Deductible gift recipient: meaning of 'the Commonwealth'

Is a corporation 'the Commonwealth' for the purposes of being a deductible gift recipient under item 5.1.1 of the table in subsection 30-50(1) of the Income Tax Assessment Act 1997 (ITAA 1997), where it is established by interested persons to support a body set up under Commonwealth statute?

No. The corporation is not 'the Commonwealth' for the purposes of item 5.1.1 of the table in subsection 30-50(1) of the ITAA 1997.

The corporation is an incorporated association. Its purpose is to be a sponsor for a body which is constituted under a Commonwealth statute.

This body's functions are governed by regulations under the statute, and its office-holders are appointed pursuant to the statute and regulations.

The corporation's main functions are the provision/maintenance of buildings and equipment together with the provision of club, general welfare and sports facilities for the body. It has been formed by interested persons from the local community. It is controlled by its members and is not under the control of the body or any other governmental authority. It is not subject to government audit and all forms of insurance cover are at its expense. Property it buys for the body becomes the property of the body. It is non-profit and on winding up surplus assets are to be transferred to a similar entity.

By virtue of item 5.1.1 of the table in subsection 30-50(1) of the ITAA 1997, 'the Commonwealth or a State' can be a deductible gift recipient. A gift made to such a deductible gift recipient can be income tax deductible if it is 'made for purposes of defence'.

Corporations can, in some circumstances, be accepted as 'the Commonwealth' (see, for example, the discussion in Maguire v. Simpson (1977) 139 CLR 362). In deciding whether a particular corporation is 'the Commonwealth', factors to be considered can include: whether the corporation fulfils a governmental or non-governmental function; the capacity of the Government to control its activities; financial autonomy; the right of appointment and dismissal of the members of the body of its staff by the Government; whether it has duties to furnish information or accounts to the Government; and its power over assets in its ownership or control. [ Re Copyright Act 1968; Re Australasian Performing Right Association Ltd (1982) 65 FLR 437 at 443 per Bowen CJ and Franki J quoting the President of the Copyright Tribunal at first instance]

When considered in light of such factors, this corporation cannot be accepted as 'the Commonwealth'. It is not controlled by the government, its members are not appointed by government, it possesses financial autonomy (even though property it buys for the body becomes the property of the body), and it is not required to furnish accounts to the government. Also, it was set up by its members and not by statute or governmental authority. It cannot be readily described as fulfilling governmental functions, even if it can be said that it is connected with and assists the operations of a government instrumentality.