I strain Goverment “tiga Australian Taxation Office The Public Officer Replyto: PO Box 9977 College of Universal Medicine Parramatta NSW 2124 15 Blue Hills Avenue Ourreference: 1012764040783 Goonellabah_ NSW 2480 Case ID; 1-SDAXBVC Contact officer: Qimin Ren Phone: (02) 9354 3085, Fax: (02) 62600739 Email: [email protected] ‘ABN: 52 152869317, Date: 13 February 2015 ‘The ATO Position on the case findings of College of Universal Medicine Dear Sir/Madam, We have reviewed the submissions provided by you on 26 September 2013 and on 29 August 2014 regarding the issues in respect of whether College of Universal Medicine (CoUM) is entitled to the DGR endorsement for the operation of a school building fund. ues identified Enclosed is the ATO posit during the review. n on the case findings setting out our view on th Please review our position document attached to this letter and provide written comments, with supporting details, if you © disagree with our understanding of the facts «disagree with our interpretation of the law ‘think there are other facts not taken into account, or ‘think our figures or calculations are incorrect. ‘Send any comments by 13 March 2015 to: ‘Active Compliance Private Group and High Wealth Individuals Australian Taxation Office PO Box 9977 Parramatta NSW 2124 Attn: Qimin Ren If you provide comments, we will consider them and let you know our final position in writing. If you ‘do not respond, this letter represents our final position on these issues. For more information If you have any questions or need to discuss any aspect of your case, please phone 13 28 69 between 8.00am and 5.00pm, Monday to Friday, and ask for Qimin Ren on extension 43065 and quote reference number 1-5DAX8VC. Yours sincerely Michael Cranston Deputy Commissioner of TaxationSensitive Australian Government Australian Taxation Office CASE ID: 1-SDAXBVC The ATO Position on the case findings This section explains the ATO’s position for College of Universal Medicine (CoUM) in relation to the issue whether the entity is entitled to be endorsed as a DGR for the operation of a school building fund. CoUM SAF case PAGE 1 OF zrSensitive THE ATO POSITION ON THE CASE FINDINGS TABLE OF CONTENTS Table of contents. Introduction i ‘Summary of Our position Issue Relevant facts Your contentions ur position explained in full. teouannon GLOSSARY Words defined in this glossary shall have the meanings ascribed to them Glossary In full name ATO Australian Taxation Offce Commissioner of | The Commissioner of Taxation of the Commonwealth of Australia Taxation ITAA 1936 Income Tax Assessment Act 1936 ITAA 1997 Income Tax Assessment Act 1997 TAA Taxation Administration Act 1953 (Cth). wwe of our the ATO CoUM or the College | College of Universal Medicine you or your College of Universal Medicine the fund College of Universal Medicine School Building Fund or CoUM SBF (COLUM SBF case (1-BDAXBVC) PAGE 20F 27Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS INTRODUCTION 1. This document is a part of our letter dated 13 February 2015. This document sets out the ATO’s analysis of the facts as we understand them, application of the relevant law to those facts, and details of any proposed recommendations that might be made as a result of the finalisation of the case. 2. Set out below are the reasons for the case, the tax issues identified, the material facts and evidence, your views and contentions, and the ATO’s position. 3. College of Universal Medicine (CoUM) intends running its operation at 37 Converys Lane, Wollongbar NSW 2477. CoUM was endorsed as a deductible gift recipient (GR) for College of Universal Medicine Schoo! Building Fund on 25 August 2011. 4. This review was commenced to examine the details of CoUM's setting and the operation of CoUM schoo! building fund for the period 25 August 2011 to 30 August 2014. This review is to determine whether CoUM is eligible for the endorsement, and Whether CoUM has complied with statutory and ATO requirements. 5. If you do not agree with our understanding of the facts or our interpretation of the law, then you will be given the opportunity to provide details, including any additional facts we should be taking into account and any other relevant matters, before we determine our final position, Our letter dated 13 February 2015 explains what you need to do and what happens next. (CoUM SBF case (1-5DAXBVC) PAGE 30F 27Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS: SUMMARY OF OUR POSITION 6. Our position as presented below is that, for the years under review, CoUM is not entitled to be endorsed as a deductible gift recipient (DGR) for the operation of College of Universal Medicine School Building Fund. ISSUE 7. Is College of Universal Medicine entitled to be endorsed under subsection 30-125(2) of the Income Tax Assessment Act 1997 (ITAA 1997) for the operation of College of Universal Medicine School Building Fund as a school or college building fund under item 2.1.10 of the table in subsection 30-25(1) of the ITAA 19977 8. Answer: No. CoUM has not satisfied the conditions of endorsement for the operation of its schoo! building fund, CoUM SAF case (1-50AX8VC) PAGE 4 0F 27Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS RELEVANT FACTS 9. 