FEDERAL COURT OF AUSTRALIA The Hunger Project Australia v Commissioner of Taxation [2013] FCA 693 Citation: The Hunger Project Australia v Commissioner of Taxation [2013] FCA 693 Parties: THE HUNGER PROJECT AUSTRALIA ACN 002 569 271 v COMMISSIONER OF TAXATION File number: NSD 1797 of 2011 Judge: PERRAM J Date of judgment: 17 July 2013 Catchwords: TAXATION – Charities – Characterisation of organisations as 'public benevolent institution' – Organisation concerned with the relief of hunger – Principal activity fund raising – Whether activities are the performance of 'directly charitable activities' – Whether charitable activities must be directly performed – Fringe Benefits Tax Assessment Act 1986 (Cth) s 57A(1) TAXATION – Fringe Benefits Tax – Exemption from fringe benefits tax for public benevolent institutions – Meaning of 'public benevolent institution' WORDS AND PHRASES – "Public Benevolent Institution" – Fringe Benefits Tax Assessment Act 1986 (Cth) Legislation: Estate Duty Assessment Act 1914 (Cth) s 8(5) Estate Duty Assessment Act 1928 (Cth) s 5 Estate Duty Assessment Act 1957 (Cth) s 5 Fringe Benefits Tax Assessment Act 1986 (Cth) ss 57A, 123C, 123D Sales Tax (Exemptions and Classifications) Act 1935 (Cth) Companies (New South Wales) Code 1981 (NSW) Pay-roll Tax Act 1971 (NSW) Charitable Uses Act 1601 (Imp) 43 Eliz 1 Commonwealth, Parliamentary Debates, House of Representatives, 14 September 1928, 6848-6849 (Dr Earl Page) Commonwealth, Parliamentary Debates, House of Representatives, 5 November 1957, 1812-1813 (Sir Arthur Fadden) Explanatory Memorandum, Taxation Laws Amendment Bill (No 2) 2001 (Cth) Cases cited: Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539 considered Australian Council of Social Service Inc v Commissioner of Pay-roll Tax (NSW) (1982) 13 ATR 290 cited Australian Council of Social Service Inc v Commissioner of Pay-roll Tax (1985) 1 NSWLR 567 followed Chesterman v Commissioner of Taxation (1925) 37 CLR 317 cited Commissioner of Taxation (Cth) v Re Royal Society for Prevention of Cruelty to Animals [1993] 1 Qd R 571 cited Commissioner of Taxation v Word Investments (2008) 236 CLR 204 cited Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531 cited Mines Rescue Board (NSW) v Commissioner of Taxation (2000) 44 ATR 107 cited Minister of National Revenue v Trusts and Guarantee Co [1940] AC 138 cited Northern Land Council v Commissioner of Taxes (2002) 171 FLR 255 cited Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297 cited Pay-roll Tax, Commissioner of (Vic) v Cairnmillar Institute (1990) 21 ATR 665 cited Perpetual Trustee Co v Federal Commissioner of Taxation (1931) 45 CLR 224 considered Re Melbourne Western Region Commission Incorporated v Commissioner of Taxation [1991] AATA 49 cited Tangentyere Council Inc v Commissioner of Taxes (1990) 99 FLR 363 cited Trustees of Allport Bequest v Commissioners of Taxation (Cth) (1988) 19 ATR 1335 cited Trustees of the Indigenous Barristers' Trust v Commissioner of Taxation (2002) 127 FCR 63 cited Yates v University College, London (1875) LR 7 HL 438 cited Date of hearing: 5 April 2013 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 128 Counsel for the Applicant: Mr J Hmelnitsky Solicitor for the Applicant: Clayton Utz Counsel for the Respondent: Mr D F C Thomas Solicitor for the Respondent: Australian Tax Office Legal Services Branch IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1797 of 2011 BETWEEN: THE HUNGER PROJECT AUSTRALIA ACN 002 569 271 Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: PERRAM J DATE OF ORDER: 17 JULY 2013 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal be allowed. 2. The Commissioner's objection decision dated 16 August 2011 be set aside. 3. The applicant's objection dated 12 April 2011 be allowed in full. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1797 of 2011 BETWEEN: THE HUNGER PROJECT AUSTRALIA ACN 002 569 271 Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: PERRAM J DATE: 17 JULY 2013 PLACE: SYDNEY REASONS FOR JUDGMENT Summary 1 The question in this case is whether the applicant is a 'public benevolent institution' within the meaning of s 57A(1) of the Fringe Benefits Tax Assessment Act 1986 (Cth) ('the FBTA Act'). If it is, then the provision of a benefit to one of its employees will be an exempt benefit for the purposes of the legislation and not brought to tax. 2 The applicant is part of a worldwide collaboration of organisations operating under the name 'The Hunger Project' whose principal aim is the relief of hunger. It is not in dispute that the applicant's purposes are charitable. Although there is some dispute about this, the applicant is principally a fund raising entity and it is other members of The Hunger Project in the developing world which perform the charitable activities directed at the relief of hunger. It is the quality of the applicant as a fund raiser rather than as a direct performer of charitable works which give rise to the two principal issues in the case which are: (i) to what extent does the applicant directly perform charitable activities; and (ii) can an organisation which carries out charitable activities indirectly as a fund raiser qualify as a 'public benevolent institution' within the meaning of s 57A(1) of the FBTA Act. 3 For the reasons which follow, I do not accept that the applicant pursues the end of relieving hunger in any substantive way beyond fund raising. Although there was some limited evidence that it directly carried on some activities of its own in the developing world, these were isolated in nature and, in any event, largely collateral to its principal activity of raising funds. However, this conclusion is of no moment as I do not accept the Commissioner's contention that the applicant cannot be a public benevolent institution unless it engages directly in charitable activities itself. 1. The Hunger Project 4 'The Global Hunger Project' was founded in America in 1977 by, amongst others, the late Mr John Denver and now operates under the name of 'The Hunger Project' from offices at Union Square in New York. It is a network constituted by entities operating in a number of countries around the world. The member entities are either in countries in the developing world ('program countries') or the developed world ('partner countries'). The network is administered by the global office in New York. The Hunger Project seeks a sustainable end to world hunger through a methodology based on principles of self-reliance, gender equality and participatory local governance. The global office, which is funded from its United States operations, co-ordinates the raising of funds in partner countries with the subsequent expenditure of those funds on hunger relief programs in program countries. There are individual 'The Hunger Project' entities in the nine partner countries and the applicant, as the Australian entity, is one of those nine. The relationship between the entities in the partner countries is governed by an agreement, called the Global Chartering Agreement, which was made in or about June 1986. 5 As to formality, the applicant is a company limited by guarantee originally incorporated as such under the former Companies (New South Wales) Code 1981 (NSW). Clause 2(a) of its Memorandum of Association ('the Memorandum') demonstrates that it is a not-for-profit company whose exclusive object is: The relief of poverty, sickness, suffering, distress, destitution and helplessness with a particular emphasis on directly aiding and developing those suffering from chronic and persistent hunger in certified developing countries as approved by the Australian Minister for Foreign Affairs from time to time. The Hunger Project Australia will work towards the sustainable end of hunger by identifying what is missing in achieving he [sic] goal of ending hunger and creating strategic initiates to provide it. 6 It has other objects but these exist, according to cl 2(a), 'solely for the purpose of carrying out' the object set out above. These subordinate objects include the soliciting of donations (cl 2(p)), the raising of funds (cl 2(d)) for the purpose of making donations for charitable purposes (cl 2(b)) and co-operating with other entities having similar objects (cl 2(c)). Clause 3 of the Memorandum prohibits the distribution of money to members or directors so that the not-for-profit nature of the applicant is structurally ensured. 7 As a company, the applicant is administered by a board of directors. The board consists of prominent Australian business people, philanthropists and consultants. One of its members is also its chief executive officer, a Ms Catherine Burke. The day to day work of the applicant is conducted under her direction by four members of staff although in the relevant years there were only three. These staff work on the three broad activities of raising funds in Australia, co-operating with other partner countries to support programs in developing countries and involvement in the implementation of these programs through co-operation with other Hunger Project entities in program countries. 8 Of these activities, it is tolerably clear that the most substantial is fund raising. Ms Burke gave evidence that during the relevant years approximately 70% of her duties related to raising funds. She explained that in recent years the applicant had been able to raise between $1.6 million and $2.5 million per year depending on economic circumstances. Because it is of some moment for another part of these reasons, it is also to be noted that the fund raising so conducted fell into two distinct categories. The first kind of funds raised were called 'unrestricted funds' because the money donated could be used for any purpose within The Hunger Project; the second, which were called 'restricted,' were designated by an individual donor either for expenditure in a particular program country or, more proscriptively, on particular activities in a specified program country. 