Decision Date: July 4, 2012
Link: Case Summary Document
Citation: [2012] TASSC 43 (Supreme Court of Tasmania, Blow J)

Summary:

This was an appeal in a dispute as to whether a transfer of the plant and equipment of the Sacred Heart College at New Town in Tasmania was dutiable pursuant to the Duties Act 2000 (Tas) (the Act). The property in question was transferred by an incorporated association named Sacred Heart College Incorporated (SHC) to the appellant, the Roman Catholic Church Trust Corporation of the Archdiocese of Hobart, by a deed dated 23 December 2010.

The appellant contended that the transaction amounted to a gift, and was therefore not dutiable. The Commissioner contended that the transaction was not a gift, and that it was dutiable. He assessed duty in the sum of $132,170, on the basis that the property transferred was worth $3,365,446.93.

Section 53(n)(i) of the Act provides:

Duty is not chargeable under this Chapter on the following:

(n) a transfer by way of gift of dutiable property so far as it passes or creates any interest, legal or equitable —

(i) in furtherance of any charitable purpose or any religious or educational purpose that is not charitable also ….

The word ‘gift’ is not defined in the Act.

The school in question was opened in 1888. From 1989, its assets, other than the premises, were owned by SHC, whose members were individual members of the Sacred Heart religious order. In 2010 it was decided to transfer all the school’s assets, including the premises, to the appellant. The deed dated 23 December 2010 was executed by SHC, the appellant, and another entity which owned the premises.

Clauses within the deed forgave loans owed by SHC to the Archdiocese, and allowed the Archdiocese to assume responsibility for the employees of the school. The Commissioner contended that, because of the forgiveness of the loans, and because the appellant relieved SHC of various obligations that it would otherwise have had to its former employees (including long service leave entitlements), the transfer of plant and equipment to the appellant was not one by way of gift. This was despite words in the deed which referred to a gift.

The Commissioner raised the issue of a material benefit being conferred on SHC by the transfer of property. This included relief from the obligations to employees. His Honour said that in order to determine whether the transfer of the assets to the appellant amounted to a gift, it was necessary to look beyond the terms of the deed and consider the circumstances of the transaction. There was a long line of stamp duty cases in which it has been held that questions of liability to duty should be determined by reference to the ‘real nature’ or ‘substance’ of a transaction, rather than the purported description of a document or the form that the transaction took. This involved looking at the meaning of ‘gift in the ordinary sense of that word.

His Honour referred to the lack of evidence of the surrounding circumstances of the transfer and said (at [21]):

On the face of it, the deed provides for a transfer of the plant and equipment by SHC to the appellant, the release of SHC’s loan debts by the appellant, and the indemnification of SHC by the appellant in respect of employee entitlements. I am not satisfied on the balance of probabilities that the release of the loan debts and the indemnities relating to employee entitlements were independent of the arrangement for the transfer of the plant and equipment. I am not satisfied that that transfer amounted to a gift for which SHC received no consideration or material benefit by way of return.

Therefore, His Honour upheld the original determination of the Commissioner that the transfer of property in this case was not a gift. As it was not a gift, it was subject to duty under the Act.

The case may be viewed at: http://www.austlii.edu.au/au/cases/tas/TASSC/2012/43.html

Implications of this case

Although His Honour referred to the necessity of looking to the substance of the transaction in these sorts of cases, he repeatedly referred to the lack of background evidence available to show the circumstances of the transaction, and how it came about. In such a case, he had to decide on the balance of probabilities what should be the outcome.