10 " 12 13. 14 15. 16. 17. 18. 19. 20. 24 22, 23. 24. In forming our position, we have had regard to the following facts and evidence. (On 04 April 2011, CoUM's founder Mr Serge Benhayon acquired 37 Converys Land Wollongbar NSW 2477 for $2,300,000. The land was 2.42 ha of general commercial property. The buildings on the land were two warehouses’. ‘On 25 August 2011, CoUM was established ‘On 25 August 2011, CoUM was registered with the Australian Securities and Investment ‘Commission (ASIC) as a company limited by guarantee®. ‘On 25 August 2011, CoUM was registered with Australian Business Register (ABR) for an Australian Business Number (ABN), its ABN is 52152869317". On 07 October 2011, COUM was registered with the ATO for a tax file number and its income tax exemption was effective from 25 August 2011 On 08 October 2011, COUM applied to the ATO for Tax Concessional Charity (TCC) ‘endorsement as a charitable institution for advancement of education. (On 07 November 2011, COUM was endorsed with the ATO as a TCC, the TCC endorsement was effective from 25 August 2011 (On 11 November 2011, COUM applied to the ATO for Deductible Gifts Recipient (OGR) endorsement for its schoo! building fund. (On 13 December 2011, COUM was endorsed with the ATO as a DGR'*; the DGR endorsement was effective from 25 August 2011 (On 06 July 2012, CoUM was registered with Office of Liquor, Gaming and Racing (NSW) as a fundraising entity” (On 28 July 2012, CoUM started its appeals for public donations at Byron Bay, NSW. (On 03 December 2012, COUM was registered with the Australian Charities and Not-for- profits Commission (ACNC) as a registered charity’, On 04 June 2013, Ballina Shire Council approved the DA application in respect of the development at 37 Converys Lane Wollongbar (Lot 2 DP 577649) for school purpose". Total number of students is limited to no more than 236 at any one time. (On 20 July 2013, the Board of Directors of CoUM identified options respect of CoUM's proposed school building. One of the options was that CoUM will lease part of the warehouse at 37 Converys Lane, Wollongbar NSW 2477 for its college use*. On 16 September 2013, the Commissioner of Taxation started a comprehensive review case on the CoUM’s entitlement for DGR endorsement for a school building fund. * See RP data ? See ATO systems records and ASIC records. > See ABR register. 4 See ATO systems records. 5 See NSW fundraising register administrated by Office of Liquor, Gaming and Racing, See the second submission to the ATO made by CoUM on 26 September 2013, 7 See Australian Charities and Not-for-profits Commission Register, See DA consent No 201 1/416.2 issued by Ballina Shire Council (under item A13 provided on 29 August 2014), ° See the minutes of Board meeting on 20 July 2013, Reference number: COUM M2/13. (CoUM SBF case (1-5DAXBVC) PAGE SOF 27Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS 25. On 03 October 2013, CUM provided its first submission to the ATO in respect of the enquiry made by the Commissioner of Taxation on 16 September 2013. 26. Inthe first submission, COUM provided a copy of amended constitution of the College of Universal Medicine. 27. The objects stated in the CoUM's constitution are’® 6 Objects The objects for which the company is established are to: (2) Teach, educate ongoingly and present, forall men and women to have (i) the understandings of the immutable Energetic Laws and Sciences that govern all Universal life and the way of the lvingness that this entails; (i) the principles of Esoteric Philosophy and Medicine as impressed forth by the ‘Ageless Wisdom along with the philosophical way of ife that provides such true health, harmony and a one-unified care, benefit and duty to all; and (i) practical training in philosophy, healing modalities and techniques based on the principles of Esoteric Philosophy and Medicine; and (©) promote and advance education in the aforesaid by: (i) establishing and conducting schools and other places of education; (i) organising and conducting workshops, lectures, and courses; and (ii) publishing books, audios, and other materials of any kind 28. CoUM's constitution also had the following articles in respect of not for profit pursues: ‘The non-profit clause in the CoUM's constitution states that"’ 8 Application of Income and Property (2) Subject to paragraph (b), the profts (if any) or other income and property of the College shall be applied solely to promoting and carrying out the objects of the College as set out in Article 6. The College shall not carry on any trade or business or engage in any transactions with a view to pecuniary gain or profit ofits members. No portion of the income or property of the College shall be paid or transferred, directly or indirectly, to any member of the College, whether by way of dividend, bonus or otherwise. The dissolution clause in the CoUM's constitution states" 71 Winding Up of the College If, on the winding up or dissolution of the College by any means and for any reason, there remains any property after the satisfaction of all the