9 The finance manager of the applicant, a Ms Annalees Jeffries, also gave evidence about her role and this included, as might naturally be expected, controlling the allocation and expenditure of funds. I do not know the precise functions performed by the remaining members of staff but I infer, given the sums raised and the time spent fund raising by Ms Burke, that they were likely principally to be involved in fund raising activities too. There was evidence, which I accept, that the three staff members would meet weekly to determine the strategic direction of the applicant. 10 There is little doubt that the applicant is involved in the process by which The Hunger Project formulates its international strategies. As a whole, the organisation is administered by a global board whose members are selected from a variety of sources. At the moment, the applicant does not have a representative on the global board. There is also another leadership group known as the Leadership Team. The applicant is not currently a member of this team either, however, Ms Burke attends quarterly telephone conferences with the Leadership Team enabling regular contact with the managing committee. It does have a voice in the global affairs of the organisation through two other routes. It is a member of the Partner Country Advisory Council ('the PCAC') which meets at least twice per year to facilitate communication between the partner countries and the global board. In addition to the PCAC, Ms Burke also has a voice in the global affairs of the organisation by attending the annual meeting of global staff in New York. That meeting reviews the activities of the previous year and formulates strategies. 11 The conclusion I would reach on the basis of this evidence is that the applicant is involved, although not in a central way, with some aspects of the strategic decision making of the global organisation. 12 Its fund raising activities in Australia take place on an independent basis. The applicant's finance manager explained in her evidence the process by which the applicant's fund raising activities and fund commitment decisions were reached. In the last quarter of each year, the global office requests each of the partner countries (including the applicant in Australia) to provide an indication of the funds which they expect to raise in the following year, together with a break down of which of those funds will be unrestricted (i.e. available for general expenditure in The Hunger Project's global operation) and which are restricted (i.e. designated by the relevant donor for a particular nominated project). The finance manager, with the assistance of the chief executive officer, then provides that estimate to the global office of the organisation. This estimate is also used by the board of the applicant to order its own affairs. 13 In parallel with this process of fund raising in the partner countries, there takes place in the program countries a process of budget preparation. These budgets contain indications of what the entities in the program countries propose to spend and these are submitted to the global office. 14 These budgets are then processed and some form of individual budget appears to be returned from the global office to each partner country entity. The applicant exercises actual decision-making power with respect to each funding decision, that is to say, its implementation of the global office's budget is neither blind nor unthinking. Examples were in evidence of situations in which the applicant had queried some aspects of the proposed budgets. 15 The actual process by which funds were dispersed was reasonably straightforward. The global office would send a request for funding to a particular partner country for a specified purpose in an identified project country. Such a request would usually only be made in respect of a project appearing in an already approved budget. The request would indicate whether the funds are required on a restricted or unrestricted basis. Following this, the transfer of funds to the program country entity is approved by the applicant and the funds directly disbursed by it. The board of the applicant, in a manner consistent with the way in which the budgets are prepared, retains control of this process and, on occasion, refuses requests for transfers of funds. This occurred on at least one occasion in 2012 in relation to a request by a Hunger Project entity in Mexico. 16 In the 2009 year, the applicant provided $1,452,127.06 to program countries in the manner described above. A similar amount was involved in the 2010 year. 17 In addition to the above fund raising activities, there was also evidence of the applicant's ad hoc involvement in various programs run by The Hunger Project in program countries. As I understood it, these were six in number: (i) The Hunger Project Bangladesh 18 Ms Burke gave evidence that she and one of the applicant's board members, Mr Michael Rennie, were working together to arrange a review of the impact of The Hunger Project in Bangladesh. Such a review had previously been conducted on a pro bono basis by McKinsey & Co in 2009 in relation to Uganda. In 2011, the Executive Vice President of The Hunger Project wrote to Ms Burke and Mr Rennie enclosing the Ugandan impact assessment materials from the 2009 review and seeking Ms Burke's thoughts on a similar study for Bangladesh. 19 Arranging for McKinsey & Co to carry out an impact assessment of The Hunger Project Bangladesh does not involve the performance of direct charitable activities by the applicant, although obviously such reviews are likely in the long term to have beneficial consequences for the conduct of the operations in Bangladesh. (ii) The Hunger Project Uganda 20 Ms Burke and Mr Rennie had, in fact, also arranged for the McKinsey & Co study for Uganda. A team of consultants spent three weeks in Uganda in 2008 and produced an assessment impact report in early 2009. Ms Burke did not suggest, and I do not conclude, that either she or Mr Rennie took part in that review process themselves. What I apprehended from her evidence was that she and Mr Rennie were the ones who had organised for McKinsey & Co to conduct the review. Again, it seems to me that the correct characterisation of these activities is that they do not involve the performance of direct charitable works. (iii) The Hunger Project Malawi 21 One of the applicant's current directors, a Ms Deborah Kwasnicki, volunteered to work in the program country office in Malawi and in the 'epicentres' in that country. I interpolate that an 'epicentre' is a building constructed relatively close to several villages and provides services such as a health facility, a food bank, a microcredit office, a community meeting hall, a library, a food processing room and educational facilities. 22 The terms of Ms Kwasnicki's letter of appointment of 6 July 2011 were in evidence. That letter made clear that the appointment was a voluntary one and that there would be no remuneration for her efforts. It also provided by clauses 1 and 2 as follows: 1. Background The placement will involving supporting the office and project team in Malawi in areas agreed to by the country director Mr Rolands Kaotcha and THPA CEO Cathy Burke. The overall aim is to provide Australian expertise in, and not limited to, communications (both internal and external) and reporting. You will be required to work both in the Malawi office as well as in the epicentres as required. The reporting task will cover both the needs communities have to evaluate their own progress as well as how this work gets reported back to Australia. As discussed with you, there is a chance that you will be asked to go to Uganda to do similar with the team there. This will be determined by THPA CEO at a later date. 2. Placement Description You will be THPA's agent to provide expertise and training to relevant stake holders at THP Malawi, in respect to communications, reporting and other duties as required. You will send a report to THPA each month outlining progress to date and will have regular skype calls with THPA CEO during your placement. 23 It seems that the aim of Ms Kwasnicki's travels to Malawi was to provide expertise on communications and reporting. In that regard, clause 2 made clear that for the purpose of imparting the training, she would be the applicant's agent. 24 I do not think that Ms Kwasnicki's trip to Malawi has the consequence that the applicant was itself involved in the direct performance of charitable works. Insofar as Ms Kwasnicki represented the applicant, she did so only in relation to providing expertise and training on communications and reporting. It is true that clause 2 also referred to 'and other duties as required' but there was no evidence to indicate that Ms Kwasnicki had been required to undertake duties whose performance could properly be characterised as involving the active provision of charitable works. This is different to the seed capital monitoring activities of Mr Massy-Greene, discussed below, because Ms Kwasnicki's activities were within other Hunger Project entities, rather than with those people the subject of the charitable activities. (iv) The Hunger Project Malawi – The Champiti Epicentre 25 Ms Burke gave evidence that one of the applicant's directors, Mr Roger Massy-Greene, had visited the Champiti Epicentre in Malawi in June 2009 and prepared a first hand report for the applicant. Mr Massy-Greene is also the chairperson of the Eureka Benevolent Foundation (EBF) which is a charitable fund that supports social justice and humanitarian causes. The report suggests it was prepared for EBF and not the applicant (being entitled 'Visit to Champiti Epicentre Report to EBF on visit to Champiti, 9 June 2010'). On the other hand, the Champiti Epicentre is conducted by The Hunger Project Malawi. In his report Mr Massy-Greene said at page 2: The purpose of the visit was to assess progress at Champiti and determine how effectively Eureka Benevolent Foundation's (EBF) financial support for the Hunger Project was being spent. The answer is resoundingly positive… (references omitted) 26 In any event, the terms of the report – which I will not set out – make reasonably clear that Mr Massy-Greene's activities were limited to a very useful and interesting report on the effects of micro financing on communities with near-subsistence farming techniques in Africa. 