Case S284/2011

The Commissioner of Taxation of the Commonwealth of Australia v. Graham Bargwanna & Melinda Bargwanna as trustee of the Kalos Metron Charitable Trust

Case No.

S284/2011

Case Information

Lower Court Judgment

17/02/2011 Federal Court of Australia (Middleton, Dowsett & Kenny JJ)
[2010] FCAFC 126

Catchwords

Taxation and duties — Income tax — Non-assessable income — Exempt entities — Funds established for public charitable purposes by instrument of trust — Section 50-105 of Income Tax Assessment Act 1997 (Cth) ("ITAA") requires Commissioner to endorse entity as exempt from income tax in certain circumstances — Section 50-60 of ITAA provides that funds established in Australia for public charitable purposes by will or instrument of trust are not exempt from income tax unless, inter alia, "the fund is applied for the purposes for which it was established" — Respondents constituted by deed the Kalos Metron Charitable Trust ("Fund") for public charitable purposes — Fund administered by accountant and held in accountant's trust account — Interest from Fund applied to pay accountant's fees — Respondents obtained housing loan with provision of mortgage security — Loan arrangements involved Fund depositing $210,000 into interest-offset account with lender — Respondents deposited other funds into account and withdrew funds in excess of deposits — Applicant refused Fund's application for endorsement under s 50-105 of ITAA — Whether application of part of Fund for purposes other than public charitable purposes meant criteria in s 50-60 of ITAA not satisfied — Whether misapplication of Fund moneys must be deliberate or intentional for conclusion that "is applied" criterion in s 50-60 not satisfied — Whether relevant inquiry is to application of Fund as a whole rather than individual transactions.

Words and phrases — "deliberate", "the fund is applied for the purposes for which it was established".

Short Particulars

Documents

12/08/2011 Hearing (SLA, Sydney)

25/08/2011 Notice of appeal

09/09/2011 Written submissions (Appellant)

09/09/2011 Chronology (Appellant)

04/10/2011 Written submissions (Respondents)

11/10/2011 Reply

01/02/2012 Hearing (Full Court, Canberra)

29/03/2012 Judgment (Judgment summary)