College's debts and liabilities, the property shall not be paid to or distributed among the members of the College, but shall be given or transferred to one or more organisations: (2) selected by the members of the College at or before the dissolution of the College; and (b) having objects similar to the College; and. (c) Whose rules prohibit the distribution of its or their income and property among its or their members; or It there are no organisations meeting the above requirements, to one or more organisations the objects of which are the promotion of charty and to which income tax deductible gifts can be made under the ITAA. 29. Articles in respect of a school building fund in the constitution of CoUM are™: 68 Use of Gift Funds * See Article 6 of Constitution of College of Universal Medicine (amended), provided on 29 September 2013 " See Article 8 of Constitution of College of Universal Medicine (amended), ® See Article 71 of Constitution of College of Universal Medicine. See Antcles 7, 67 and 68 of Constitution of College of Universal Medicine. (CoUM SBF case (1-5DAXBVC) PAGE 80F 27Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS 30. 31. (2) The directors must place into the Gift Fund every gift of money or property made to that Gift Fund (each a “Gift’) and all money received as a consequence of any Gift. (b) The College may only use a Gift Fund in accordance with: () the principle purpose of the Gift Fund as identified in Rules relating to the fund; and (i) any requirements of (A) the ATO; (6) the ACNC, (C) any public authority regulating the collection and use of money raised in a fundraising appeal, (©) the conditions applicable to any fundraising authority granted to the College of the Gift Fund by a public authority; and (E) any enactment controling the collection and use of money raised in a fundraising appeal. (c) The bank account, receipts for donations to and other accounting records of the Gift Fund must be clearly identified and kept separate from any other accounts, receipts or records of the College. 72 Winding Up of the Gift Fund In the event that the Gift Fund is wound up, or the Git Fund's deductible gift recipient endorsement is revoked, any surplus assets remaining after the payment ofthe fund's liabilities shall be transferred to another fund, authority or institutton which has similar objects and to which income tax deductible gifts can be made under the ITAA. On 28 January 2014, a telephone conference was held between CoUM and the ATO. We discussed our initial findings based on the first submission'*. CoUM agreed that the ATO will examine the issues in respect of CoUM's entitlement to DGR endorsement in a further case and CoUM will provide all required formal school paperwork for the ATO's further review case. (On 04 February 2014, the Commissioner of Taxation advised CoUM that a further examination was required to address the issues in respect of CoUM's entitlement to DGR endorsement, because the following issues were identified based on the first submission made by CoUM: ‘+ CoUM is not operating a school. + There being no enrolment procedure, no orientation programs and no student instruction guidelines. Asset of formal and defined curriculum for courses not being available. No qualification framework existing, ‘There being no procedure in respect of student assessment and correction, Presentations provided by CoUM not being formal courses. Neither a school building nor a specific plan for a school building existing. CoUM not having any budget or any detailed expenditure forecasting for the planned use of the School Building Fund money. * There being no financial assurance in respect of the costs of running a school in which free education programs are expected to be provided. ‘+ There being no capital assurance in respect of the financial ability to enable the renovation / extension of a building and installation of school facilities for a school in a reasonable time. '* There being a potential capital benefit flowing through to the owner of the leased property, in respect of the added value on the property, where a school operation is, proposed. ‘See details in the ATO letter dated 04 February 2014, (CoUM SBF case (1-5DAXBVC) PAGE 7 0F 27Sensitive THE ATO POSITION ON THE CASE FINDINGS 32. 33, (On 30 April 2014, the Commissioner of Taxation commenced a comprehensive review on CoUM's entitlement to DGR endorsement for a school building fund, requesting CoUM to provide further documentation and information. On 31 July 2014, CoUM SBF had accumulated total donations of $581,781. Those donations were kept in four separate bank accounts in Westpac Bank"®. (On 31 July 2014, both bank statements and detailed accounts of CoUM SBF indicate the total DGR fund of $581,781 had been preserved and had not been used inappropriately. 35. On 12 August 2014, CoUM signed agreements with 27 volunteer presenters / teachers binding them to provide voluntary work to CoOUM"®. 36. On 15 August 2014, Mr Serge Benhayon entered into a building development contract 37. 