27 I would not regard the activities undertaken by Mr Massy-Greene on 9 June 2010 at the Champiti Epicentre as involving the direct performance of charitable works, even if they had been done for the applicant. This is simply because Mr Massy-Greene was reporting on charitable works carried out by others. 28 Ms Burke, however, also gave evidence that Mr Massy-Greene had been involved in introducing 'seed capital monitoring for agricultural inputs for a trial' at the Champiti Epicentre. 29 What does this mean? At page 12 of his original report Mr Massy-Greene had recommended that EBF propose to The Hunger Project a further grant of up to $50,000 for 'increased capitalisation of the Champiti Farm Inputs Credit and micro-credit programs'. He suggested that the provision of such support should, however, be subject to a condition that there should be a monitoring program to be agreed between The Hunger Project and EBF which was in turn, to have community support in exchange for extra funding. This proposal appears to have its genesis in an observation at page 6 of the report in the following terms: There are some issues to consider, though. One is whether an increase in the availability of credit would affect the current 100% repayment rate. Another is whether the community could manage the probity risks attached to the larger amount of money in circulation. Champiti already has surplus grain this year (about 200 bags), so all further increases in repayments would need to be sold, leading to considerable amounts of cash being earned by the Food Bank. Whether a community used to living at near subsistence levels could manage this would need to be carefully considered. This risk could be ameliorated, at least initially, by THP supervision. 30 I would infer, although it is not totally clear, that the activities Ms Burke says Mr Massy-Greene engaged in 'in introducing additional seed capital monitoring for agricultural inputs' was the activity proposed in more detail in his report. 31 Two questions then arise. First, whether such an activity can be properly characterised as a charitable work. Secondly, whether, if so, it was being carried on by the applicant. As to the first question, I would accept that Mr Massy-Greene's activities partook of the nature of charitable work. His were not actions which promoted or might assist in the provision of charitable works by others. The increase in capital to the Food Bank and micro financing structure erected a systemic risk arising from the problem that subsistence or near subsistence farmers might have no experience in handling excess capital (and inferentially the probity risk accompanying that inexperience). Without some system, in effect, to ensure by monitoring the integrity of the system, the venture might well fail. This has the consequence that Mr Massy-Greene's activities were not ancillary to the provision of the charitable work; they were central to it. 32 More difficult is the question of who Mr Massy-Greene was representing when performing these charitable works. Ms Burke says that the applicant 'was involved' in this activity. 33 As I have said, it is tolerably clear that the report was prepared for EBF and not for the applicant. It is expressed to be a report 'to EBF' and it concludes with the recommendations which are plainly made to EBF (for example, 'EBF should consider proposing to THP a further grant of up $50,000…'). However, the monitoring program suggested by Mr Massy-Greene in the report was contemplated to be operated (should the recommendation be accepted) by 'THP': Any such grant should be conditional on measures including agreement with THP that: the monies will flow to Champiti based on an agreed schedule of amounts and timing; THP will; ○ devise and implement a monitoring program to be agreed with EBF; … 34 'THP' could refer to the entity operating in Malawi or the applicant in Australia. However, read as a whole it seems to me that it is more likely that the applicant was the intended reference. So much flows from the reference to 'THP' providing a further grant. Only the Australian entity was in a position to do that. That reading is supported, to an extent, by the observation that Mr Massy-Greene was himself a director of the applicant. 35 For those reasons, I accept the applicant's contention that it engaged directly in the provision of charitable works in Malawi when Mr Massy-Greene conducted his seed capital monitoring program. (v) Membership of Global Co-ordinating Committee 36 Ms Burke gave evidence that she and Mr Massy-Greene were also members of a recently convened Global Co-ordinating Committee. The purpose of this committee is to translate current strategic initiatives into a coherent strategic plan. 37 A concept note in relation to this committee was in evidence. Part of that note was as follows: Draft Purpose and Intended Results for the Committee Purpose: To meet a dual challenge: facilitate a global process that ensures broad ownership and participation in all THP countries while ensuring a bold, inspiring approach to moving THP into its future role. Intended Results: That each country creates a strategic plan consistent for fulfilling the global strategic initiatives. That each plan include the resources needed for its accomplishing it. That we develop greater clarity on how to communicate our work in this era in ways which build greater global unity, alignment and support. That we develop a communication and fundraising strategy sufficiently powerful to generate the necessary resources. 38 There was no evidence as to how far this committee had gone in pursuing these aims (which is perhaps a little surprising since it seems to have existed since July 2011). However, I am prepared to assume that it has been active in the pursuit of its goals. Even so, I do not accept that being a part of this committee involves the applicant in the direct provision of charitable works. Its work is far removed from the coal face of such activities (I do not intend by that remark to downplay the significance of the committee's work but only to underline the apparent lack of directness in its activities). (vi) Trips to Partner Countries by Ms Burke 39 Ms Burke frequently undertakes trips to program countries. She has six such trips planned, for example, in 2013. She sometimes takes donors or potential donors with her. She did not say, but I infer, that she does this to encourage donors either to donate (if they have not done so already) or to continue donating (if they have). 40 Ms Burke's evidence, however, suggested a second set of purposes for these trips. For example, she said that the visitors also strengthened relations between the applicant and the program countries. To that end she uses the visits to take the opportunity to discuss how the various programs are going. In the case of Bangladesh and Malawi she is used as a sounding board for advice by officials in The Hunger Project in those countries. In the case of Bangladesh, she has proffered advice to its country director, Dr Badiul Alam Majumdar, on how to shift the focus of its activities from a nationwide approach to one which focuses more on the lowest levels of government. In the case of Malawi, she has proffered advice to its country director, Mr Rowlands Kaotcha, in relation to his additional role as the country director for Mozambique. This has involved discussion between the two of them on the needs of Mozambique and her views, based on her experience, on suggested ways of managing the issues which arise in that country. 41 Again, whilst fully accepting the utility of these activities by Ms Burke (and through her, the applicant), I do not think that they can be characterised as the direct provision of charitable works. 42 The activities of the applicant may then be summarised as follows: (a) fund raising activities in Australia; (b) fund raising activities in program countries directed at raising funds in Australia (eg donor tours); (c) participation at the global level in a number of strategic decision making processes; (d) setting of budgets in consultation with The Hunger Project global office; (e) remission of donated funds to program countries; (f) proffering advice to officials in program countries on strategic and/or operational issues; (g) arranging reports and recommendations on activities in program countries; and (h) conducting the seed capital monitoring program through Mr Massy-Green at the Champiti Epicentre in Malawi; (i) determining the strategic direction of The Hunger Project Australia; (j) meeting with the board of directors to approve/reject funding allocation; (k) sending volunteers to program countries to share their expertise with The Hunger Project staff in local epicentres. 43 Of these, (a) is by far the dominant activity. However, I would accept that (b) to (g) and (i) to (k) are not unimportant aspects of the applicant's operations, although I would not describe them as dominant. By contrast, (h) appears to be an isolated instance. This is significant because it is only (h) that I would be prepared to infer involved the direct performance of charitable activities. 44 I do not find, therefore, that the applicant is substantially engaged in the direct provision of charitable works. The correct characterisation of its activities is that it is predominantly engaged in fund raising and to a lesser extent in providing strategic guidance. Its direct charitable activities are negligible when viewed in the overall scheme of its operations. 