Close Search
 
MEDIA, JOBS & RESOURCES for the COMMON GOOD
News  |  Events

Charity Loses Federal Court Tax Fight


24 November 2015 at 11:10 am
Xavier Smerdon
An Australian organisation that claimed to be a charity and spent more than $1 million on luxury cars for its members, has lost a Federal Court appeal to keep receiving charitable tax concessions.

Xavier Smerdon | 24 November 2015 at 11:10 am


0 Comments


 Print
Charity Loses Federal Court Tax Fight
24 November 2015 at 11:10 am

An Australian organisation that claimed to be a charity and spent more than $1 million on luxury cars for its members has lost a Federal Court appeal to keep receiving charitable tax concessions.

The Study and Prevention of Psychological Diseases Foundation (SPED) took the Australian Taxation Office to court over the revocation of endorsements for its charity tax concessions and deductible gift recipient (DGR) status.

The Federal Court ruled in favour of the ATO and the Administrative Appeals Tribunal (AAT), which had previously found that SPED was “neither a charitable institution nor a health promotion charity”.

Court documents revealed that SPED was founded by James Salerno Snr and that the organisation claimed its principal activities were research carried out by members 24 hours per day, seven days a week.

SPED claimed to be researching poverty, opulence, crowded living, living alone, in cities and in remote areas of Australia, and the effects these living conditions had on people.

The organisation had spent over $1 million on three luxury cars to be used by the members for “research”.

“As part of what was called Project Inebriation, SPED investigated aspects of human behaviour as it relates to luxury motor vehicle use,” documents from the AAT said.

“This research was undertaken using motor vehicles purchased by SPED. They included a Hummer, for which it paid about $100,000, a Ferrari purchased for about $300,000, and a Rolls Royce at about $695,000.

“Other projects included Project India (undertaken when SPED members visited India to attend a wedding), and ‘Project Gambling: Understanding thought processes and addictive behaviour from engagement in games of chance’.”

The AAT said there was no evidence of any of SPED’s research or findings being published in the traditional sense.

“Nothing has made its way into, or even been submitted to, any medical or other journal,” it said.

“The members are described as both the researchers and the ‘guinea pigs’. They are not required to have any qualifications in psychology or social science.”

Salerno Snr was not listed as a member of SPED, instead being identified as an advisor, but 11 of the 21 members of SPED shared his surname.

“SPED acknowledges that the members are bound by blood ties, marriage or friendship,” the AAT said.

SPED also claimed to be researching the “Ideal Human Environment” (IHE), with a group of around 40 people becoming known as the “Ideal Human Environment Social Research Team”.

“The IHE is a place where all people regardless of race, colour, creed or religion can be emotionally and physically safe from and with each other,” SPED explained in court documents.

Members of SPED gave their entire income to the organisation, therefore paying no income tax.

Consistent with its view that every activity of its members amounted to research, SPED claimed every outlay, including but not limited to its members’ ordinary living expenses, as a research expense.

SPED also covered at least some of James Salerno Snr’s expenses even though he was not a member.

A spokesperson for the ATO welcomed the Federal Court’s upholding of its and the AAT’s rulings.

“The decision helps protect the integrity of the Not for Profit sector by ensuring charity tax concessions are accessed only by those entitled to do so,” the spokesperson said.


Xavier Smerdon  |  Journalist  |  @XavierSmerdon

Xavier Smerdon is a journalist specialising in the Not for Profit sector. He writes breaking and investigative news articles.

PB Careers
Get your biweekly dose of news, opinion and analysis to keep you up to date with what’s happening and why it matters for you, sent every Tuesday and Thursday morning.

Got a story to share?

Got a news tip or article idea for Pro Bono News? Or perhaps you would like to write an article and join a growing community of sector leaders sharing their thoughts and analysis with Pro Bono News readers? Get in touch at news@probonoaustralia.com.au or download our contributor guidelines.

Advertisement

Virtual Congress - CPA Australia

Tags : ATO, Federal Court, SPED,

 Print

Get more stories like this

FREE SOCIAL
SECTOR NEWS

Your email address will not be published. Required fields are marked *



YOU MAY ALSO LIKE

Meet Pro Bono News’ first editorial advisory board

Wendy Williams

Thursday, 16th April 2020 at 8:02 am

Survey Reveals Australian Attitudes to Torture in Conflict

Lina Caneva

Tuesday, 6th December 2016 at 3:05 pm

Indigenous Advocate Named 2016 Telstra Business Woman of the Year

Lina Caneva

Tuesday, 22nd November 2016 at 12:30 pm

Aussies Say Yes to Multiculturalism, Marriage Equality But No To Politics

Lina Caneva

Tuesday, 22nd November 2016 at 11:05 am

pba inverse logo
Subscribe Twitter Facebook
×