39. with Bennett Constructions (NSW) Pty Ltd (ABN: 25 131 984 971) in respect of the renovations at 37 Converys Lane Wollongbar. According to the contract, the related work items were “Internal fitout of factory / shed plus associated roadworks and sewer” Total contract price was $784,126.20. ‘On 20 August 2014, CoUM obtained an evaluation from Elders Real Estate Alstonville in respect of the lease payment for 753 square metres hall at 37 Converys Lane Wollongbar NSW. The lease payment for the above area of a hall including executive fit out, kitchen and amenities and car parking was estimated for a price between $82,830 and $90,360 per annum. ‘On 29 August 2014, CoUM provided the second submission of documents and information to the ATO. In second submission, CoUM provided the following documents and information: ‘= Curriculum of courses Student handbook ‘+ Explanation of qualification framework adopted by COUM ‘© Appointment of volunteers Draft lease agreement ‘* Council DA consent ‘* Building floor plans ‘* Photos of building site ‘* Explanation of running a formal schoo! ‘+ Explanation of proposed use of the building ‘* Bank statements of CoUM SBF ‘* Financial statements of COUM SBF +9 See the balance sheet as of July 2014 under item B13 of second submission made by CoUM on 29 August 2014 "See item A9 of second submission by CoUM on 29 August 2014 (CoUM SBF case (1-SDAXBVC) PAGE 80F 27Sensitive "THE ATO POSITION ON THE CASE FINDINGS YOUR CONTENTIONS” 40. CoUM was not founded for a select few or to bring benefits to any one or more of a seeding group. It was founded for the public, in full recognition and awareness of the extent of problems that mankind actually faces at present. 41, CoUM was founded to bring educational programs and formal school courses to the public at large — educating them on another way to be with their bodies and in their everyday lives that in no way compromises them or their tasks and the multitude of things that need to be done, but that does all of that in a way that truly looks after the person. Introducing concepts of self-care and self-responsibilty to life are a door-opener and many, many people worldwide have now experienced and benefited hugely from. this, and the many tools and programs which COUM has to date presented. 42. CoUN’s school courses offer @ simple reflection to people on many different topics of every day life, whereby a simple connection and ease of being with oneself can be experienced whilst still carrying on normal life, which is of course of great importance. CoUM students come from all walks of life, professional, home-keepers, and everything in between, plus being of all ages and community/cultural/nationality backgrounds, 43, CoUN’s school courses, as you will see from the attachments, span many different areas, from a specialised focus on men’s health and common problems for men today, to women's health and specific areas of focus for women, as well as a course on ante- natal care, a course on selfcare, a course on oyber-bullying — a prolific problem in society today, and a course on psychological wellbeing — just to give you a taste. The range of topics is broad, and deliberately s0, as research performed by the CoUM team shows very clearly that the public is calling for simple, easy to access information on topics that are part of their everyday experience. CoUM has answered that call 44, Courses offered by the College sit outside the national qualifications and training framework. Accordingly, the pathways for students considering enrolling in courses offered by the College are informal and are based purely on each individual's personal response to the invitation offered by the teachings of the Ageless Wisdom to develop a deeper understanding of themselves as they explore new ways to address the ills that confront society. While the College does not offer vocational training, students will frequently find that their interpersonal relationships and effectiveness in the workplace are enhanced based on what is gained from the courses. For the most part, there are no pre-requisite study or other entry requirements. However, some courses will be based ‘on content and assume familiarity with ideas presented in other courses. Accordingly, in some cases, enrolment in a course will be subject to prior completion of related study such as, for example, ifa level 1 and a level 2 of a subject are offered. Students wishing to enrol in courses subject to prior study should contact the student relations co- ordinator in each case to confirm prior learning requirements. 45, The DGR fund of CoUM SBF will be used for school building purpose. 46, The courses offered by CoUM are designed to deliver the constituent objects of CoUM. 47, CoUM's founder Mr Serge Benhayon will lease part of his own property at 37 Converys Lane Wollongbar NSW to CoUM for school use. 48, The costs of the renovations that convert a warehouse (at 37 Converys Lane Wollongbar NSW) to a ready-to-use schoo! hall will be paid by Mr Serge Benhayon. Mr "” See the contentions made by CoUM in first submission to the ATO on 26 September 2013 and second submission to the ATO on 29 August 2014. (CoUM SBF case (1-5DAXBVC) PAGE 9 OF 27Sensitive ‘THE-ATO POSITION ON THE CASE FINDINGS ‘Serge Benhayon is also responsible to provide all necessary facilities that a school building should have. Those costs are not being charged back to the College. 