: Promotion of commerce: a charitable purpose?

Promotion of commerce: a charitable purpose?

Penelope Swales

On 1 January 2014, the Charities Act 2013 (Cth) came into force, introducing a statutory definition of charity for federal tax purposes and replacing the Commonwealth’s reliance on over 400 years of common law when administering access to charitable tax concessions.

While the statutory definition of charity aims to create certainty and consistency at a federal level, state case law continues to push the boundaries of which organisations are considered charitable. In Chamber of Commerce and Industry of Western Australia (Inc) v Commissioner of State Revenue [2012] WASAT 146, the State Administrative Tribunal was asked to rule on whether promotion of commerce can be considered charitable for the purposes of the Pay­roll Tax Assessment Act 2002. President Chaney held that the Chamber of Commerce and Industry of Western Australia (‘CCI’) did indeed meet the criteria for ‘purposes beneficial to the community’ (ie, the fourth Pemsel head of charity). Currently in the Victorian Supreme Court, the Victorian Employers Chamber of Commerce (‘VECCI’) is making a similar bid for charitable state tax concessions.

The success of VECCI being declared a charity by the Victorian Supreme Court is likely to hinge on its ability to replicate CCI’s accepted arguments, including that it undertakes extensive advocacy around ‘core business issues such as industrial relations, occupational health and safety and workers compensation, economics, business policy, health and community, and education and training’ [at 50] and that it works for the benefit of all commerce and industry in the state, not just members.

In a failed opposition to CCI’s earlier claim, the WA Commissioner argued CCI’s main activity is the provision of services to members on a fee-for-service basis and that organisations with mixed purposes do not qualify for charitable status. Further, it was argued the benefit flowing to the community from such organisations as the CCI is too remote to be able to access charitable tax concessions. The case turned on whether the activities of CCI were beneficial to the broader economy or if benefit to the community only manifested through assistance given to individual businesses.

Ultimately, the flow-on effects to the broader community by CCI were held to be sufficient. President Chaney considered a number of cases that found promotion of industry and commerce to be charitable. He stated [at 97]: ‘In my view, CCI’s main purpose is charitable. ... [T]he materials before the Tribunal support the view that the driving force of CCI’s operations is the promotion of a strong business community in Western Australia. It is apparent that access to advice, information and services to strengthen individual businesses is seen to be an integral part of a successful business community. He added, [at 98] ‘[T]he focus on the policy role of the organisation as the key point of differentiation from other organisations which provide employment related services.’

It is by no means certain that the promotion of commerce would be considered a charitable purpose under the Commonwealth statutory definition, and the continued reliance on the common law when administering state based tax concessions highlights the potential for inconsistencies between how the states and Commonwealth define charity. Nonetheless, it is the WA precedent that the Supreme Court will be referencing in its upcoming determination as to whether VECCI is entitled to access tax concessions as a charity. Such inconsistencies have the potential to further complicate an already complex regime.

The outcome of the VECCI case is being awaited with interest.

PENELOPE SWALES is a PLT student at Justice Connect Victoria.

(2014) 39(1) AltLJ 61
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