The State Government of Western Australia is seeking to restrict
the availability of an exemption for state taxes for organisations
established and carried on for the promotion of trade, industry or
In this Alert, Special Counsel Justin Byrne and Senior Associate
Rosalie Cattermole discuss how the State Government has sought to
restrict the availability of exemptions for state taxes in response
to the 2012 decision of the WA State Administrative Tribunal in
Chamber of Commerce and Industry of Western Australia Inc v
Commissioner of State Revenue  WASAT 146. In that case,
the Tribunal held in favour of the taxpayer and determined that the
Chamber of Commerce and Industry of Western Australia
(CCI) was carried on mainly for a purpose
beneficial to the community under the so-called 'fourth
limb' of charitable purposes. Interestingly, the CCI is
currently a registered charity for Commonwealth purposes for other
purposes beneficial to the general public under the Charities
Act 2013 (Cth).
The availability of an exemption for pay-roll tax, land tax and
stamp duty in Western Australia will be further restricted for
certain charitable organisations.
Currently exempt organisations may no longer be eligible for
state tax exemptions.
Affected organisations may be eligible to apply to the Minister
for the reinstatement of their exempt status.
The Commissioner of State Revenue
(Commissioner) had rejected CCI's application
for exemption liability to pay-roll tax on the basis that it was a
"charitable body or organisation" within the meaning of
section 41 of the Pay-roll Tax Assessment Act 2002 (WA)
(Pay-roll Tax Act). The Commissioner argued that
the main (or at least equally important) purpose for which CCI
carried on its operations was to provide services to its members
rather than any purpose which was directed to the benefit of the
Under a Bill currently before the Legislative Council in Western
Australia, organisations established and carried on for the
promotion of trade, industry or commerce would only be entitled to
an exemption for stamp duty, land tax and payroll tax if the sole
or dominant purpose of the organisation is the relief of poverty,
the advancement of education or the advancement of religion.
Importantly, with one exception, the Bill provides that a
"professional body" having as one of its objects and
activities the promotion of the interests of its members in any
profession (which would be the case for most professional bodies)
will not be eligible to apply for an exemption. This is because it
will be characterised as a "relevant body". A
professional body can however apply for an exemption for state
taxes if the Minister and Treasurer determine that the organisation
is a "beneficial body" for the purposes of the relevant
state tax legislation.
How will the proposed changes affect your organisation?
If the Bill is passed in its current form, it will operate
prospectively from the date of Royal Assent.
An organisation that is currently exempt may receive a notice
from the Commissioner advising that the Commissioner has formed a
preliminary view that it is a "relevant body" and as such
the organisation's exemption may be revoked. The Commissioner
must then decide whether to revoke the organisation's
Organisations that may be impacted by the proposed changes under
the Bill should immediately review their governing documents,
whether in the form of rules, a constitution or trust deed to
ensure that they accurately reflect the organisation's objects
For example, an organisation that promotes trade, industry or
commerce may well have as its dominant purpose the advancement of
education. If this is the case, the organisation should ensure that
this is reflected in the written documentation for the body and not
simply generally understood to be the case by group members and the
If your organisation is firmly within the scope of the proposed
tightening of the exemption for charities, then it should consider
making an application to the Minister for a "beneficial body
determination". Importantly, such an application will only be
possible in limited circumstances and once the taxpayer has
exhausted its other options.
The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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