49. Mr Serge Benhayon agreed to lease the ready-to-use school hall to CUM for $80,000 per annum. The lease payment is lower than the estimated lease payment estimated by Elder Real Estate. 50. The fund currently holds $581,781.62 as at 31 July 2014, which is sufficient to cover the proposed rental payments for a period of approximately 6 years if no further funds are received, 51, The proposed hall will be used for school purpose. (CoUM SBF case (1-5DAXBVC) PAGE 100F 27Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS OUR POSITION EXPLAINED IN FULL 52. Section 30-15 of the ITAA 1997 allows an income tax deduction for gifts to a fund, authority or institution covered by an item in any of the tables in Subdivision 30-B of the ITAA 1997. 53. Subdivision 30-8 of the ITAA 1997 contains subsection 30-25(1) of the ITAA 1997. 54. Item 2.1.10 of the table in subsection 30-25(1) of the ITAA states: ‘a public fund established and maintained solely for providing money for the acquisition, construction or maintenance of a building used, or to be used, as a school or college by (a) a government; or (b) a public authority; or (c) a society or association which is carried on otherwise than for the purposes Of profit or gain to the individual members of the society or association’ 55, These funds are referred to as ‘school cr college building funds’ or ‘school building funds’ 56. Taxation Ruling TR 2013/2 outlines the ATO view on what is required for a fund to qualify as a school or college building fund. 57. Paragraph 9 of TR 2013/2 states the following requirements of a school building fund: In order for a fund to satisfy Item 2.1.10: ‘+ itmust be @ public fund established and maintained solely for the purpose of providing money for the acquisition, construction or maintenance of a building used as a school, ‘+ the building must be used as a schoo! by a government, a public authority or a ‘non-profit society or association as described in Iter 2.1.10; and ‘the fund must be registered under the Australian Chanties and Not-for-profts Commission Act 2012 (ACNC Act 2012), or not be an ACNC type of entity as defined in the ITAA 1997 58, Paragraph 122 of TR 2013/2 states the following: "The key requirements of Item 2.1.10 considered in this Ruling are as follows ‘© there must be @ school; there must be a building; the building must be used as @ school; the building must be used as a school by a qualifying body; there must be acquisition, construction or maintenance; and the fund must be established and maintained for the requisite purpose. 59. In order for Item 2.1.10 to apply, there must be a school or an objective intention to carry on a school. For the purposes of Item 2.1.10, the word ‘schoo!’ or ‘college’ carries its ordinary meaning. It must be both a place of assembly and an educational organisation. 60. In the Australian Oxford Dictionary”, the principle definition of ‘schoo!’ is ‘an institution for educating or giving instruction, especially for children’. A ‘college’ is defined as ‘an establishment for further or higher education, sometimes part of a university’ "* See The Australian Oxford Dictionary, 1999, Oxford University Press, Melbourne. ‘CoUM SBF case (1-SDAXBVC) PAGE 11 0F 27Sensitive THE ATO POSITION ON THE CASE FINOINGS 61. In Cromer Golf Club Limited v. Downs and Another (1973) 47 ALJR 219; [1972-73] ALR 1295 (‘Cromer’) Barwick C.J) said at ALJR 221; ALR 1299: ‘It'seems to me that a ‘schoo!’ is a place where people, whether young, adolescent or ‘adult, assemble for the purpose of being instructed in some area of knowledge or of activity. Thus there are drama schools, ballet schools, technical schools, trade schools, agricultural schools and so on.” 62. Paragraph 14 of TR 2013/2 states: In order for there to be a school for the purposes of Item 2.1.10, there must also be an ‘educational organisation which: ‘+ has a distinct identity, and ‘= provides regular, ongoing and systematic instruction in a course of non- recreational education. 63. Paragraph 16 of TR 2013/2 states that a school will have a distinct identity. It will ordinarily be an institution in its own right and being an organisation. The schoo! building fund will ordinarily have its own name linking to the school. A schoo! building fund must be explicitly inking to the school or college. 64. CoUM schoo! building fund is named ‘College of Universal Medicine School Building Fund’ on the registration of DGR endorsement’®. However, its website refers COUM SBF as to ‘Fiery Building Fund”. It is not consistent with the names used in the bank statements of CUM SBF and not consistent with the registered name. 65. Although you provided a statutory deciaration that ‘Fiery Building Fund’ is same as CoUM SBF, you failed the test of distinct identity. The reason is that you publicly invited donors for donating money to a fund that has a different name related to a school which will apply the fund for schoo! building. 