2. The Meaning of 'Public Benevolent Institution' 45 The question then is whether the applicant is a 'public benevolent institution' within the meaning of s 57A(1) of the FBTA Act. For reasons associated with a textual argument developed by the Commissioner subsections (2) and (3) are also relevant. Subsections 57A(1)-(3) of the FBTA Act provide: (1) Where the employer of an employee is a public benevolent institution endorsed under subsection 123C(1) or (5), a benefit provided in respect of the employment of the employee is an exempt benefit. (2) Where: (a) the employer of an employee is a government body; and (b) the duties of the employment of the employee are exclusively performed in, or in connection with: (i) a public hospital; or (iii) a hospital carried on by a society that is a non-profit society for the purposes of s 65J or by an association that is a non-profit association for the purposes of s 65J; a benefit provided in respect of the employment of the employee is an exempt benefit. (3) A benefit provided in respect of the employment of an employee is an exempt benefit if: (a) the employer of the employee is a public hospital; or (b) the employer provides public ambulance services or services that support those services and the employee is predominantly involved in connection with the provision of those services.' 46 At the times relevant to this case s 123C of the FBTA Act provided: (1) The Commissioner must endorse an entity as a public benevolent institution if: (a) the entity is entitled to be endorsed as a public benevolent institution (see subs (2)); and (b) the entity has applied for that endorsement in accordance with Division 426 in Schedule 1 to the Taxation Administration Act 1953. (2) An entity is entitled to be endorsed as a public benevolent institution if the entity: (a) is a public benevolent institution; and (b) has an ABN; and (c) is not an employer in relation to which step 2 of the method statement in subsection 5B(1E) applies. 47 The expression 'public benevolent institution' is not defined. 48 On 12 November 2010 the applicant applied to the Commissioner for endorsement as a public benevolent institution under s 123C of the FBTA Act and this was refused by him on 11 February 2011. An objection to that decision was lodged by the applicant on 12 April 2011 but this was refused on 16 August 2011 in terms which included the following passage: It is accepted that the Project has a principal aim to provide relief from hunger however its activities indicate that this is achieved by the provision of funding for independent overseas projects which is not the direct provision of relief for the purpose of the term public benevolent institution. The organisations and projects supported by the Project provide the direct benevolent relief to the people who are experiencing chronic hunger. 49 The present question is whether this is correct. 3. 'Public Benevolent Institution' – The authorities 50 The expression was first considered by the High Court in Perpetual Trustee Co v Federal Commissioner of Taxation (1931) 45 CLR 224. It did so in the context of the identical expression appearing in s 8(5) of the Estate Duty Assessment Act 1914 (Cth) as it stood in 1928 which provided that: Estate duty shall not be assessed or payable upon so much of the estate as is devised or bequeathed or passes by gift inter vivos or settlement for religious, scientific, or public educational purposes in Australia or to a public hospital or public benevolent institution in Australia or to a fund established and maintained for the purpose of providing money for use for such institutions or for the relief of person in necessitous circumstances in Australia. 51 This version of s 8(5) had replaced by force of s 5 of the Estate Duty Assessment Act 1928 (Cth) an earlier one which since 1914 had provided: Estate duty shall not be assessed or payable upon so much of the estate as is devised or bequeathed or passes by gift inter vivos or settlement for religious, scientific, charitable or public educational purposes. 52 The expression 'charitable' had been the source of previous litigation. In particular, a question had arisen, which was ultimately settled by the Privy Council in Chesterman v Commissioner of Taxation (1925) 37 CLR 317, as to whether 'charitable' connoted purposes which were charitable in the technical legal sense used in the Charitable Uses Act 1601 (Imp) 43 Eliz 1 ('the Statute of Elizabeth') or in the popular 'eleemosynary' sense of providing aid to those in need. 53 According to the Oxford English Dictionary ('the OED') the word eleemosynary, which is largely used to frighten law students, made its debut in English in around 1640 and is derived from the medieval Latin word eleēmosynārius which means 'alms'. The OED defines eleemosynary to mean: 'Of or pertaining to alms or almsgiving; charitable'. Its utilisation by trust lawyers as a replacement for the word 'charitable' was made necessary because the effect of the law of charities is that the word 'charitable' in law bears little resemblance to the concept it bears in ordinary English. It might perhaps have promoted clarity for lawyers to have used the word 'eleemosynary' to refer to the technical sense of the concept and to have left the word 'charitable' with its ordinary meaning but it is too late now to rescue the language from this misfortune. 54 In any event, in Chesterman the Privy Council concluded that 'charitable' in the former s 8(5) (that of the Estate Duty Assessment Act 1914 (Cth)) bore its technical legal meaning. 55 The Privy Council had decided Chesterman contrary to the interests of the Commissioner who had contended for the popular meaning of the word. A new form of s 8(5) was then introduced by the Estate Duty Assessment Act 1928 (Cth) which introduced the language of 'public benevolent institution' and moved away from the technical legal concept of 'charitable'. On the second reading speech of the Estate Duty Assessment Bill 1928 (Commonwealth, Parliamentary Debates, House of Representatives, 14 September 1928, 6848-6849) Dr Earle Page made these remarks: It has been found necessary to re-state the provisions of the law relating to settlements, bequests or devises of property for religious, scientific, charitable, or public educational purposes, so as to limit the exemption to bequests for such purposes in Australia, and also to express the intention of Parliament in regard to charitable bequests, that the limitation shall apply only to such requests when made to public charitable institutions in Australia. This re-statement of the law in regard to charitable bequests has been necessitated by a decision of the Privy Council over-ruling the judgment of the High Court in the appeal of the trustees of the estate Peter Stuckey Mitchell, deceased, in respect of a bequest of the residue of the estate of the deceased upon trusts under which prizes were to be awarded to various classes of persons, military, naval and civil, and of both sexes, the merit of the candidate to be ascertained by various physical, moral and literary tests. The High Court held that this bequest is not a charitable bequest within the meaning of the act because its character is not eleemosynary and because the word "charitable" was, in the opinion of the court, used in the act in its popular meaning which involves the idea of assisting poverty or destitution. The Privy Council held that the four words "religious", "scientific", "charitable" and "public educational" as used in the section are not mutually exclusive, and that the word "charitable" as used in the act must be given its technical legal meaning as used in the Elizabethan sense, namely, Trusts for the relief of poverty; Trusts for the advancement of education - although this already covered by the section; Trusts for the advancement of religion already covered by the section; Trusts for other purposes beneficial to the community, not falling under any of the preceding heads. When the Estate Duty Act was passed it was intended that the four terms referred to should be mutually exclusive. It is proposed to bring this about by means of the amendment in the bill. The bill will also make clear the charitable purposes intended to be provided for. For this purpose it uses the language which was inserted by Parliament for the same purpose in the Income Tax Assessment Act 1927, in connexion with deductions for donations to public charitable institutions. 56 This might suggest that Parliament's intention was to restore 'religious', 'scientific', 'charitable' and 'public educational' as independent concepts rather than narrowing the operation of the provision. One view of these remarks might be that Parliament intended precisely to vindicate the position of the Commissioner in Chesterman. 57 Nevertheless, I do not think I should so conclude. The High Court observed in Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539 at 548 [16] that this was not the effect of the 1928 amendments: This, however, was not to vindicate the Commissioner's construction but to assist taxpayers by the addition of favourable treatment for any entity which was a "public benevolent institution in Australia". 58 When Perpetual Trustee came before the High Court in 1931 it was, at least, obvious that the phrase 'public benevolent institution' was a new phrase deliberately selected to avoid the technicalities of the past. 59 Starke J put the matter this way (at 231-232): Now we have to consider the expression "public benevolent institution." It cannot be said that this expression has any technical legal sense, and therefore it is to be understood in the sense in which it is commonly used in the English language. There is no definition in the Act of the composite expression, nor is it to be found in any dictionary. It is, however, found in the Act under consideration in association with such institutions as public hospitals and with funds established and maintained for the relief of persons in necessitous circumstances in Australia. In the context in which the expression is found, and in ordinary English usage, a "public benevolent institution" means, in my opinion, an institution organized for the relief of poverty, sickness, destitution, or helplessness. 60 The question in Perpetual Trustee was whether an institution known as the Royal Naval House was a public benevolent institution. Royal Naval House was used for the benefit of petty officers and lower ratings in the Navy by providing to them accommodation and recreational facilities. Starke J's conclusion was that it was not a public benevolent institution (at 232): It would surprise English-speaking people, I think, to learn that in the Royal Naval House naval forces are accommodated and entertained at a public benevolent institution. 