Issue
Is a trust which is established for the purposes of administering the property and assets of a religious group, a 'religious institution' or a 'charitable institution' under Items 1.1 and 1.2 of section 50-5 (Income Tax Assessment Act 1997 (ITAA 1997))?
Decision
No. The trust is neither a 'religious institution' nor a 'charitable institution' under Items 1.1 and 1.2 of section 50-5 (ITAA 1997) as the trust is not an 'institution'.
Facts
A trust is set up for the purpose of administering the property and funds of a particular unincorporated religious group. The trustees are members of the congregation of the group. Under the trust deed, the trustees hold the property and funds of the congregation for trust purposes, namely to carry on the service of God.
Reasons For Decision
Taxation Ruling TR 92/17 discusses the meaning of the term 'institution' for the purposes of the ITAA 1997. Taxation Ruling TR 92/17 states that a body is an 'institution' if it is an establishment, organisation, or association, instituted for the promotion of some object. This definition was accepted by the High Court in Stratton v Simpson (1970) 125 CLR 138. In this case the Court held that a trust which had been set up to hold property for charitable purposes was a 'mere trust' and not an 'institution' (see also Commissioner for Land Tax (NSW) v Joyce & Ors 132 CLR 22). The Court also held that although a body or organisation which holds property upon a charitable trust and carries out the trust purposes is commonly called a charitable institution, it is really an instrument for carrying a purpose into effect.
The present trust is not an 'institution' under Items 1.1 and 1.2 of section 50-5 (ITAA 1997) but is rather a 'mere trust', merely an instrument for carrying a purpose into effect.