66. The second factor to establish an educational organisation is regular, ongoing and systematic instruction in a course of non-recreational education. 67. Paragraph 18 of TR 2013/2 states: ‘The presence of the following factors indicate that an organisation is providing instruction as a schoo! for the purposes of Item 2.1.10: ‘a set curriculum; the enrolment of students; organisation. instruction or training provided by suitably qualified persons; some form of assessment and correction; and the creation of a qualification or status which is recognised outside of the 68. A copy of curriculum of CoUM's courses was submitted to the ATO. According to the ‘summary of course syllabuses“', CoUM provided a list of 34 courses including 29 courses available and 5 courses in development. Some details of the curriculum of CoUM's courses are provided as follows”: Coa Ta Sia Tae ‘S006 Patent and Carer Edicabon then Worrstep7 | Settee (One day) presentator (oes —| Aral Se Care (Se-are | Pregnant [asa Watahop? —| Sates ® See the DGR application form made by COUM See hup/iersbuldingfind. org as at October 2014 21 See item Al of second submission to the ATO provided by CoUM on 29 August 2014, You provided the details of curriculum for 15 courses, se above footnote CCoUM SAF case (1-S0Ax8VC) PAGE 120F 27Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS ‘Code | Course curriculum available | Targoted group | Longih Glass ype | Nature Pregnancy) ‘women (One day resentation | Lie sty ‘C005 | Embracing parimenopau ‘Women hours (fweeks | Workshop —| Seifcare Menopause and Post menopause {Sour pa) presentation | Lite sive ‘COGS | Being a woman ine world today | Women hours (4 weeks | Workshop / | Life style 4.Shour pw) presentation COOTS | Working wih and Understanding | Poona ‘hours, (2 weeks | Workshop? —| Ue ayia Ansety concerned ot | 3 hours pw) presentation anviety ‘COOIS | Exercise or SaConfdancs & | Women Ro detals aE ‘SeitWorth. Women's Program presentation ‘GOOTE | Connection wih Gniaren = for | Chideare ‘hours (émonti | Workshop’ | Chiacare Chigcare Workers worker 4 hour pm ) _presertation ‘COOTE | Men wih Anwety Men hours (4 weeks | Workshop | Ue sive 4.5 hour pw) presentation ‘CoaTs | Adcressing Cyber Bullng ‘Oper ‘hours (4 weeks | Workshop | Community 2 hours pw) presentation | knowledge ‘Coazz | Sait Care or practtonere ih Beautician [4 houre (4 woaks | Workshop —| Seif care Beauty and Spa ndusty + hout pw) presentation ‘GoGz3 |Your Body and its Connesive | Open hours (4weeks | Workshop! | Salfcare Tissue. 4.Shour pw) presentation | Life syle ‘Goazk | Bringing Canneaion Dignity and | Dying parsons] @hours (4 weeks | Workshop/ | Self care SelfGere tothe Dying Process | anctherrcarers | 1.5 hour pw) presentation | Age care Le: CooaT | Sell Care Toren Wen Thous Bwoaia | Woraton7 —] Sarees] 4.5 hour pw) presentation | Lite sive ‘G00G0 | Wen with Depression Wer YOhours (weeks | Workshoo/ —| Seif care 2hours pw presentation | Lite style ‘Goiod | The Uwieg Sutras ofthe Fevareny | Open “5 hours (1Omonihs | Workshop’ —| Prilosophie {5 hours pm) presentation Code | Course curicutum im Targeted group | Length Class ype | Nature development ‘GOOTO | Modem Science Meets The open Te hours Workshop? — | Fistory ‘Ageless Wisdom (over !2morth) | presentation | Ageless 15 presentations ‘wor ‘Coors | Foundations for Vay and Woren Brows Workshop? —| Lie sve Wellbeing Wornen presentation GOOTT | Weibeing Workshop Oper ‘Srours Workshop! | Tie sve presentation ‘Coaz0—| Creating tue viaty avery day | Open Ts reas ‘Workshop / | Lie sve Exhausted? There ls another way (Swooks, 1.5hour | presentation bw ‘Coaat | Weaithy seep, healthy We One 78 fours ‘Worshop? | Lie aye (Swooks) presentation 4.8 hour pw ‘Co0R5 | Seir Care nthe Workpace™ Open 2 hours ‘Worshop? | Seifeare Practeal tools for your well-being (6 wooks) presentation 69. The Australian Oxford Dictionary defines ‘curriculum’ as ‘the subjects comprising a course of study in a school or college’, and defines ‘syllabus’ as ‘the subjects in a course of study or teaching’, further the dictionary defines ‘su knowiedge studied or taught in a school, college or university”. 70. The curriculum of CoUM's courses indicates that CoUM provides single subject bject’ as ‘a branch of courses, Each subject is comprised of some lessons. It is found that the curriculum of CoUM's courses does not represent a systematic knowledge teaching framework in both conceptual way and practical way. ® See The Australian Oxford Dictionary, 1999, Oxford University Press, Melbourne. ‘CoUM SBF case (1-SDAXBVC) PAGE 130F 27Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS 1. 72. 73. 74, 75. 