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20 Dec 1010 Bulk grain handler an exempt entity - Cooperative Bulk Handling

The Full Federal Court has, by majority (Mansfield and McKerracher JJ, Siopis J dissenting), dismissed the Commissioner's appeal against the decision of Gilmour J, who held that Cooperative Bulk Handling Ltd (CBH), a handler of bulk wheat and other grains grown in Western Australia, is entitled to an exemption from tax under s 50-1 ITAA 1997, on the basis that it is an exempt entity under Item 8.2 in the table in s 50-40 ITAA 1997.

Item 8.2 provides, so far as is relevant, as follows:

"A society or association established for the purpose of promoting the development of any of the following Australian resources:
(a) agricultural resources..."

A condition of the exemption was that the organisation was not carried on for the profit or gain of its individual members.

Mansfield and McKerracher JJ said, at para 80:

"The conclusion drawn by the primary judge as to purpose was correct. The totality of the discrete activities which continue to be undertaken by CBH are directed to promoting the development of the grain growing industry in Western Australia by its continual focus on:

  • improving the quality of grain both as grown and maintained through its delivery, storage and handling;
  • on securing its continued marketability so that production can be maintained and increased;
  • and on enhancing the reputation of wheat grown in Western Australia,

thereby advancing Australia’s competitiveness in the grain export market. (The evidence showed that Western Australia produced 40% of Australia’s wheat)."

In relation to whether or not CBH was being carried on for the profit or gain of its individual members, Mansfield and McKerracher JJ said, at paras 112-113:

"112. While members do benefit from the activities of CBH, in its grain handling and storage activities, they do so to no greater extent than, and have no preference over, non-members who deal with the company, and in these circumstances such benefits do not accrue to them as 'individual members'.

113. It follows that CBH is not carried on for the 'profit or gain of its individual members'."

FCT v Co-operative Bulk Handling Limited [2010] FCAFC 155 (Full Federal Court; Mansfield, Siopis and McKerracher JJ; 17 December 2010).


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