The Mackay Community Foundation Ltd ATF the Mackay Community Trust v The Commissioner of State Revenue [2025] QCAT 476[1]

Background

In what is hopefully the final round in what has proven to be a controversial question, QCAT, following the precedent set in Commissioner of State Revenue v Montessori Children’s Foundation (Montessori), has again struck down the decision of the Commissioner of State Revenue that The Mackay Community Foundation Limited (MCFL) as trustee for the Mackay Community Foundation Trust was not entitled to be registered as a charitable institution due to it being a trust under s149C(4) of the Taxation Administration Act 2001 (Qld Tax Act).

The fundamental question was whether a trust qualifies as an ‘institution’ for the purposes of s149C(4) of the Qld Tax Act. The relevance of this question lies in the advantages of registration. Successful registration brings with it exemptions from transfer duty, payroll tax and land tax offering significant financial benefits to charitable organisations. This QCAT decision is the latest in a series of decisions finding against the Commissioner’s position and interpretation of the legislation.

In the Montessori decision, the Tribunal noted that what makes a trust an ‘institution’ is moving past simply holding and administering funds and assets (a ‘mere trust’) to actively conducting activities in pursuit of its purpose. The Commissioner’s appeal was struck down by the Queensland Court of Appeal noting that “institution” holds its ordinary meaning and that the Foundation moved past the threshold of a “mere trust” but rather was “both living and active” in pursuing its intended purpose. Significantly, the appeal decision created binding precedent for further cases appearing before the Tribunal.

Facts

Back before QCAT, the Commission’s narrow interpretation of “institution” was again challenged. This time in relation to the Mackay Community Foundation Trust (Trust).

Established in 2003, the Trust’s mission is “to raise and provide a sustainable and perpetual source of funds for the advancement of community welfare” in Mackay. The Trust was gifted real property in support of its cause.  It sought to be registered as a charitable institution under the Qld Tax Act before the transfer to enable it to have the benefit of a transfer duty exemption.  Both the application and objection to the Assessment were rejected subjecting the Trust to a liability of $50,675 in respect of transfer duty.

Legal issues

The Commissioner’s decision raised 4 main points of contention:

  • whether the Trust requires a body or organisation that carries out its activities;
  • whether the Trust, and not simply the trustee, must meet the requirements of an institution;
  • whether the Trust must ‘directly and independently of the trustee’ undertake activities targeted toward its charitable purpose; and
  • whether the trust is a ‘mere trust’?

Decision

Turning first to the structure of the Trust, the Tribunal held that flowing from Montessori there are no standard or set structural requirements, such as a minimum membership number of 7, that must be met in order for an organisation to qualify as an institution under the Qld Tax Act. The Tribunal placed emphasis on the variety of charitable organisations envisioned in s149C ranging from universities and religious organisations to kindergartens. Formal membership is not determinative of the Trust’s ‘substantial public participation‘. Rather what carried weight were student volunteers, public fundraising and direct service delivery.

The argument that the Trust and not the trustee must meet the requirements was rejected outright. The Tribunal relied on Montessori which noted the importance of the relationship between the trust and the trustee as seen in the Trustee’s constitution, the Trust Deed regulating the Trustee’s use of the trust assets and the trustee’s ‘structure and activities‘.

The Tribunal rejected the assertion that the activities of the trust must be assessed independently of those of the trustee. The primary flaw in such an argument is seen in the nature of a Trust as ‘a relationship rather than a legal entity‘ thus a trust lacks capacity to act independently of its trustee. This would leave s149C(4) inoperative.

The true assessment in cases of this nature, is whether the trust moves beyond a ‘mere trust’. The Tribunal identified 7 factors as being relevant for this assessment:

  • whether the trustee was called into existence to translate a specific charitable purpose “into a living and active principle“;
  • whether the trustee does “far more than merely hold trust assets for charitable purposes“;
  • whether the trustee uses trust property in actively carrying out the charitable objects, rather than simply managing investments and distributing income;
  • the organisational structure through which the charitable purpose is pursued;
  • the extent and significance of the activities undertaken;
  • the degree to which the activities engage with and serve the public; and
  • whether the trustee is “living and active” in pursuing the charitable purpose.

The Tribunal took a practical approach to these questions. The workings of the Trust alongside its trustee were considered including fundraising activities, the Trust documents regulating the use of trust funds and assets, the organisational structure of the trustee including board membership and meetings as well as the scale of activities amongst other things. Ultimately, the Tribunal determined that the Trust was an institution for the purposes of s149C.

Conclusion and Implications

It goes without saying that benefits open to charitable organisations must be protected from abuse. The Commission’s historically strict interpretation has however left deserving organisations unable to access the benefits availed to them by law. Borrowing the sentiments of Member King Scott:

“The Foundation is exactly the type of body that Parliament would have intended to benefit from registration as a charitable institution: a well-established, well governed organisation with substantial community engagement and a track record of effectively advancing social welfare in its community.”

Hopefully, the position is now settled.

[1] The Mackay Community Foundation Ltd ATF the Mackay Community Trust v The Commissioner of State Revenue [2025] QCAT 476