76. The lessons listed in the curriculum of CoUM's courses indicate the contents of the courses are more experience sharing rather than systematic knowledge based teaching. The length of study for each course of CoUM is from 6 hours to 15 hours. Comparing CoUM's courses with the courses offered by primary schools, high schools, vocational schools and TAFE colleges in Australia, the total hours of teaching for each course of, ‘CoUM are too short to provide systematic knowledge. This finding indicates the inability of CoUM to deliver systematic knowledge teaching After examining the detailed curriculum of CoUM'’s courses, we are also aware that ‘one of important approaches applied to most of CoUM's courses is breathing technique - Gentle Breath Meditation (GBM). GBM is based on experience and ‘subject to personal controls. It is not a kind of knowledge based teaching We are also aware that some courses offered by CoUM are providing physical exercise guidance. Those courses are similar to yoga classes. They are considered to be recreational in nature rather than educational. The curriculum of CoUM's courses also indicates that the classification of the courses is under the following categories: Philosophical Women’s health Men's health Self care Psychological wellbeing Healthy lifestyle Most of those categories are related to the topics of self care and life style change. They are the topics of self-improvement for well-being rather than for obtaining skills and knowledge for further study and future career. The limitation of CoUM's qualification recognition confirms this finding™. After analysing the curriculum of CoUM's courses, we summarised the following findings: ‘Code | Course curriculum available | SKli'set | Corrected | Linking pathway | Qualification description | assessment | to other courses_| description ‘Cocoi | Patent and Carer Education Ne No Wo No ‘COWS | Rate-ralal Se¥ Care Sar-Carein [No We We We Pregnancy) ‘COGS | Embracing pertmenonause, We We We We ‘Menopause and Post menopause ‘CoG | Being a woman inthe word today | No We Wo We ‘GooTS | Werking with and Understanding | No We Wo We ansesy TOOTS | Exercise er SefContcence & | No We Wo Ne Self Worth. Women's Program ‘Coos —} Connection wen Choren = for | No We Wo Ne CChieare Workers ‘Coos —] Men wath Anxiety We We We Ne ‘coors | Addressing Cyber Bulivng We We We No ‘Gooz2 | Se Care for practioner nh No Ne We No Beauly and Spa ndusty See the analysis of qualification below, (CoUM SBF case (1-8DAXBVC) PAGE 14027Sensitive THE ATO POSITION ON THE CASE FINDINGS 7. 78. 79. 80. 81 ‘Gode | Course curiculum available | Skillset | Corrected Linking pathway | Guallieation description | assessment | to other courses _| description ‘GOOS | Your Body and is Connective No No No No Tissue. | Gooza — Bringing Connection, Dignity and] No We We We ‘Self Care to the Dying Process GooeT | Self Care for Men Wo We We Wo GOOG] Wen with Depression Wo We We fo ‘COTOO | The Living Sutras ofthe Ferarchy | No We We We ‘Code | Course curiculum in ‘Shil'est_—] Correction | Linking pathway | Gualfication development ‘description | assessment | to other courses_| description ‘GooTO | Wosem Scence Heels The No No No No +| Ageless Wisdom ‘GooTa | Foundations for Vay an We We We fo Wellbeing - Women ‘GOOTT | Welbaing Workshop We We We te ‘Go0z0 | Creating ve vialty very day | No We We We Exhausted? There is another way Goo | Healthy sioep, healthy ie We We We We (Go0zs | Self-Care inthe Wiorksace: Ne Wo We We Practical tons for you" we. bing The curriculum of COUM's courses does not include a description of skill set and knowledge set that a student should be expected to have acquired at the completion of a course of leaning. A skill set is the abilty of a student ready for his/her further study or future career. A knowledge set is the systematic understanding of a subject. The skill set and knowledge set for schoo! building fund purpose are for further study or future career rather than for the self- improvement of well-being or for recreational ability The curriculum of CoUM's courses does not identify the linking pathway to other courses. This finding further confirms that CoUM's courses are not systematic knowledge based. A knowledge system is comprised of different levels and hierarchies. The curriculum of CoUM's courses does not indicate those levels or hierarchies of knowledge within a course and between the courses. Clause 7 of CoUM's student handbook provides the following assessments will be used in CoUM: Attendance; Student self-assessment; Participation in group discussions; Preparing and delivering short class presentations, Essays e.g, writing a course diary or a short piece on an aspect of the course content: General assessment checklist to gauge comprehension of the main material covered; ‘Online survey; Feedback questionnaire; Workbooks or worksheets, or Reading learning materials (books, audios, etc). ‘CoUM SBF case (1-5DAXBVC) PAGE 150F 27Sensitive ‘THE ATD POSITION ON THE CASE FINDINGS 82. 83. 84. 8s. 86. 87. 88. 89. 