The National Institute of Dramatic Art v Chief Commissioner of State Revenue

1. [1]

   HIS HONOUR: This is an application by The National Institute of Dramatic Art (“NIDA”) for the review of a decision of the Chief Commissioner of State Revenue refusing an application by NIDA for a refund of payroll tax paid over the financial years ended 30 June 2010 to 30 June 2014. NIDA sought a refund of $2,540,040.

2. [2]

   NIDA contended that the wages payable by it were exempt wages for the purposes of the Payroll Tax Act 2007 (NSW) pursuant to cl 12(1)(c) of Sch 2 to that Act. Clause 12(1)(c) provides:

3. [3]

   It is common ground that NIDA is a non-profit organisation and there was ultimately no dispute that NIDA has as one of its objects a charitable purpose. The Chief Commissioner rejected the application for a refund on the ground that NIDA is a school or college within the meaning of cl 12(1)(c) and that therefore the exemption does not apply.

4. [4]

   NIDA does not dispute that it conducts a school or college. Up to 29 January 2012 it was registered as higher education provider with the NSW Department of Education and Training and from that date it was registered with the Australian Government’s Tertiary Education Quality and Standards Agency as a higher education provider. It describes itself as Australia’s National Education and Training Institution for the Dramatic Arts. According to its 2009 Annual Report, at the start of 2009 NIDA had 166 students enrolled in six higher education courses. It offered degrees of Bachelor of Dramatic Art in Acting, Design, Production, and Production Crafts, Properties and Costume. It offered a graduate Diploma of Dramatic Art (Directing) and an Advanced Diploma of Dramatic Art in Scenery Construction.

5. [5]

   But this was only part of NIDA’s activities. Counsel called it “the jewel in the crown” to distinguish it from the crown itself. In addition to offering graduate and undergraduate courses, NIDA carried out other activities through various divisions.

6. [6]

   The NIDA Open Program offered a range of short-term and part-time courses in the Arts, including acting on stage and for the camera, singing, costume, production, writing and direction. The courses were available for children, adolescents and adults and were available at different levels. At least at foundation levels, courses were available to all. The courses might be for as short a time as one or two days. An example of such courses from 2011 included part-time courses for three hours for one or two nights a week for approximately three months or on weekends for intensive training through practical sessions in areas described as Acting Ensemble, Acting to Camera, the Designer, the Director presenting to Camera and Singers Studio. On average about 12,000 people attended such courses each year.

7. [7]

   Another division was called Vocational Education and Training. NIDA offered programs that could result in vocational qualifications in areas such as musical theatre, specialised make-up, live production and technical services.

8. [8]

   Another area was called NIDA Corporate. NIDA Corporate offered courses for business executives seeking to improve their communication skills.

9. [9]

   Another division of NIDA was called Venue Hire. This involved the hiring out of theatres, foyers, rehearsal spaces and reception rooms, including by making performance space available to amateur community groups.

10. [10]

    NIDA maintains a vast collection of costumes, props and staging that are hired to the general public. NIDA also stages its own productions.

11. [11]

    In this and other ways explained in more detail later in these reasons, NIDA says that although as part of its activities it conducts a college or school, it should not itself be characterised as a college or school. Rather, its essential character is that of a promoter of the arts. It contends that this is a charitable purpose and that all of its activities are directed towards that purpose and all of its wages are thus exempt under cl 12(1)(c).

12. [12]

    The Chief Commissioner contends that NIDA is a school or college within the meaning of cl 12(1)(c). He says that all or almost all of NIDA’s activities are ancillary to its conduct of a drama school. He contends that the meaning of “school” is broad and that an institution where people, whether young, adolescent or adult, are instructed in some area of knowledge or activity is a school, so that not only NIDA’s undergraduate and graduate programs involve the conduct of a school or college, but its broader activities such as, at least, its Vocational Education and Training Division and NIDA’s Open Program, involve the conduct of a school or college. The Chief Commissioner contends that the fact that NIDA may be characterised as a promoter of the arts does not mean that it is not also a school or college within the meaning of cl 12(1)(c).

13. [13]

    The Chief Commissioner also submits that if, contrary to his submission, NIDA cannot be described as a school or college within the meaning of cl 12(1)(c), that nonetheless its activities in conducting a school are covered by the exclusion to the exemption in that clause.

14. [14]

    The Chief Commissioner also contends that if NIDA can otherwise bring itself within cl 12(1)(c) by avoiding the exclusion of being a school or college, it is not enough for wages to be exempt that the employees’ work advances the charitable purpose of NIDA. Rather the work itself must be charitable work, that is, have an intrinsically charitable character. Thus, the Chief Commissioner submits that wages paid to employees engaged in hiring out costumes or theatres, or coaching business executives in communication skills, would not be paid for the employees’ engaging in charitable work, even though it was work done for the purpose of raising funds that would be devoted to the overall charitable purpose of NIDA.