61 Dixon J reasoned along similar lines and, after noting the legislative history explained by Starke J, said (at 233-234): Having regard to this history of the legislation and to the considerations I have mentioned, I am unable to place upon the expression "public benevolent institution" in the exemption a meaning wide enough to include organizations which do not promote the relief of poverty, suffering, distress or misfortune. 62 Evatt J reasoned (at 235-236): But they have one thing in common: they give relief freely to those who are in need of it and who are unable to care for themselves. Those who receive aid or comfort in this way are the poor, the sick, the aged and the young. Their disability or distress arouses pity, and the institutions are designed to give them protection. They are very numerous – "the nobler a sole is the more objects of compassion it hath" – and they have come to be known as "benevolent institutions". 63 McTiernan J's reasons are perhaps the most pertinent for present purposes. His Honour reasoned in the following terms (at 242): A comparison of the two sub-sections appears to show that the Legislature intended to exclude from the benefit of the exemptions granted by the Act a number of gifts which, though good charitable gifts in the technical sense, were not for religious or scientific or for public educational purposes or were not made upon the principle of giving direct relief or assistance to mankind in sickness or in need. (emphasis added) 64 It is in that statement that one sees for the first time the idea that the aid in question must be dispensed directly. Of course, there was no question about directness in Perpetual Trustee but nevertheless the statement finds later resonances. 65 The clearest of these is the judgment of Rath J in Australian Council of Social Service Inc v Commissioner of Pay-roll Tax (NSW) (1982) 13 ATR 290. The Australian Council of Social Service ('the Association') did not provide any direct relief of poverty or distress. Its activities were instead directed to providing indirect aid for such relief by performing functions of an advisory, informative, research and advocative nature. If it was a public benevolent institution it was entitled to an exemption from pay-roll tax by virtue of s 10(1)(b) of the Pay-roll Tax Act 1971 (NSW). Having surveyed the judgments in Perpetual Trustee Rath J then reasoned this way (at 299): Though this was not the question before the court in the Perpetual Trustee Company case, it seems to me that the reasoning of the court (including McTiernan J) is based on the proposition that an institution, claiming the character of a public benevolent institution, must itself dispense relief to the needy. When the judges in that case are referring to the organisation of the institution it is the organisation of aid in a direct and immediate sense that is contemplated. 66 His Honour concluded therefore that the Association was not a public benevolent institution. 67 That conclusion was then challenged on appeal in Australian Council of Social Service Inc v Commissioner of Pay-roll Tax (1985) 1 NSWLR 567. The principle judgment was delivered by Priestley JA (with whom Mahoney JA agreed). The Commissioner for Pay-roll Tax advanced the submission on that occasion, as the Commissioner for Taxation now does here, that there can be no classification as a public benevolent institution unless the body in question provides direct relief. Counsel for the Association advanced an argument against this which Priestley JA recorded as follows (at 575): When the appeal came to be argued before us, counsel for the appellants recognized as a difficulty in their way that the Association had not administered aid in a direct and immediate sense but in an indirect sense as a promoting body. This difficulty was sought to be met by the submission that what was said and decided in the Perpetual Trustee case should not be mechanically applied to exclude the Association from the exemption in the present case. Stress was laid on the submission that the content of the words "public benevolent institution" had expanded since 1931. It was said that at the time the Perpetual Trustee case was decided popular ideas of benevolence revolved around the concept of direct provision of aid for the unemployed and the needy and that the High Court had not had to consider the less direct activities of a body such as the Association which were nevertheless either wholly or primarily directed to the ultimate reduction of distress of the relevant kinds. 68 His Honour then proceeded to assess that submission (at 575): It seems to me that there might well be some force in this submission as to the proper application of the Perpetual Trustee case but even if that is so, on the facts of this case, it does not assist the appellants. To me, the word "benevolent" in the composite phrase "public benevolent institution" carries with it the idea of benevolence exercised towards persons in need of benevolence, however manifested. Benevolence in this sense seems to me to be quite a different concept from benevolence exercised at large and for the benefit of the community as a whole even if such benevolence results in relief of or reduction in poverty and distress. Thus it seems to me that "public benevolent institution" includes an institution which in a public way conducts itself benevolently towards those who are recognizably in need of benevolence but excludes an institution, which although concerned, in an abstract sense, with the relief of poverty and distress, manifests that concern by promotion of social welfare in the community generally. 69 There was a debate before me as to whether Priestley JA's remarks were to be seen endorsing or detracting from the proposition that relief must be provided directly. 70 In my view, his Honour did not decide whether the requirement of directness was sound or not although he indicated a preference for the view that it was not. Instead, what his Honour did was to formulate a requirement that the objects of the entity's benevolence had to be concrete, that is, they had to be 'those who are recognisably in need of benevolence' and he eschewed the notion that general, but undirected or abstract, benevolence would suffice. He concluded that the Association failed that test. 71 Pausing there, it is apparent that the applicant passes this test because its involvement in the relief of hunger is concrete, it being a member of a structure of organisations that in fact relieve hunger. The reasoning leaves intact, however, the possibility that there might nevertheless also be a directness test to be applied as well, although in that regard Priestley JA concluded that 'there might well be some force' in the proposition that there was not. 72 It follows that Priestley JA's reasons do not directly control the outcome of this case. They do, however, provide some support as an obiter dictum for the applicant's submissions. 73 The reasoning in the same case of Street CJ does not. There were a number of steps in his Honour's reasons. The first was in these terms (at 568): The fact is that those words do have an established scope, one of the elements of which involves the ascertainment of the identity of the persons to benefit from the benevolence of the institution in question. This tends naturally to imply that there will be direct beneficiaries of such benevolence. 74 This seems to me, with respect, to involve a non-sequitur. The fact that a person is identified as the subject of benevolence does not imply that the benevolence should be provided directly. I may direct the trustees under my will to benefit the homeless and the destitute but I should be surprised if this meant that the trustees had to do so themselves. 75 His Honour then referred to Perpetual Trustee to observe that the institution in that case (which was, it will be recalled, the Royal Naval House) did dispense its aid directly before going on to say (at 568): [I]n every reported case but one this element of direct dispensation of benefits is to be found within the factual context. This, of course, does not necessarily and of itself predicate the direct dispensation of benefits is a prerequisite. It does, however, provide a strongly persuasive basis for holding that, over the passage of years, this element has now become built into the concept of a public benevolent institution. The judges of the past have taken this for granted and it is a long step to hold that a comparatively modern statute (the Pay-roll Tax Act which was passed in 1971) can properly be construed as being freed from that basic factual element. 76 His Honour then concluded (at 569): The matter is not one in which laws or approaches previously laid down require to be moulded to accommodate modern social conditions and expectations. The phrase has, over the decades, been applied to countless property transactions in a context which has involved recognition of the need for the presence of the basic element of direct distribution or dispensation of aid. If the tacit assumption that this is an essential prerequisite is to be changed, it is in my view the province of either the legislature or the High Court, which has itself more than once been party to that tacit assumption, to prescribe and authorize the change. For the foregoing reasons I am of the view that the comparatively simple test that has thus far been recognized although not expressly laid, should not be regarded as able to be extended. In other respects, however, I am in full agreement with the reasoning developed in Priestley JA's judgment and I concur with his conclusion that the appeal should be dismissed with costs. 