the revocation should apply from 1 January 2005, which was the date that it was originally endorsed as tax exempt entity. It was also the date, from which, the AAT, at first instance, originally revoked the Foundation’s exempt status.
In again finding that this was the appropriate date from which to revoke the taxpayer’s tax exempt status, the AAT emphasised that despite the fact that taxpayer had complied with the ATO’s “Taxpayers’ Charter” and “Compliance Model” guidelines during the course of the audit (eg acting transparently and seeking appropriate expert advice), nevertheless the actual activities of the taxpayer did not coincide with its stated objects and did not fulfil the charitable purposes it asserted.
Accordingly, the AAT dismissed the taxpayer’s claim that the retrospective revocation of its tax exempt status as a charity was not appropriate or fair in the circumstances. Instead, it found that taking into account the taxpayer’s actual activities and financial affairs in the years in question, its effective date of revocation should be from when it was first endorsed as a charity – namely, 1 January 2005.
(Re The Study and Prevention of Psychological Diseases Foundation Incorporated and FCT [2017] AATA 377, AAT, File No: 2012/2088, Molloy DP, 27 March 2017.)
[LTN 60, 30/3/17]
Catchwords from Federal Court case (that ordered a rehearing)
ADMINISTRATIVE LAW – consideration of an appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) from a decision of the Tribunal affirming a decision of the Commissioner of Taxation to revoke the following endorsements of the applicant from the date of grant: as an entity exempt from income tax as a “charitable institution” having regard to Item 1.1 in the table in s 50-5 of the Income Tax Assessment Act 1997 (Cth) (the “1997 Act”); an endorsement under s 30125 of the 1997 Act of the applicant as a “deductible gift recipient” having regard to Item 1 in the table at s 3015 and Item 1.1.6 in the table at s 3020(1) of the 1997 Act; an endorsement as a “charitable institution” under s 1761(1) of A New Tax System (Goods and Services Tax) Act 1999 (Cth); an endorsement as a “health promotion charity” under s 123D(2) of the Fringe Benefits Tax Assessment Act 1986 (Cth) – consideration of the Tribunal’s approach to determining whether the applicant is a charitable institution – consideration of the principles governing that question – consideration of the methodological approach adopted by the Tribunal to determining that issue – consideration of whether the Tribunal fell into error of law in approach to identifying the questions to be addressed in determining whether the applicant was, under the legislation, “entitled” to the relevant endorsements