Taxation V Hunger Project Australia

Question: Discuss about theTaxationfor V Hunger Project Australia. Answer: Commissioner of Taxation V Hunger Project Australia (2014) FCAFC 69 Introduction The decision taken by the Federal court in the recent case of Hunger Project Australia is very important for the not for profit sectors and charity. The decision is important because it challenges the idea that it is important for an organization to provide direct relief and services in order to be considered as an institution for public benevolent. The status of Public benevolent Institution brings various types of benefits, particularly employees under the provision of the FBT and to the organization for deductible receipt of gifts. This case have provided opportunity to various organization that have not been recognized as PBI by the ATO because it does not provide direct relief (Saad 2014). Case Introduction/ Background The Hunger Project Australia is a business that is limited by guarantee. The objective of the company is to provide relief in sickness, poverty, helplessness and destitutions. In the developing world the work is primarily conducted. This organization is the part of the global project The Hunger Project. The HPA is engaged in wide range of activities but the most substantial activity carried out by them is that of raising funds. Though there are some activities carried out by them but it is considered as negligible (Hurley 2014). In this case, question before the Federal Court was to decide whether The Hunger Project be considered as a Public Benevolent institution. It was argued by the ATO that the HPA could not be regarded as PBI because there is lack of directness in the activity of the HPA. The argument provided by the Hunger Project Australia was that the requirement of directness was wrongfully read in the context of Public Benevolent institution. There is no definition provided in the legislation therefore without the proper basis of law if an organization raises funds for chartable purpose then that organization can be regarded as PBI (Friezer and Wu 2014). Legislations In this case, various legislations have been referred the list of which is below: Estate Duty Assessment Act 1914-1928; Fringe benefit Tax Assessment Act 1986; Income Tax Assessment Act 1997; Pay roll Tax Act 1971; and Tax Administration Act 1953; Section Breached The section 57A (1) of the FBT Act, states that if the employer is a public benevolent institution as per section 123C (1) or (5). Then in such case, the benefit provided by the employer to employee is an exempted benefit. The section 57A (2) further provides that the employer should be the government body and the duty of the employees should be in connection with the public hospital (Naik and Kohn 2013). The section 57A (3) states that in this case the benefit provided by the employer to the employee is an exempted benefit. The condition is that the employer should be a public hospital or the employer is engaged in the service related to public ambulance (Murray and Martin 2015). The section 123C (1) of the FBTA Act provides that the commissioner is obliged to endorse the entity as a Public Benevolent Institution if the body has applied for the endorsement. The section 123C (2) states that an entity can be endorsed if it is a public benevolent institution that has a Australian Business Number (ABN) and the employer is not engaged in the step two of as provided in the method statement (Bell 2013). In this case the issue is to determine if the entity is a public benevolent institution as per section 123C (2) of the FBTA Act. It should be not that there is no definition of the public benevolent institution is provided in the FBTA Act (Sharkey and Murray 2015). Analysis of the Decision The discussion above shows that the issue before the court is to determine if the entity can be regarded as a public benevolent institution if it is not directly related in providing relief to those in needs. The court has analyzed the meaning of the term PBI in the different statutory backgrounds (Marks 2013). The principal authorities reflected by the court in this case are: Perpetual Trustee Co Ltd V Federal Commissioner of Taxation (1931); Australian Council of Social Service Inc V Commissioner of Payroll tax (NSW); Commissioner of Taxation V Royal Society for Prevention of Cruelty to Animals; and Commissioner of Pay roll Tax V Cairnmillar Institute (1990); The court found that the authorities mentioned above supports the proposition that ordinary meaning should be given to the expression Public benevolent institutions. The ordinary meaning is not clear whether the requirement includes that the relief is to be provided directly by the entity. The court was expressing the meaning of PBI on the argument provided by the commissioner that the entities should provide relief directly to be considered as a PBI (Hurley 2014). The argument provided by the commissioner includes history of the statutory expression and the consideration of the authority. The commissioner on appeal provided the same argument but the court was not satisfied with the argument that an institution cannot be a PBI if it does not provide relief directly. The court on the other hand established that there is at least one primary reason for refusing the obligation of direct relief by the company. The good reason was found in the judgment of the case of the High Court in Federal Commissioner of Taxation