15. [15]

    Counsel for NIDA recognised that one of the ordinary meanings of the word “school” that has been applied in this country in other contexts, is the wide meaning for which the Chief Commissioner contends. However, NIDA contends that read in the context of other provisions, the words “school or college” in cl 12(1)(c) refer to traditional institutions of educational instruction. Counsel submitted that merely because an organisation provides education or instruction does not mean that for the purposes of cl 12(1)(c) it is a school or college.

16. [16]

    It is convenient to deal first with the issues of construction and the meaning to be given to the words “school or college” in cl 12(1)(c).

Legal Principles

1. [17]

   Section 6 of the Payroll Tax Act imposes payroll tax on all taxable wages. Section 10(2) provides that exempt wages are not taxable wages. The employer by whom taxable wages are paid or payable is liable to pay payroll tax on the wages (s 7).

2. [18]

   Part 4 of the Payroll Tax Act is headed “Exemptions”. Sections 48 and 49 provide:

3. [19]

   Included in Div 1 of Pt 3 of Sch 2 is clause 4. It provides:

4. [20]

   Clause 12 is in Div 4 of Pt 3 of Sch 2. It is given effect by s 100 that provides that:

5. [21]

   Both parties relied on cl 4 of Sch 2 to advance a contention in relation to the meaning of cl 12(1)(c). Clause 4 exempts from payroll tax wages paid or payable by a school or college (other than a technical school or a technical college) that provides education at or below, but not above, the secondary level of education and is carried on by a not-for-profit body corporate, society or association, provided it is not carried on by or on behalf of the State. The effect of cl 4 is that most private schools providing education up to the secondary level are not required to pay payroll tax.

6. [22]

   The Chief Commissioner emphasised that cl 4 refers to a school or college that is carried on by a specified body (cl 4(b)). That is to say, the reference in cl 4 to a school or college is a reference to the conduct of a school or college by one of the specified bodies in cl 4(b). He submitted that “school or college” should be given a consistent construction in cl 4 and cl 12, so that in cl 12(1)(c) the exclusion of the exemption applies to the activities of the non-profit organisation in conducting a school or college, even if that activity were not the main activity or purpose of the organisation which would not itself be characterised as a school or college.

7. [23]

   Consistently with this submission, at one point, the Chief Commissioner conceded that if this submission were accepted it would follow that insofar as wages were paid by NIDA for work done that was of an intrinsically charitable character, but was not properly characterised as wages paid for the conduct of a school or college or matters ancillary thereto, the wages would be exempt wages. Ultimately the Chief Commissioner’s position was that he made no concessions. But, if the above argument were accepted, the corollary would follow.

8. [24]

   The difficulty with this submission is that cl 12(1)(c), unlike cl 4, prescribes the exemption by reference to the identity or character of the non-profit organisation rather than by what activity the organisation carries on. Of course the activity the organisation carries on will be relevant to its proper characterisation, but the concepts are discrete. The contention advanced by the Chief Commissioner could only be adopted if cl 12(1)(c) could be read as if it provided, in substance, that wages were exempt if they were paid or payable by a non-profit organisation (other than in its conduct of a school or college, or a statutory body or an instrumentality of the State). Although such a construction would not be inconsistent with the apparent legislative purpose of the provisions, that is not sufficient to justify the adoption of the Chief Commissioner’s submission (Taylor v Owners - Strata Plan No 11564 (2014) 253 CLR 531; [2014] HCA 9 at [39]). I cannot be satisfied that it was by inadvertence that the exclusion from the exemption in cl 12(1)(c) was made by reference to the character of the organisation rather than the activity carried on by it. The lack of symmetry between cl 4 and cl 12(1)(c) may have been intentional. The alternative construction could lead to additional complications in assessing what wages fell within and what fell outside the field of conducting a school or college. Neither the second nor third conditions stated by Lord Diplock in Jones v Wrotham Park Settled Estates [1980] AC 74 at 105-106, as restated by Lord Nicholls in Inco Europe Ltd v First Choice Distribution [2000] 2 All ER 109 at 115 is satisfied.

9. [25]

   The words “school” and “college” each has more than one ordinary meaning. The Macquarie Dictionary defines “school” as including:

10. [26]

    The Oxford English Dictionary gives as the first relevant meaning of the word “school” that it is “An establishment or institution for the formal education of children or young people”. The Australian Concise Oxford Dictionary also gives as the first meaning of “school” that it is “An institution for educating or giving instruction, especially for children, or US for any level of instruction including college or university”.