77 This reasoning is at odds with Starke J's observation in Perpetual Trustee that the concept of a public benevolent institution was to be approached as a matter of ordinary usage. As will be seen, it is that approach which was recently endorsed by the High Court in Aid/Watch Inc. 78 Both parties sought to derive support from the decision of Angel J in Tangentyere Council Inc v Commissioner of Taxes (1990) 99 FLR 363. I do not think that it assists either party. His Honour recorded the Commissioner's submission (based on the reasons of Street CJ in ACOSS) that the Tangentyere Council was not a public benevolent institution because it was an umbrella organisation not directly dispensing aid. But his Honour reached no conclusion on the matter (at 371): [B]ut I see no need to reach such a conclusion. The evidence discloses that the appellant's efforts do directly benefit the inhabitants of the town camps. 79 Contrary to the applicant's submissions, I do not think that this involves any criticism of the approach of Street CJ. It is true that in Northern Land Council v Commissioner of Taxes (2002) 171 FLR 255 the Court of Appeal of the Northern Territory referred with apparent approval to Tangentyere Council but this seems to me to have little relevance. This is because first, Tangentyere Council says nothing about the issue so that the Court of Appeal's subsequent endorsement of it has no consequences for the question at hand; and secondly, because the Court of Appeal (at 259) endorsed the test suggested Priestley JA in ACOSS, i.e., a suggested need for the objects of the benevolence to be concrete rather than merely abstract. As I have indicated above, however, Priestley JA expressly left the present question open. 80 The Commissioner placed considerable reliance upon the Queensland Court of Appeal's decision in Commissioner of Taxation (Cth) v Re Royal Society for Prevention of Cruelty to Animals [1993] 1 Qd R 571. The question in that case was whether the Royal Society for the Protection of Cruelty to Animals, Queensland Inc. ('the RSPCA') was a public benevolent institution. It is likely that the RSPCA was a charity in the technical sense but it was entitled to a sales tax exemption only if it was a public benevolent institution within the meaning of the Sales Tax (Exemptions and Classifications) Act 1935 (Cth). The central question was whether the relief of suffering of animals was a sufficient object to confer the status of being a public benevolent institution on the RSPCA. There was no issue in the case, however, as to whether the relief given had to be proffered directly. Having recited Perpetual Trustee and the reasons of both Street CJ and Priestley JA in ACOSS, Fitzgerald P said (at 577): For the reasons given by Street CJ, this Court should accept the meaning of the expression "public benevolent institution" which has been adopted for many years, irrespective of whether or not a wider approach might be appropriate if the question now fell for consideration for the first time. 81 Since the issue of directness was not at stake in the RSPCA case I do not think that this passage assists. It is not necessary for me to express any view whether the approach apparently indicated by the Queensland Court of Appeal as to how the decision in Perpetual Trustee is to be interpreted is a correct one, but such an inquiry would require an examination of Aid/Watch Inc. 82 The Commissioner also relied upon the decision of McGarvie J in Pay-roll Tax, Commissioner of (Vic) v Cairnmillar Institute (1990) 21 ATR 665. It is true that his Honour did there remark (at 675) that 'in my opinion the authorities established that a public institution which provides relief in a direct way to persons suffering from some unfortunate disability or condition is a public benevolent institution'. But there was no issue of directness before his Honour and I do not regard the comment as a considered one deciding the issue. 83 In any event, the statement is not a negative statement that a body which only provides services indirectly is not a public benevolent institution (although I place little weight on this observation). 84 The Commissioner next relied upon the decision of Northrop J in Trustees of Allport Bequest v Commissioners of Taxation (Cth) (1988) 19 ATR 1335. In that case the question was whether a statutory charitable trust whose object was to pay out gifts 'to public charitable objects for the citizens of Hobart' was a public benevolent institution. Northrop J concluded that it was not because a trust was not an institution. Having done so he went on to say (at 1341): Having come to the conclusion that the applicants are not a public benevolent institution under the Administration Act. I do not need to consider other submissions based upon the fact that the applicants are not benefiting directly members of the public but are making donations or gifts to institutions which are public benevolent institutions. That fact, however, supports the view that the applicants are not an institution carrying out the objects of those public benevolent institutions. 85 I do not see that this assists the Commissioner. His Honour said that he did not need to decide the question of directness. The only use thereafter of the question of directness was as an aid to support the conclusion that the trust was not an institution. 86 The Commissioner also relied on Mines Rescue Board (NSW) v Commissioner of Taxation (2000) 44 ATR 107 at 112 where Hely J recorded the submission that the Mines Rescue Board of NSW did not conduct mine rescues directly itself and was therefore not a public benevolent institution. At [23] his Honour rejected that submission on the facts concluding that its members did conduct rescues. There was no occasion, in that circumstance, for his Honour to assess whether the requirement existed and he did not do so. 87 The Commissioner relied (in a footnote in his submissions) on the decision of the Administrative Appeals Tribunal ('the AAT') in Re Melbourne Western Region Commission Incorporated v Commissioner of Taxation [1991] AATA 49 at [23]. There the AAT recited both the approaches of Street CJ and Priestley JA in ACOSS and noted the potential difference between the two on the issue of directness. Without any discussion the AAT concluded that the benevolent activities of the applicant were so minor that this prevented it being a public benevolent institution. However, it also said that the applicant's activities did not 'involve "direct distribution or dispensation of aid"' and therefore concluded on that additional basis that it was not a public benevolent institution. 88 I think this does assist the Commissioner. It is the sole example, apart from the reasons of Street CJ in ACOSS and those of Rath J at trial, of the directness test being applied. 89 The position in terms of direct judicial opinion is, therefore, inconclusive. Only Street CJ and Rath J in ACOSS have directly decided the issue but Street CJ was not in the majority on this approach and Rath J's approach was not applied by the majority; the majority in ACOSS avoided the issue but doubted the existence of the directness requirement; some judges have avoided the issue factually by concluding that in the case before them the directness requirement was satisfied. The AAT has applied the approach of Street CJ. 90 I do not consider myself bound in any particular direction by the current state of the authorities on the question at hand. I turn then to the questions of principle. 4. 'Public Benevolent Institution' - Analysis 91 For the applicant Mr Hmelnitsky, of counsel, focussed on Starke J's observation in Perpetual Trustee that the question was one of what the ordinary English usage of the expression 'public benevolent institution' required. It was true that none of the other Justices in Perpetual Trustee had expressly invoked that concept (although some of their reasoning was perhaps consistent with that view) but this did not matter because it was Starke J's approach which had been ultimately endorsed by five Justices of the High Court in Aid/Watch Inc (per French CJ, Gummow, Hayne, Crennan and Bell JJ) at 548 [16]. This mattered, so it was submitted, because there was nothing in the ordinary usage of the expression 'public benevolent institution' that required such an institution directly to dispense aid. Further, the test of directness was inherently unstable because all organisations acted through agents. For that reason, and perhaps others, it had been rejected as a test by the High Court in an analogous area in Commissioner of Taxation v Word Investments (2008) 236 CLR 204. It was submitted that the High Court had there firmly rejected the Commissioner's suggestion that an institution could not be charitable (in the legal sense) merely because it directed profits to entities which were. 92 For the Commissioner Mr Thomas, of counsel, emphasised the following. First, the introduction of the expression 'public benevolent institution' represented an attempt by the legislature to narrow the scope of the exemption from the broader concept which had obtained under the Statute of Elizabeth. 93 Secondly, in the form of s 8(5) of the Estate Duty Assessment Act 1928 (Cth) considered by the High Court in Perpetual Trustee 'public benevolent institution' had formed part of a wider expression 'public hospital or public benevolent institution' and the reference to hospitals showed that the direct conferral of benefits was intended. This mattered because the legislation in the relevant period, and in particular s 57A(2) of the FBTA Act, continued the reference to hospitals. 94 Thirdly, following its amendment in 1928 s 8(5) of the Estate Duty Assessment Act had itself observed a distinction between a 'public benevolent institution,' on the one hand, and 'a fund established and maintained for the purpose of providing money for use for such institutions,' on the other, but conferred the exemption on both. This was significant because, with a limited exception, s 57A of the FBTA Act made no reference to such funds at all. This suggested the presence of a legislative intention that such funds were not intended to be covered by the exemption. 