Decision Date: August 7, 2012
Link: Case Summary Document
Citation: [2012] AATA 520 (Administrative Appeals Tribunal of Australia, Taxation Appeals Division, Middleton J, FJ Alpins DP, E Fice)
Acknowledgement:The Pemsel Case Foundation thanks The Australian Centre for Philanthropy and Nonprofit Studies for its contribution in the drafting of this Case Note.


The issue before the Tribunal in this case was whether the applicant, Sea Shepherd Australia Limited, was entitled to be endorsed as a deductible gift recipient for the purposes of section 30-125(1) of the Income Tax Assessment Act 1997 (Cth) (ITAA). In particular, the proceeding concerned the construction of Item 4.1.6 in section 30-45 of the ITAA.

The applicant applied for endorsement as a deductible gift recipient pursuant to section 30-120 of the ITAA in February 2010. The Commissioner refused to endorse the applicant; the applicant objected and the Commissioner disallowed its objection. This proceeding was an application for review of the Commissioner’s objection decision. The Tribunal upheld the Commissioner’s decision for the following reasons.

The applicant was established by Sea Shepherd Conservation Society (SSCS), a company incorporated in the United States of America, as an international nonprofit marine wildlife conservation organisation. The founder and president of SSCS, Mr Paul Watson, is also a director of the applicant. The applicant was incorporated in January 2007, and is registered as an unlisted public nonprofit company. At a meeting held in February 2010, the applicant’s board of directors resolved that the applicant would commence trading.

Clause 3.1 of the applicant’s constitution provides that the purposes of the applicant are:

3.1.1 to advance education in the field of marine and freshwater ecology;

3.1.2 to promote the conservation and preservation of marine and freshwater living organisms;

3.1.3 to promote humane behaviour towards animals, particularly but not exclusively marine animals, which are in need of care and attention by reason of sickness, maltreatment, poor circumstances or ill-usage;

3.1.4 any other purposes deemed charitable.

Clause 10.2 of the applicant’s constitution provides:

In the event of the organisation being dissolved, the amount that remains after such dissolution and the satisfaction of all debts and liabilities shall be transferred to another organisation with similar purposes which is not carried on for the profit or gain of its individual members.

The facts of the case were not in dispute. Evidence was given that the applicant’s main activity is the conduct of what it terms ‘campaigns’ which are designed to protect marine wildlife from being harmed or killed by humans. The applicant operates independently from SSCS, but the two entities collaborate in the planning and carrying out of the campaigns. To date, the applicant’s campaigns have been focused primarily on the protection of whales. The campaigns involve intercepting whaling fleets and obstructing the whalers’ activities so as to prevent the killing and injuring of whales.

The applicant’s activities also encompass the protection of other marine wildlife, by intervening so as to prevent the killing of sharks for their fins and the clubbing of seals. Furthermore, the applicant tracks and removes dolphin drift nets. The applicant does engage in activities other than campaigns. For example, it co-ordinates the rescue, transport and cleaning of affected wildlife during disasters, but these latter activities were found not to be its primary purpose.

It was not in dispute that the applicant is a charitable institution. However, its entitlement to deductible gift recipient status was in contention.

The relevant legislation is contained in Division 30 of the ITAA, which deals with deductions for certain gifts or contributions made by taxpayers. Section 3015 makes available deductions for gifts or contributions made to certain recipients, including a ‘fund, authority or institution covered by an item in any of the tables in Subdivision 30-B’ (Item 1 of the table in section 3015). Section 30-17 requires that such a recipient be endorsed under Subdivision 30-BA as a ‘deductible gift recipient’.

Subdivision 30-B sets out tables of recipients for deductible gifts, including both general categories of recipients and ‘specific’ (named) recipients in various fields of endeavour such as health, education, research and the environment. In particular, ‘welfare and rights recipients’ are set out in the tables in section 3045.

The table in section 3045(1) sets out general categories of welfare and rights recipients. Item 4.1.6 of that table provides for the following category, upon which the applicant relied in this case:

…a charitable institution whose principal activity is one or both of these:

(a) providing short-term direct care to animals (but not only native wildlife) that have been lost or mistreated or are without owners;

(b) rehabilitating orphaned, sick or injured animals (but not only native wildlife) that have been lost or mistreated or are without owners.

Section 30-120 of Subdivision 30-BA provides that, upon application by an entity in accordance with Division 426 in Schedule 1 to the Taxation Administration Act 1953 (Cth) (the TAA), the Commissioner must endorse the entity as a deductible gift recipient if the entity is entitled to be so endorsed.

Section 30-125(1) governs the entitlement to such endorsement. Relevantly to this case, the provision provides:

An entity is entitled to be endorsed as a deductible gift recipient if:


(b) the entity is a fund, authority or institution that:

(i) is described (but not by name) in item 1 …. of the table in section 30-15; and

(c) the entity meets the requirements of subsection (6) ….