11. [27]

    The Macquarie Dictionary defines “college” as:

12. [28]

    The Australian Concise Oxford Dictionary defines “college” as:

13. [29]

    In Lawrence v South County Freeholds Ltd [1939] 1 Ch 656 a restrictive covenant prohibited the use of land for the carrying on of any trade or business other than that of a school or seminary, a surgeon or apothecary. The plaintiff sought an injunction to restrain the defendants from carrying on, or from suffering to be carried on, from the land the business of teachers of music and dancing. The defendants admitted that the premises were used for what was called a “school of music”. Simonds J held that the primary and natural meaning of the word “school” was “a place where boys and girls receive instruction and discipline. That is the meaning which it bears in its most familiar compounds – schoolboy, schoolgirl, schoolmaster” (at 671). His Lordship said (at 672):

14. [30]

    A different approach was taken in Cromer Golf Club Ltd v Downs [1972-73] ALR 1295; (1973) 47 ALJR 219. That case concerned the construction of s 40(1)(c) of the Public Works Act 1912 (NSW) that authorised the compulsory acquisition of land “for school sites”. The High Court held that this provision authorised the acquisition of land for a National Fitness Camp, being an acquisition for the purposes of an existing national fitness camp at Narrabeen. Barwick CJ, with whom McTiernan and Stephen JJ agreed, said (at 1299):

15. [31]

    Commissioner of Taxation v Leeuwin Sail Training Foundation Limited (1996) 68 FCR 197 concerned an exemption from sales tax of “goods for use by a university, or school, that is conducted by a non-profit body”. The question was whether the taxpayer conducted a school for the purposes of the exemption in conducting training programs, principally for young men and young women, on a square rigged ship. The ship was used for training programs, described as programs for personal development, corporate team building, disabled youth, school maritime studies, and eco adventure. The principal activity (that occupied about 70 per cent of the time taken by training activities involving the ship) was the personal development program that entailed a 10-day voyage in which participants received instruction in basic seamanship, catering, marine engineering, maritime history, meteorology and other nautical subjects. The emphasis was on participants’ engendering teamwork, and “trust-initiating activities” to help develop personal relationships and responsibilities. The corporate team-building voyages lasted three days and their object was basically the same as that for the 10-day personal development voyages, except that due to the limited time the teams did not actually sail the vessel unaided. The disabled youth voyages were of five days’ duration and were designed to offer participants experience in the challenges of sailing having regard to their particular disabilities and needs. The maritime studies voyages were of four days’ duration and were designed to provide students with practical experience that complemented classroom activities, focusing on practical marine studies. The eco-adventure voyages were designed to provide participants with instruction in environmental awareness rather than personal development.

16. [32]

    The principal object of the foundation that conducted these programs was to promote the education of young men and women by the provision of an adventure sail training scheme using a traditional sailing ship. The Full Court of the Federal Court held that the foundation conducted a school, applying what was said to be the ordinary meaning of that word as given by Barwick CJ in the Cromer Golf Club case consistently with a dictionary definition that included an establishment in which boys or girls or both receive instruction, or an institution in which instruction of any kind is given, whether to children or adults (at 202-203).

17. [33]

    In Leeuwin the Commissioner of Taxation argued that the juxtaposition of the word “school” with “university” indicated that the word was used in the sense of an institution which promoted learning through a set curriculum taught by a professional body of teachers and subject to formal assessment where there was regular attendance of students over a substantial period of time (at 202). The Full Court of the Federal Court found that there was no such limitation. The Full Court found that the ordinary meaning of “school” was not so limited.

18. [34]

    Carr J, who took a somewhat narrower view of the Court’s function in deciding an appeal which was limited to a question of law than that of the majority, nonetheless observed that Barwick CJ in the Cromer Golf Club case had regard to the ordinary meaning of the term “school” that included an institution in which instruction of any kind is given, whether to children or adults, often with a defining word indicating a special subject that is taught, such as dancing, music or riding. His Honour considered that the reasoning of Barwick CJ in Cromer Golf Club was inconsistent with that of Simonds J in Lawrence v South County Freeholds Limited and preferred the view of Barwick CJ in Cromer Golf Club by which, if the matter were one of law, he was in any event bound (at 212). That is, there was nothing in the juxtaposition of the word “school” with “university” to indicate that “school” should be given a narrower meaning than what was said to be the ordinary meaning of the term.

19. [35]

    The same approach to the meaning of the word “school” was taken by the Full Court of the Federal Court in Commissioner of Taxation v Australian Airlines Ltd (1996) 71 FCR 446. It also concerned an exemption from sales tax for goods “… for use … by a university or school conducted by an organization not carried on for the profit of an individual”.

20. [36]

    The taxpayer was a company, the shares in which were owned by the Commonwealth. It conducted the airlines business known as Trans-Australia Airlines. As part of its operations it conducted a flight training centre. The relevant exemption distinguished between the educational institution itself and the organisation that conducted the educational institution (at 463). Clause 4 of Sch 1 of the Payroll Tax Act makes a like distinction, but cl 12(1)(c) does not. Sundberg and Merkel JJ said (at 463):

21. [37]

    Cromer Golf Club, Leeuwin and Australian Airlines provide a consistent body of authority attributing a wide meaning to the word “school” to which the Parliamentary draftsman might be expected to have had regard in the drafting of the relevant provisions of the Payroll Tax Act.