95 Fourthly, in a similar vein, s 57A(3)(b) of the FBTA Act referred not only to ambulance services but also to 'services that support those services'. Those words were sufficiently broad to include the concept of fund raising. Similar wording was not to be found in s 57A(1) (public benevolent institutions) or s 57A(2) (public hospitals etc) so that it was to be seen in consequence that where the Parliament had intended that fund raising activities might be exempt (as in the case of ambulances in s 57A(3)) it had used express language to do so. 96 Fifthly, attention was drawn to paragraph 5.4 of the explanatory memorandum for the Taxation Laws Amendment Bill (No 2) 2001 (Cth) which had inserted s 57A(5) of the FBTA Act. It was not suggested that s 57A(5) of the FBTA Act was directly relevant but the explanatory memorandum did say that a public benevolent institution was one in which 'the aid is given directly'. Section 57A(5) does not refer to a public benevolent institution. Their relevance emerges from s 65J of the FBTA Act which describes a rebatable employer as an entity which is neither a public benevolent institution nor a charitable institution referred to in s 57A(5). 97 Sixthly, insofar as Word Investments was concerned, it had dealt with the expression 'charitable institution', not 'public benevolent institution,' under different legislation and with a different statutory history. No proper analogy was to be drawn between public benevolent institutions and charitable institutions because the former had been specifically introduced into the legislation to narrow the technical legal meaning of the expression it replaced ('settlement for religious, scientific, charitable or public educational purposes', Estate Duty Assessment Act 1914 (Cth) s 8(5)). 98 The submissions of the applicant are to be preferred. An important part of the Commissioner's submissions depends upon the contention that the amendments to s 8(5) which took place by virtue of the Estate Duty Assessment Act 1928 (Cth) had narrowed the scope of the exemption. 99 As already noted, the Privy Council in Chesterman had rejected the idea that the word 'charitable' in s 8(5) of the Estate Duty Assessment Act 1914 (Cth) connoted other than its technical meaning. The Commissioner had unsuccessfully submitted in that case that it bore its ordinary rather than technical meaning. The High Court made the same point in Aid/Watch Inc when it said (at 547 [15]): It was this latter submission that was rejected. The result was to deny the limitation which the submissions by the Commissioner had sought to impose upon the favourable treatment given to taxpayers by s 8(5) of the Estate Duty Act. 100 The word 'limitation' is the source of some of the present debate between the parties. In a sense both are correct. The non-technical or eleemosynary meaning of what constitutes a charitable purpose is both broader and narrower than the corresponding technical legal meaning (explained in Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531 at 572). The learned authors of Jacobs' Law of Trusts in Australia (J D Heydon and M Leeming, Jacobs' Law of Trusts in Australia (LexisNexis Butterworths, 7th ed, 2006) put the matter this way (at 138): There are many purposes which might be regarded as being charitable in the popular sense of the term (for example, trusts for the education of the children of one's employees) which will not bring trusts therefor within the category of charitable trusts. Other trusts (eg, are trusts 'for my country England' or trusts to found chairs of learning at a university) might be regarded as charitable in law although they are not popularly so regarded. (references omitted) 101 It is true that the Commissioner's position in Chesterman constituted a limitation on what was encompassed in the notion of charitable purposes. Thus to take the example of the trust 'for my country England' given in the quote from Jacobs' above, such a trust would be charitable in the legal sense (cf Yates v University College, London (1875) LR 7 HL 438 438) but probably not charitable in the ordinary sense. The Commissioner's submission that 'charitable' in the former s 8(5) should have been given its ordinary meaning would have had the limiting effect, therefore, of preventing some charitable trusts from obtaining the benefit of exemption. On the other hand, it would also have an expansionary effect. The example given of a trust for the children of one's employees (cf Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297) would have become included when previously it would have fallen outside the exemption. 102 It may, therefore, not be altogether accurate to describe the Commissioner's submission in Chesterman as purely one of limitation for it must also have had expansionary consequences. I note that Dr Earle Page's remarks in the second reading speech (above at [55]) were not couched in terms of constriction or expansion. 103 It was this dual nature of the amendment as both expansionary and restricting which led the parties in this case to diametrically opposed conclusions about the significance of the amendments made by Estate Duty Assessment Act 1928 (Cth). 104 The Commissioner's submission that s 8(5) of the amended Act narrowed the operation of the former provision is, in part, correct. Trusts of the kind discussed in Yates might well now be excluded. But the applicant's submission that it broadened the former operation of s 8(5) is also correct for trusts such as those at stake in Oppenheim might now be included. 105 What I think this means is that it would be potentially erroneous to consider the amendment in the 1928 Act as either broadening or narrowing the ambit of s 8(5). What it did was to put in place an entirely different concept. That concept was in some ways narrower and in some ways broader than the concept it replaced. It was this fundamentally different nature which Starke J emphasised in Perpetual Trustee, with his Honour's focus on ordinary English usage, and it was the same sentiment which led the High Court to say in Aid/Watch Inc (at 548 [16]): The legislative response to the decision in Chesterman was the amendment of s 8(5) of the Estate Duty Act. This, however, was not to vindicate the Commissioner's construction but to assist taxpayers by the addition of favourable treatment for any entity which was a "pubic benevolent institution in Australia". As Starke J emphasised in Perpetual Trustee Co v Federal Commissioner of Taxation, that expression had no technical legal sense and thus was to be understood in accordance with common usage. (footnotes omitted) 106 I therefore reject the Commissioner's submission that I should understand the concept of a public benevolent institution as a narrowing of what had been comprehended in the former s 8(5). It is an entirely different concept to which notions of common usage are instead to be applied. 107 Nor do I think that the references to public hospitals in the form s 8(5) took after the 1928 amendment assist the position of the Commissioner. It is true that public hospitals dispense aid directly but I see no reason why that requirement should be seen as having been required of a public benevolent institution just because the expressions appear next to each other. In any event, although hospitals still appear in the text of s 57A of the FBTA Act the very different layout of that section makes this argument even more tenuous. 108 The Commissioner's argument based on the reference in the form s 8(5) took after 1928 to 'a fund established and maintained for the purpose of providing money for use for such institutions' is, I think, perhaps more substantial. The submission was that those words were absent from the form of s 57(A) of the FBTA Act during the relevant period and their omission was said to reveal a legislative intention that an entity which provided money to a public benevolent institution could not itself be a public benevolent institution. 109 The form s 8(5) took from the Estate Duty Assessment Act 1928 (Cth) is set out above at [50]. The notion underlying the Commissioner's contention must be that the provision dealt with public benevolent institutions and funds providing money to public benevolent institutions separately (although, it should be noted, making both exempt). Implicit perhaps in the Commissioner's position is the idea that a public benevolent institution could not have included a fund providing money to a public benevolent institution because, were that so, the reference to a fund of that kind would have been otiose. 110 The second reading speech given for the Estate Duty Assessment Bill 1928 (Cth) throws no light on this issue. 111 The argument must confront however the precise terms of the provision. Section 8(5) operated to exempt from death duty transfers of estates (whether by devolution under the terms of a will, by settlement or by gift inter vivos) in the following six circumstances: (a) where the purpose of the gift &c was religious or scientific; (b) for public educational purposes in Australia; (c) to a public hospital; (d) to a public benevolent institution; (e) to a fund established to provide money to such institutions; or (f) for the relief of persons in necessitous circumstances in Australia. 112 The expression 'institution' has a range of meanings but as was pointed out by the Privy Council in Minister of National Revenue v Trusts and Guarantee Co [1940] AC 138 at 149-150 it does not, without more, connote a mere trust for charitable purposes. I think the same may be said of funds, that is to say, I do not think that a fund, without more, can be an 'institution'. Once that is understood, the reference to a fund in s 8(5) is more readily explicable as bringing within the exemption a class of structure, i.e. funds, which would not otherwise have been caught by the concept of an institution. There is, on that view, a distinction to be drawn between institutions and funds which the section observes but it is a distinction concerned with the structural difference between the two. The reference to funds, therefore, expands the exemption to include non-institutional concepts such as funds but the expansion is limited to that class of fund which raises money for the institutions mentioned in s 8(5). The fact that the expansion of the exemption into the class of funds is delimited in that way says nothing about the nature of public benevolent institutions. 