Section 30-125(6) provides that (when read in conjunction with section 30-125(7)) the entity must be required by (amongst other things) a document constituting the entity or rules governing the entity’s activities to transfer any surplus assets upon being wound up to another fund, authority or institution that is a deductible gift recipient. The applicant’s winding up provision did not meet this requirement.

The applicant applied for endorsement as a deductible gift recipient on the basis that it is a fund, authority or institution that is described (but not by name) in Item 1 of the table in section 30-15, being covered by Item 4.1.6 in the table in section 30-45(1) setting out general categories of welfare and rights recipients.

The applicant contended that its activities fell within the terms of para (a) of Item 4.1.6 in the ITAA because:

1.       They constituted the provision of ‘short-term direct care’ to animals. The applicant submitted that the word ‘care’, according to its ordinary meaning, encompassed protection from harm or death, and accordingly, in undertaking its campaigns, the applicant provided ‘care’ within the terms of the provision.

2.       The care provided was both ‘direct’ and ‘short-term’ as per the provision.

3.       The whales and other marine life protected by the applicant’s campaigns were ‘animals … that … are without owners’ for the purposes of that provision.

4.       The animals protected were not ‘native wildlife’, which meant wildlife on the mainland of Australia.

In response, the Commissioner submitted that:

1.       The phrase ‘short-term direct care’ was to be construed as a composite phrase and meant some form of direct physical assistance, such as shelter or medical care. The Commissioner’s contention was that para (a) is concerned with the provision of such care to categories of animals which have suffered some misfortune, and in that regard that the phrase ‘without owners’ was concerned with animals requiring care as a result of an event which had occurred, rather than being concerned with any unowned animals (whether wild or otherwise) that might suffer some misfortune in the future.

2.       Therefore, the applicant’s principal activity of preventing wild animals from being killed or injured by humans did not satisfy the terms of para (a).

3.       Further, the applicant’s activities did not satisfy the terms of para (a) in any event because all the marine wildlife protected by the applicant were ‘native wildlife’. Accordingly, the applicant’s activities were expressly excluded from Item 4.1.6. The Commissioner submitted that the phrase ‘native wildlife’ in para (a) included migratory species naturally found in Australian waters, and that all of the marine species protected by the applicant fitted that description.

The Tribunal embarked on a statutory interpretation exercise in response to these submissions. It held that the applicant’s interpretation of the terms ‘care’ and ‘without owners’ was flawed because it was without context. The words had to be construed in their wider context as composite terms. On this issue, the Tribunal said (at [48]–[49]):

We do not accept the applicant’s contention that legislature has employed the phrase ‘without owners’ so as to encompass both abandoned animals and wild animals. On the applicant’s contended construction, the provision of care to certain stray animals (for example, a domesticated animal born stray) would be excluded, because they were neither wild nor abandoned. In our view, the applicant’s contended construction does not accord with the legislative intention evinced by the rest of the provision. The word ‘care’ forms part of a composite phrase with the preceding adjectives ‘short-term’ and ‘direct’ and is to be construed accordingly. We reject the applicant’s piecemeal approach to the construction of that phrase. In our view that phrase confirms that para (a) is not concerned with the protection of animals from anticipated harm. Rather, it comprehends the provision of physical assistance, such as food, shelter or veterinary care, to animals with unmet needs arising from specified circumstances.

However, the Tribunal did not accept the Commissioner’s view on the meaning of ‘native wildlife’ as encompassing migratory species in Australian waters. Rather, the Tribunal agreed that the term meant indigenous species within Australia. Therefore, the Tribunal did not find that the applicant’s activities were confined to the protection of ‘native wildlife’ for the purposes of Item 4.1.6. Nevertheless, its actual activities (protecting whales, dolphins etc) did not fall within those described in para (a) of Item 4.1.6 of the ITAA.

As the applicant’s activities did not satisfy the terms of Item 4.1.6, the applicant was not ‘a fund, authority or institution’ described in Item 1 of the table in section 30-15. Accordingly, the applicant was not entitled to be endorsed as a deductible gift recipient for the purposes of section 30-125 of the ITAA.

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Implications of this case

This case illustrates the distinction between a charity and a deductible gift recipient. An organisation may be a charity, but still not fall within the definition of a deductible gift recipient for taxation purposes. The Commissioner of Taxation in this case accepted that Sea Shepherd was a charity and also that its principal activity was the protection of whales and other marine life by means of campaigns designed to prevent those animals being harmed or killed by humans. The case arose because the parties differed in their construction of the meaning of para (a) of Item 4.1.6 of the ITAA and the application of that provision to the facts of the case. The type of ‘care’ being offered to animals by Sea Shepherd was found not to be that which was envisaged by the Act, which was more that of a short-term ‘shelter’ type of care.