22. [38]

    NIDA submitted that cl 4 of Sch 1 uses the words “school or college” in the traditional sense, rejected by the Full Court in Leeuwin, of an educational institution that promotes learning through a set curriculum taught by a professional body of teachers and subject to a formal assessment, and encompassing the notion of regular attendance over a substantial period of time. This is because cl 4 refers to a school or college that provides education at or below, but not above, the secondary level of education. That indicates that the school or college in question provides education that can be fitted within what is customarily understood as primary, secondary or tertiary levels of education. I think there is force in that submission insofar as it applies to cl 4. But it does not follow that the same interpretation can be given to cl 12(1)(c) that does not use the words “school or college” in the same context as those words are used in cl 4.

23. [39]

    In my view the word “school” in cl 12(1)(c) is to be given the wide sense that the word has been given in the Australian cases referred to above as being a place or institution where people, whether young, adolescent or adult, receive instruction in some area of knowledge or of activity. “College” at least includes an institution that provides post-secondary higher education, such as a technical or professional school that awards a diploma or like certification, or provides specialised professional education, such as a business college, music college or naval college. I do not accept that in cl 12(1)(c) the words “school or college” refer only to an educational institution that promotes learning through a set curriculum taught by a professional body of teachers and subject to a formal assessment encompassing the notion of regular attendance over a substantial period of time. The National Fitness Camp in Cromer Golf Club and the training ship in Leeuwin would not be a school (or college) on that more limited definition. But both the High Court and the Full Federal Court, in finding that the relevant bodies conducted a school, said that this was in accordance with the ordinary meaning of that word. I do not think a more limited meaning should be given to the words “school or college” in cl 12(1)(c) merely because a more limited meaning might be adopted in cl 4 having regard to the context in which the words “school or college” are used in cl 4.

24. [40]

    The legislative history of the relevant provisions does not indicate that they form a coherent whole so that the meaning of an expression in cl 12(1)(c) can be usefully obtained from the meaning of the same expression in cl 4. It is not only cl 4 that would have to be considered if recourse is had to context. Section 48 is also relevant. Again, there is no coherence in the exemption provided by s 48 and that provided by cl 12(1)(c) in Sch 2.

25. [41]

    Section 48 exempts wages from payroll tax if the wages are paid or payable by, inter alia, a non-profit organisation that has a charitable, benevolent, philanthropic or patriotic purpose as its sole or dominant purpose, whereas cl 12(1)(c) applies to a non-profit organisation that has a charitable, benevolent, philanthropic or patriotic purpose as one of its objects. The wages that are exempt under s 48 are those payable to a person engaged exclusively in work of a kind ordinarily performed in connection with such a purpose of the non-profit organisation, whereas under cl 12(1)(c) wages are exempt when payable to a person in respect of the time when he or she is engaged in charitable, benevolent, philanthropic or patriotic work of the organisation. There is excluded from the kinds of non-profit organisations that might be entitled to an exemption under s 48 a school, an educational institution (meaning an entity that provides education above secondary level) and an educational company, being a company in which an educational institution has a controlling interest and that provides, promotes or supports the educational services of that institution. There is excluded from the exemption in cl 12(1)(c), a school or college.

26. [42]

    There is no obvious reason for these overlapping but differently expressed exemptions. Given the width of the definition of “educational institution”, it may be that in the context of s 48(1)(c) the word “school” has a more limited meaning than it does in cl 12(1)(c), but it is not necessary to decide that question. Again, the different context in which the word is used in s 48 means that whatever meaning might be given to the word “school” in the exclusion from the exemption in s 48(1)(c) does not translate to cl 12(1)(c).

27. [43]

    Ms Kaur-Bains who appeared for the Chief Commissioner helpfully traced the legislative history of the different provisions.

28. [44]

    Between 1949 and 1971 payroll tax was imposed by the Commonwealth. Section 15 of the Payroll Tax Act 1941 (Cth) relevantly provided that payroll tax was not imposed on wages paid by a religious or public benevolent institution (Payroll Tax Act 1941, s 15(b)). Section 15 was amended in 1966 to include s 15(bb) which included an exemption for:

29. [45]

    In the second reading speech by the Minister introducing the bill that became the Pay-roll Tax Assessment Act 1966 (Cth) the Minister stated that:

30. [46]

    When responsibility for the imposition and collection of payroll tax was passed to the States in 1971 the provision that was in s 15(bb) of the Pay-roll Tax Assessment Act 1966 (Cth) was substantially replicated in s 10(d) of the Pay-roll Tax Act 1971 (NSW). That provision remained in the Pay-roll Tax Act 1971 until its repeal in 2007. In 2007 the section which had been s 10(1)(d) of the Pay-roll Tax Act 1971 became cl 4 of Sch 1 to the 2007 Act, with the only material change being a change to the order of sub-paras (i) and (ii).

31. [47]

    The progenitor of cl 12(1)(c) was ss 10(1)(j) and (2) of the Pay-roll Tax Act 1971. Prior to the repeal of that Act in 2007, s 10(1)(j) and (2) relevantly provided:

32. [48]

    These provisions became cl 12(1)(c) of Sch 2 to the 2007 Act.