113 For completeness, it should be noted that the reference to funds in s 8(5) was eventually deleted by s 5 of the Estate Duty Assessment Act 1957 (Cth). The only comment on s 5 in the second reading speech (Commonwealth, Parliamentary Debates, House of Representatives, 5 November 1957, 1812-1813 (Sir Arthur Fadden) was as follows: By clause 5 of the bill it is proposed to extend the exemption from estate duty to bequests, devises and gifts to public libraries and hospitals which are not carried on for the profit of individuals. It is also proposed to extend to the exemption to bequests, devises and gifts to the National Trust which has been established in each of the States of New South Wales, Victoria and South Australia, and to the Australian Council for Educational Research. 114 Although I would be reluctant to read too much into this, it does not provide any support for the idea that the deletion in 1957 of the reference to a fund in s 8(5) reflected a legislative concern to ensure that only those involved in direct activities should have the benefit of the exemption. The legislative history of s 57A of the FBTA Act takes matters no further. It formed part of the original text of the FBTA Act in 1986 although it was initially in this form: Where a public benevolent institution provides a benefit to an employee of the institution, the benefit is an exempt benefit. 115 It will be seen then that s 57A of the FBTA Act did not originally contain a reference to a fund. Nothing, however, turns on this for the reasons I have already given. 116 Nor do I accept that the reference in s 57A(3)(b) (ambulances) to 'services that support those services' is a reason to read down s 57A(1) (public benevolent institutions) or s 57A(2) (public hospitals etc) so as to exclude fund raising entities. Whilst it is possible that in some circumstances such an expressio unius argument may succeed I am neither satisfied that s 57A is capable of supporting such a structural implication nor, in any event, that there is a precise correspondence between the concept of fund raising activities and 'services to support those services'; i.e., these words may be broader than fund raising activities. 117 It is true, as Mr Thomas submitted, that the explanatory memorandum for s 57A(5) of the FBTA Act (Sch 4 of the Taxation Laws Amendment Bill (No 2) 2001 (Cth)) involved a statement that one of the features of a public benevolent institution was that it dispensed aid directly. The Explanatory Memorandum, Taxation Laws Amendment Bill (No 2) 2001 (Cth) was in these terms: 5.4 Generally, a PBI: has as its main or principal object, the relief of poverty, sickness, suffering, distress, misfortune, destitution or helplessness; is carried on without purpose of private gain for particular persons; is established for the benefit of the public or a section or class of the public; the relief is available without discrimination to every member of that section of the public which the organisation aims to benefit; and the aid is given directly to those in need. But that phrase did not appear in s 57A(5) of the FBTA Act which was as follows: A benefit provided in respect of the employment of an employee is an exempt benefit if: (a) the employer of the employee is a health promotion charity; and (b) the health promotion charity is endorsed under subsection 123D(1). 118 I would accept that the relevant passage in the explanatory memorandum appears to reflect a view on the part of its author that directness in the dispensation of aid is a required characteristic of a public benevolent institution. That view, however, had nothing to do with the legislative task with which the bill was concerned. In any event, the passage appears to reflect an erroneous assumption. The case law concerning public benevolent institutions does not, in my opinion, hold that directness is a requirement, and, to the extent that the explanatory memorandum suggests to the contrary, it is wrong. 119 I do not find compelling, therefore, any of the reasons put forward by the Commissioner for why the suggested limitation to direct activities should be discerned in the expression public benevolent institution. On the other hand there is at least one good reason not to do so and that is the High Court's decision in Word Investments. That case was concerned with 'charitable institutions' rather than public benevolent institutions. Word Investments was founded by persons closely associated with a charitable organisation which conducted missionary and bible translation activities overseas. There was no dispute that those activities were, relevantly, charitable. Word Investments accepted deposits from the public paying little or no interest upon them and used those inexpensive funds to earn profits which were then given to the charitable organisation. 120 The Commissioner's contention was that whilst it was an object of Word Investments to proclaim the Christian religion it did not, in fact, do so. All it did, as the High Court summarised the Commission's argument, was to 'raise money from commercial activities and hand it over to other bodies so that they could proclaim the Christian religion' (at 224 [36]). 121 The Court did not accept that this prevented Word Investments from being classified as a charitable institution. Insofar as the law of charities was concerned, it found nothing which would prevent such a fund raising entity from being characterised as being for charitable purposes. More importantly, the Court observed a consequence of the Commissioner's argument. This was that if a charitable institution had arranged its affairs in such a way that it had two divisions, one engaged in charitable activities and the other fund raising, then the organisation would be exempt but if it were to be split into two organisations then the fund raising entity would lose its exempt status. Of this situation the Court observed (at 225 [37]): It would not reflect credit on the law if the distinction implicit in the Commissioner's argument were sound. 122 The applicant submits that this powerfully supports its position for precisely the same argument can be made not only in the case of public benevolent institutions in general but in the case of the applicant in particular. 123 The Commissioner submitted that Word Investments provided no guidance in the present case. It was concerned with the law of charities and the whole point of the expression 'public benevolent institution' in s 8(5) of the Estate Duty Assessment Act 1914 (Cth), as the High Court's reasons in Perpetual Trustee showed, was to move away from the technical complexities of the concept of charitable purposes. Further, the statutory history of the two concepts was quite different making any analogy between them difficult. 124 I do not accept that either of these matters provides a good reason to distinguish Word Investments from the present situation. It is true that it was concerned with charitable institutions rather than with public benevolent institutions but the High Court's reasoning at 225 [37] (set out above at [121]) did not turn on any of those technical matters. It was instead simply the observation that it was difficult to discern the redeeming features of an approach which focussed entirely on the form an organisation took rather than its substance. If the law is affronted by the proposition that a charitable institution might lose its exempt status for its fund raising activities if they be devolved into a separate entity (and Word Investments holds that it is) I cannot see why it would be any less affronted if a public benevolent institution lost exempt status for its fund raising activities by doing the same thing. There is no relevant difference. 125 Nor does the difference in statutory history provide any reason to depart from that conclusion. If it were correct to say that the history and text of the various iterations of s 8(5) following the Estate Duty Assessment Act 1914 (Cth) showed that the concept of a public benevolent institution included a requirement of direct provision I might be disposed to see some force in the Commissioner's contention. But I have rejected that view of s 8(5). Whilst I accept that the statutory histories are different, without more, I do not discern any reason not to conclude that the reasoning in Word Investments is equally applicable to public benevolent institutions. 126 For those reasons, I do not accept that it is a requirement that a public benevolent institution engage directly in the activities making up the object of its benevolence. On the other hand, the reasons of Priestley JA in ACOSS have as their ratio decidendi the necessity for the benevolent objects of an organisation to be more than merely abstract. Since Mahoney JA agreed with this conclusion, and since it was the basis of the actual decision, ACOSS binds me as a decision of a co-ordinate intermediate appellate Court to apply that test. However, for reasons already given, I have no doubt that the applicant's objects are not abstract in that sense and are sufficiently concrete. The applicant's principal object of relieving hunger is achieved through its close relationships with The Hunger Project entities in program countries. For those reasons, I conclude that the applicant is a public benevolent institution. 127 For completeness, I should record that the applicant also pursued an argument that I should construe s 57A of the FBTA Act as beneficial legislation citing Trustees of the Indigenous Barristers' Trust v Commissioner of Taxation (2002) 127 FCR 63 at 89 [40]. I have not found it necessary to invoke that principle. 5. Conclusion 128 The applicant has succeeded but the parties were in agreement that as the applicant was being funded pursuant to the Commissioner's test case funding program, there should be no order as to costs regardless of the outcome. In those circumstances, I make the following orders: 1. The appeal be allowed. 2. The Commissioner's objection decision dated 16 August 2011 be set aside. 3. The applicant's objection dated 12 April 2011 be allowed in full. I certify that the preceding one hundred and twenty-eight (128) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate: Dated: 17 July 2013