V Word investment (2008). In the circumstance of Word Investments, the main concern is to determine if the entity in question is a charitable institution (Norbury 2014). In this, case the entity accepted the deposit from the people for that it has paid low or no interest. These funds were then used by the entity for commercial activity for making profits. The company to perform charitable activities in overseas used the profits. The High court rejected the argument of the commissioner that the organization was not an institution for charity (Hedlund 2016). The court reasoned that it would not be proper to distinguish between the companies based on whether the company is paying other company for charity or the company has other division t hat is engaged in the charitable activity. The court in the situation of Word Investments found that the argument of the commissioner not correct and rejected the appeal of the commissioner. The commissioners submissions related to the statutory context are presumed to be at worst misconceived and best unpersuasive. Under section 41 the reliance on the subsection 8 (5) has been seen to be difficult in terms of following a different tax regime. It has been further seen to be difficult to observe the terms different way of acting with varying tax regime (Saad 2014). This is directly related to the fact which has been stated in the year 1928 and is further seen to be considered for the exempt from the estate duty, inter alia, a public benevolent institution and a fund established and maintained for providing money for the use of such institutions. It has does not take into consideration the general understanding of a public compassionate institutions for the last eighty years. In the terms stated under s 8(5) of the EDA is not seen to be providing a relevant contextual consideration under the FBTA Act (Edelman and Bant 2016). Under the sec 42, it has been stated that the primary judge erred to dismiss the different consideration under the 8(5) of theEDAAct. The honor was rightly considered to conclude on the consequence in the apparent legislations provided under 8(5) of theEDAAct (Hurley 2014). This was taken into consideration to confirm that the handouts from a fund such as trust find are seen to be structurally not have been considered to institution. This is further exempted from estate dutyconsiderations. A fund is considered to be separate from a body set up to manage the fund. Since, a fund shall not be considered in ordinary circumstance (McGregor-Lowndes 2015). The primary judgment was seen to be concluding that the he had no opinion on the feature of the ordinary meaning of a public benevolent institution. The various types of the terms which has been considered under the separate terms of the 57A(3)(b) of the FBTA Act is also seen to be providing no assistance for the judgment related to the c onsiderations stating whether an organization which principally raises moneys for munificent resolves can be a public benevolent institution. It is unclear how the legislature is chosen under the s57A (3) (b)and the several exemptions which are seen to be maintained for the employers. It cannot be inferred clearly whether an entity which is seen to be raising resources to be utilized by separate entity for the respite of hunger, which cannot be a public benevolent institution. In the section 44 the advancing exercise for the administration for the analogous extension in s 57A (1) is not considered (Sharkey and Murray 2015). The different type of the consideration for the analogies, it might be concluded that these extension was not crucial since an institution, which is mainly involved in fund raising, can in any event act as a public benevolent institution (Barker et al. 2017). The judgment of the court was appropriate because it has correctly rejected the contention of the court in relative to the meaning of the term public benevolent institution. The court has found no good reason that entity should dispense relief directly to be regarded as the PBI. Conclusion Based on the above discussion it can be said that there cannot be single definition or ordinary meaning of the Public Benevolent Institution. The PBI are the institutions that are engaged in the activity of providing relief in poverty and distress. The meaning of the term PBI is broad enough to encompass institutions that are providing relief to developing countries. Therefore, it can be said that the institution that are not directly engaged in the relief can also be regarded as PBI. It was concluded by the court that based on the facts it can be said that the HPA is a PBI. Reference Barker, K., Fairweather, K. and Grantham, R. eds., 2017.Private Law in the 21st Century. Bloomsbury Publishing. Bell, E., 2013. Judicial perspectives on statutory interpretation.Commonwealth Law Bulletin,39(2), pp.245-281. Edelman, J. and Bant, E., 2016.Unjust Enrichment. Bloomsbury Publishing. Friezer, M. and Wu, L., 2014. Taxation: Fund-raising can be enough: Not-for-profits as public benevolent institutions.LSJ: Law Society of NSW Journal,1(4), p.68. Hedlund, R., 2016.Conscience and Unconscionability in English Equity(Doctoral dissertation, University of York). Hurley, T., 2014. Case notes: The latest from the high and federal courts.LSJ: Law Society of NSW Journal,1(3), p.84. Hurley, T., 2014. Thomas Hurley case notes.Brief,41(7), p.43. Marks, D.W., 2013. 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