33. [49]

    Section 10(1)(j) of the 1971 Act was introduced by the Pay-roll Tax (Further Amendment) Act 1977 (NSW). In introducing the Bill for that Act the Treasurer stated in his Second Reading Speech that:

34. [50]

    There is no equivalent to s 48 in the Pay-roll Tax Act 1971 (NSW). A purpose of the 2007 amendments was to harmonise payroll tax law with Victoria. Section 48 is in substantially the same terms as in the Payroll Tax Act 2007 (Vic). The section appears to have its origins in s 10(1)(b), (ba), (bb), (2), and (3) of the Pay-roll Tax Act 1971 (Vic).

35. [51]

    Having regard to the discrete sources from which the provisions were drawn, it is not surprising that they lack a coherent structure. The context in which the provisions appear does not provide material assistance in construing the text of cl 12(1)(c), although it is clear that it was not the purpose of cl 12(1)(c) to provide an exemption for tertiary institutions. This tends to support giving the words “school or college” in cl 12(1)(c) a wide meaning in accordance with the line of authority stemming from Cromer Golf Club.

36. [52]

    The question then is whether NIDA is a school or college in that wide sense. The characterisation of NIDA as an institution must have regard to its objects as provided for in its constitution and its activities (R v Trade Practices Tribunal; Ex Parte St George County Council (1974) 130 CLR 533; [1974] HCA 7 at 562; Re Ku Ring Gai Co-operative Building Society (No. 12) Ltd (1978) 22 ALR 621 at 624, 634, 641-642; State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282; [1982] HCA 77 at 305; United Firefighters Union of Australia v Country Fire Authority [2015] FCAFC 1; (2015) 315 ALR 460 at [132]-[138]). This is consistent with the High Court’s decision in Incorporated Council of Law Reporting (Qld) v Federal Commissioner of Taxation (1971) 125 CLR 659; [1971] HCA 44 where Barwick CJ said (at 666) that the Council of Law Reporting would be a “charitable institution” within the meaning of s 23(e) of the Income Tax and Social Services Contribution Assessment Act 1936-1962 (Cth) if its purposes were charitable “for the nature of the institution inheres in the purposes it is created to and does pursue”.

NIDA’s Constitution

1. [53]

   From 27 May 2008 clause 10 of NIDA’s constitution has provided:

2. [54]

   Clause 11 states that “in furtherance of the principal purpose of the company described in clause 10, the company has the following purposes: …”. There follow 19 additional “purposes”, many of which would be better described as powers (such as the power to purchase, lease, hire, accept or otherwise acquire property or to construct buildings or to sell, manage, lease, license, grant concessions over, mortgage, dispose of or otherwise deal with property).

3. [55]

   It can be seen from clause 10 that the principal purpose of NIDA can be expressed generally as the promotion and encouragement of expertise in the practice, knowledge, appreciation, understanding and enjoyment of the arts. But the focus of the ways in which that purpose will be achieved is on teaching and educating people in the arts, including by establishing schools, lectures, courses, seminars et cetera and conferring degrees, diplomas, certificates or awards, as well as awarding scholarships and financial assistance and presenting plays, opera, ballet and any other form of theatre art. The overall effect of clause 10 is that NIDA’s principal purpose is to promote the arts through teaching and education, including through the provision of lectures and workshops and through the conducting of schools that confer degrees or other awards.

NIDA’s Annual Reports

1. [56]

   NIDA’s annual reports describe its activities. Its reports are for a calendar year. In its 2009 annual report NIDA provided a “Vision statement” and a “Mission statement”. Under the heading “Vision” it said:

2. [57]

   Under the heading “Mission” it stated:

3. [58]

   NIDA’s chairman Mr Long stated:

4. [59]

   NIDA’s chief executive officer, Ms Lynne Williams reported:

5. [60]

   The focus of these descriptions is on NIDA’s contributing to the arts primarily through its education and training programs.

6. [61]

   The 2010 annual report contained the same Vision and Mission statements as did the 2009 report. The chairman’s letter opened with the following statements:

7. [62]

   The letter from Ms Williams stated that in 2010 NIDA had continued to:

8. [63]

   The emphasis in Ms Williams’ statement in the 2010 annual report was on the education NIDA offered its students. Thanks were provided to the Commercial and Outreach teams offered as part of the Open program, the Corporate Training program or Parade Theatres programs in contributing to NIDA’s success. The inference I draw from the letter is that those programs were regarded as being ancillary to NIDA’s core function of providing education to its students.

9. [64]

   The 2011 annual report omitted the previous Vision and Mission statements. Possibly they had fallen out of fashion. The first page of the report described NIDA in the following terms:

10. [65]

    Again, the emphasis is on NIDA’s education in its undergraduate and graduate programs and the education offered more widely through NIDA Open and NIDA Corporate Performance. The same emphasis appears in the reports from the chairman and the chief executive officer. Ms Williams described NIDA as Australia’s leading education and training institute for the dramatic arts. The 2011 annual report then provided sections describing first the undergraduate program, and secondly the post-graduate program. It stated the number of students enrolled and the number of staff, visiting staff and the productions undertaken. NIDA’s productions are an essential part of its educational philosophy of learning by doing.

11. [66]

    The next section of the report was headed “NIDA Open”. It was reported that in 2011 the NIDA Open program and NIDA Corporate Performance joined forces to become NIDA Open offering “access to NIDA philosophies and expertise through short and part-time courses for young people and adults, and through communication and presentation skills training for business professionals.” It was stated that NIDA Open’s offerings included acting, design, production, costumes, properties, directing and playwriting, and in addition courses in TV presenting, film-making, writing for film and television, higher school certificate specialist topics, early childhood learning, teacher training, and communication and presentation skills. These courses were offered through a variety of formats. It was said that for young people these included seasonal holiday courses, regular term classes and specialist schools sessions and that for adults there were year-round evening and weekend short courses, two and four term part-time courses and customised training.

12. [67]

    To deliver the various programs NIDA Open employed 395 casual tutors throughout 2011 who were recognised as experts in education and professional practice. They were drawn both from regular teaching staff and from the arts and entertainment industries. It was reported that throughout 2011 NIDA Open provided NIDA’s higher education students and recent graduates with training and casual employment opportunities in the NIDA Open courses.

13. [68]

    The next section of the report was headed “Educational Resources and Technology” and described NIDA’s investment in technology and its capital works projects and their funding.

14. [69]

    The next section was headed “Development”. Under this section NIDA thanked its principal donors and sponsors.

15. [70]

    Again, the main focus of the report was on NIDA’s undergraduate and graduate programs. Its secondary focus was on the programs offered through NIDA Open.

16. [71]

    In its 2012 annual report greater emphasis was given to the activities of NIDA Open. In her report Ms Williams referred to NIDA’s contribution to debate concerning a new national cultural policy and its implementation of a “Continuum of Opportunity” program. She said that this program aimed to bring arts and cultural education and training to a wider constituency and sought to encourage families, schools, businesses and communities to value creativity as an important part of their lives and to equip elite students and mid-career professional practitioners with skills and expertise to lead the cultural life of the nation. She reported that offerings of NIDA Open had expanded and more than 17,000 students had responded to a range of courses and activities. NIDA’s undergraduate and graduate program continued to hold prominent places in the report.

17. [72]

    The section on NIDA Open reported that the programming reflected NIDA’s higher education offerings with courses in performance, design, production, costume, properties, directing and writing, as well as courses in television presenting, film-making, higher school certificate specialist topics, early childhood learning, teacher training and communication and presentation skills development. Over 17,000 students and “clients” participated. Four hundred casual teachers were employed in the NIDA Open program who were mostly NIDA graduates. It was reported that for many participants NIDA Open’s training was a pathway into NIDA’s higher education program. Thirty-eight per cent of the students undertaking full-time undergraduate and graduate study had previously completed short course programs through NIDA Open.

18. [73]

    There is not a material change of emphasis in the 2013 and 2014 reports. Each of the reports from 2011 contains a brief description of NIDA in substantially the same terms as that contained in the 2011 report quoted at [64] above.

Ms Williams’ Evidence

1. [74]

   Ms Williams deposed that NIDA was made up of a number of divisions that she listed as follows:

2. [75]

   Ms Williams deposed that on average there were only 75 students per year enrolled in the graduate and undergraduate programs from 2009 to 2014 as opposed to an average of 12,000 NIDA Open program students per year.

3. [76]

   Ms Williams joined NIDA as its chief executive officer in May 2008. She deposed that prior to joining NIDA she had “… maintained a broad portfolio career as a creative artist, artistic director and cultural entrepreneur”. Apart from five years as a lecturer in Education and Performing Arts at the University of Wollongong between 1977 and 1982 her background was not in teaching. NIDA submitted that its appointment of a chief executive officer with such a background was consistent with its essentially not being a school or college, but rather having a broader role in the promotion of the arts.

4. [77]

   Ms Williams gave evidence of NIDA’s activities that might not be characterised as the activities of a school or college. She deposed that part of her role was “… building and strengthening relationships and partnerships with companies, institutions and festivals which will benefit NIDA as a whole and increase the profile of the Dramatic Arts within Australia’s cultural life.” She gave examples of such partnerships and relationships with other arts organisations. She said that an important aspect of her role was promoting NIDA and Australian Performing Arts to the world. She gave examples of that. Ms Williams deposed that she had opened up NIDA to the community at large by increasing the range of NIDA Open and Corporate programs to “… give children and adults access and opportunities to realise their creative potential”. She said that:

5. [78]

   Ms Williams deposed that NIDA had been realising “this vision” through what she called the “Independent Program” that had been running since 2012 through which NIDA provides free facilities and rehearsal spaces to small arts organisations and co-operatives made up of emerging artists. She deposed that NIDA provides assistance to artists with marketing and developing their work, including providing them with access to industry experts to provide guidance. She deposed that NIDA functions as a centre for community arts activities offering its performance spaces and venues for hire to the broader community or free for specific “industry partners”. She deposed that NIDA had a vast collection of costumes, properties and staging available for the general public to hire at reduced rates and that this was offered not to generate revenue, but to increase opportunities for the broader community to access the arts through a relationship with NIDA. She said that NIDA viewed its theatres and spaces as a key access point to NIDA for the community and when its theatres and spaces are not being used for its own purposes they are available for hire, mostly to community groups.

6. [79]

   Whilst Ms Williams did refer to NIDA’s undergraduate and graduate programs as contributing to its community initiatives and the implementation of “’continuum of opportunity’ vision”, her affidavit did not give NIDA’s undergraduate and graduate programs the prominence they were given in NIDA’s annual reports.

Other Evidence of NIDA’s Activities

1. [80]

   NIDA provided an affidavit from the head of its Open and Corporate Division, Ms Caroline Spence, and from the “Producer” at NIDA, a Ms Johanna Mulholland, who was the producer at NIDA Parade Theatres responsible for managing its facilities and venues in Kensington (where the NIDA Parade Theatre is located) and was responsible for overseeing NIDA’s productions and events as well as NIDA’s “Independent Program”.

2. [81]

   There was no similar affidavit from the head of NIDA’s undergraduate and graduate programs describing those programs in the same detail. Nor was evidence given about NIDA’s Vocational Education and Training division in anything like the detail given in relation to NIDA’s other programs that involve a broader engagement with the community.

3. [82]

   It is clear that in its undergraduate and graduate programs NIDA conducts a school or college. Having regard to the width of the definition of school or college, and having regard to the paucity of the material adduced in respect of its VET division, I conclude that NIDA also conducts a school or college in providing programs to students in order for them to gain qualifications in the performing arts in various specific skills through that division.

4. [83]

   One relevant criterion in assessing the relative significance of NIDA’s undergraduate and graduate programs and its Vocational Education and Training program on the one hand, and its other operations on the other hand, is the extent to which different divisions contributed to revenue and the costs incurred in respect of those divisions, including the number of staff engaged in them. The 2011 annual report is typical of the entire period. In the year ended 31 December 2011 NIDA derived revenue of $18,124,987 reported as follows:

5. [84]

   Of the $5,009,660 of revenue contributed by the Open and Corporate programs, $3,423,044 was contributed by the NIDA Open division and $1,586,616 by the NIDA Corporate division.

6. [85]

   NIDA as a whole obtained a surplus in that year of $389,147. Its principal expense was wages, salary and oncosts that totalled $10,038,409. It reported that the Open and Corporate Programs provided a surplus of $1,944,082 and without those programs NIDA would have incurred a deficit of $1,554,935.

7. [86]

   The most significant contribution to revenue was the operating grant from the Australian Government of $6,826,657 and the capital works grant from the Australian Government of $2,366,262.

8. [87]

   Funding is provided to NIDA by the Australian Government pursuant to funding agreements. The funding agreement for 2010-2011 required NIDA to carry out “the Activity” to achieve the “Objectives” within the “Activity Period”, in accordance with the agreement and diligently, effectively and to a high standard. The “Activity” NIDA was required to carry out was defined as meaning “the activity described in item A [Program and Activity], which aims to fulfil one or more of the Objectives of the Program, and includes the provision of Activity Material.” Those were further described as follows:

9. [88]

   Thus although NIDA’s revenue from payment of student fees for its full-time programs was only a little more than a quarter of the revenue derived from its Open and Corporate programs, the largest component of its funding was derived from its commitment to conducting an accredited program of full-time courses.

10. [89]

    Ms Williams deposed that in the financial year ended 30 June 2011 NIDA had 110 full-time or part-time employees and 516 casual employees. In the following financial year it had 102 full-time or part-time employees and 538 casual employees. The figures were much the same in the earlier financial year and in the financial year ended 30 June 2013. In the financial year ending 30 June 2014 NIDA employed 130 full-time and part-time employees and 552 casual employees. Ms Spence, the head of the NIDA Open and Corporate divisions deposed that in the 2011 calendar year five staff were employed in the Corporate division and 12 were employed in the Open program. This did not include casual tutors who worked in both programs. No clear figures were provided of the number of staff employed full-time or part-time in the undergraduate and graduate programs or in the Vocational Education and Training division. The 2010 annual report had a section naming NIDA’s staff. It listed 16 staff members under the heading “Open Program, Corporate Performance, Marketing and Development”. It listed 26 staff members under the heading “Teaching Program”. Other staff members were listed under the headings “Executive, Student and Staff Services, Library, Philanthropy and Events, Operations, Venues and Accounts”. These were the numbers as at 1 March 2011.

11. [90]

    Ms Williams described the “continuum of opportunity” 10-year plan as an overarching program that was informed by NIDA’s vision of its being opened up to the community at large so as to give children and adults access and opportunities to realise in their creative potential at multiple points throughout their lives. She said that the elite training programs made up only a part of the whole of that continuum of opportunity vision. The 10-year plan was prepared for the Federal Government in 2010 and is for a period of 10 years from 2011 to 2021. The plan described its objectives as follows:

12. [91]

    The plan then identified five initiatives, namely:

13. [92]

    In describing its first initiative NIDA stated that through its NIDA Open courses NIDA engaged with thousands of young people, but there was greater opportunity to work within the primary and secondary education system to build the skills of teachers, and to that end NIDA would seek to develop two teacher training qualifications which specialised in an advanced understanding of drama teaching and would assess the potential for delivering a one-year graduate Diploma in Education (Drama) and a three-year Bachelor of Education in Drama and Performance studies to provide participants with skills for teaching theatre. These courses would be delivered in partnership with a selected university or universities. In describing this initiative NIDA stated that:

14. [93]

    The plan stated that there was an opportunity for NIDA to develop additional VET courses at varying levels for secondary school students. It also postulated the creation of specialised VET courses for “young digital entrepreneurs”.

15. [94]

    NIDA did not explain the admission that its primary focus had been on the delivery of higher education courses at undergraduate and postgraduate level. I would in any event infer from NIDA’s own documents that those programs were its primary focus. I am not satisfied that at any material time they ceased to be its primary focus.

16. [95]

    Having regard to the width of the meaning of “school” that has been adopted in the authorities and which I accept as applicable to cl 12(1)(c), I think that NIDA conducts a school not only through its undergraduate and graduate programs and its Vocational and Education Training Programs, but also through at least parts of its Open Program.

17. [96]

    That may not be so for all of its Open Program. Some of its programs involve the offering of stage productions of well-known Australian children’s books that were delivered to primary school students and their families and teachers designed to introduce and engage children in the performing arts from a young age. Short courses over two or five days were offered to adolescents and adults in many areas, such as music, theatre and TV presenting, writing, directing, production, design, film-making, acting and performance and so on.

18. [97]

    But longer courses were offered, for example, over eight evenings once or twice a week for eight weeks. There were foundation courses offered in acting and performance over a course of eight evenings described as, by way of example, NIDA Acting Techniques, Screen Acting Techniques or voice. Specialised acting and performance courses over the same length of time were offered called, by way of example, Verbatim Theatre, Screen Test Workout, The Total Actor, and so on.

19. [98]

    NIDA also offered advanced short courses, entry to which was by audition, that took place on one or two evenings a week over a half year. These courses were offered under headings such as Acting Ensemble, Screen Acting Ensemble, TV Presenters Ensemble, and so on. Some of these courses could lead to the grant of certificates that provide qualifications in certain employments. Thus a brochure in April 2013 issued by NIDA Open stated that “NIDA is one of the few certified training organisations that offers electives for the Certificate III in live production, theatre and events (technical operations). This July we are offering the elective - Design Apply and Remove Make-Up.” The reference to Certificate III is evidently a reference to the Australian Qualifications Framework Specification. The award of such a certificate is not different in principle from the award of a diploma or degree. It is a certification that the person receiving the certificate has acquired a particular level of knowledge or skill in the designated area.

20. [99]

    Applying the broader definition of “school” I consider that at least many of the programs offered through NIDA Open would qualify as the activities of a school.

21. [100]

    NIDA led evidence of other of its operations, such as venue and costume hire which, considered by themselves, would not constitute the conduct of a school. I also doubt that many of its corporate development programs would be so characterised, but it is unnecessary to decide that question.

22. [101]

    Considering its activities as a whole I would characterise NIDA as being a school or college, even if it were necessary to choose between its being a school or college on the one hand, or being a promoter of the dramatic arts on the other. Of course the two are not mutually exclusive. Even if its school-type activities are confined to its undergraduate and graduate programs and its Vocational Education and Training Programs, they are nonetheless activities carried out on a significant scale (State Superannuation Board v Trade Practices Commission at 306). I would go further and say that they were the “predominant and characteristic activity” of NIDA which are supported by its other activities. When the school-type activities of the NIDA Open Program are also taken into account that conclusion is even clearer.

23. [102]

    For these reasons I conclude that the Chief Commissioner was right to refuse NIDA’s application for an exemption from payroll tax from 1 July 2009 and for a refund of payroll tax paid, because NIDA during that period was a school or college within the meaning of cl 12(1)(c). The wages paid or payable by it were not exempt wages under that provision.

24. [103]

    It is unnecessary to decide whether, if a different conclusion had been reached, all of the wages paid by NIDA would be exempt on the basis that all of its activities are directed to the obtaining of a charitable object, or whether it would only be the wages paid for work that was “intrinsically charitable” (for example, the wages paid to a teacher, but not those paid to an employee engaged in costume hire) that would be exempt. (For this distinction see Federal Commissioner of Taxation v Word Investments Ltd (2008) 236 CLR 204 at 221.)

25. [104]

    For these reasons I order that the decision of the defendant to refuse the plaintiff’s application for a refund of payroll tax paid for the period from 1 July 2009 to 30 June 2014 be confirmed. I order that the plaintiff’s summons be dismissed. Prima facie, the plaintiff should pay the defendant’s costs. I will hear the parties on costs.