90. Ciause 7 of the student handbook indicates that the assessments under CoUM are not the corrected assessments. The curriculum of CoOUM's courses confirms that there is no corrected assessment in CoUM. The ‘assessment’ in the handbook or curriculum. of CoUM's courses is likely a piece of home work or administrative procedure rather than an assessment of the understanding of leaming According to Australian Qualification Framework, an assessment is a process to determine a student's achievement of expected leamiing outcomes and may include a range of written and oral methods and practice or demonstration”. National Skills Standards Council provides that an assessment for a formal qualification must be consistent, fair, valid and reliable. Following points in respect of assessment must be ensured in a formal qualification: . assessment is conducted in accordance with the rules of evidence (ie. valid, authentic, sufficient, current); b. assessment meets relevant occupational and licensing regulatory requirements; . assessment is systematically validated; and 4. leamers' complaints and appeals regarding assessment decisions are efficiently and effectively acknowledged and resolved. Corrected assessment means a review on the understanding of knowledge is processed by a qualified assessor and feedback is given to the student, including ‘marking, ranking and evaluating of the student's learning performance and demonstration of knowledge and skills. The assessment process is normally involving a formal examination and test. The assessment defined by CoUM is lacking the basic principle of an assessment required for a formal course. This finding confirms that CoUM's courses are not likely to be recognised outside Universal Medicine group. The curriculum of CoUM's courses does not include the qualification description for completion of a course. Taxation ruling TR2013/2 does not require a schoo! qualification framework is exactly same as the State / Federal Framework. However, a school's qualification framework must have the basic elements that a qualification framework should have. According to Australian Qualification Framework (AQF), a qualification framework must be a classification system that is designed to fit in different acquired knowledge / skill sets and to show the relationship between them. “The organising framework for the AQF is a taxonomic structure of levels and qualification types each of which is defined by a taxonomy of learning outcomes. The taxonomic approach is designed to enable consistency in the way in which qualifications are described as well as ciarity about the differences and relationships between qualification types. One of the key objectives of the Australian Qualifications Framework is to facilitate pathways to, and through, formal qualifications. ....."*” As per AQF, a formal school qualification framework has the following five basic elements: % See p92 of Australian Qualifications Framework Second Edition January 2013, * See p2l of NSSC Standards Policy Framework — Improving Vocational Education and Training: the Australian Vocational Qualification System , National Skills Standards Council, 2013 Commonwealth of Australia ” see page 1 of Australian Qualification Framework 2nd edition January 2013, (CCUM SBF case (1-5DAXBVC) PAGE 18027Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS Element Details of AGF requirements T | Purpose: ‘Aparticular level giving a pathway to further study, accreditation or ‘occupation 2 | Knowledge 7 skis: Knowledge levels in respect of foundational, procedural or theoretical S| Application of Use of what learnt in situations on the levels in respect of basic, knowledge / routine and non-routine or advanced, demonstrating autonomy, skills: Judgement and responsibility 4 | Volume of Period of time for study, 0.5 ~4 years, at ieast 0.5 year with a learning: umber of subjects in a course © | Qualification types: Types of ceriificates giving to different studies, for example, @ certificate, a diploma or a degree 91. CoUM has two levels of certificates offered to its students. However, the qualification of CoUM's courses is lacking the basic elements that are required by a formal qualification framework: Element Details of CoUM’s courses 1 | Purpose: CoUN'S courses do not identify the pathway to other courses, ‘Therefore, they are not likely giving a pathway to further study, accreditation or occupation 2 | Knowiedge7 skills: ‘The detailed curricula confirm that the CoUM's courses do not provide different knowiedge/skil sts. There is no systematic sill set description 3 __| Application of knowledge / skills: ‘The courses fall to provide systematic knowledge and skil sets. Most of the courses are with the nature of life style and self- improvement. The teaching is based on the presenter’s experience land interpretation. There is no systematic knowledge conceptual framework to follow. @__| Volume of learning. Most of CoUM's courses are for 6 to 6 weeks with total 6 - 15 hours. Such short length of study is not consistent with a formal learning © | Qualification types: ‘COUN only provides Certificate. ‘The College designs its own certificate paper with no reference to the relevant level of the formal qualifications available outside UM ‘group. 92. The above finding indicates that CoUM's courses sit outside a formal school qualifcation framework. CoUM's courses do not have similar basic elements identical toa formal course. Therefore a qualification issued by CoUM is not likely to be recognised outside UM group. 93. As at the end of December 2014, CoUM had the following courses available for enrolment”: [Code | Course available for Length of course Where a class is? enrolment ‘C0008 | Embracing per menopause, Menopause | (4x1 Shour sessions) | 69 Uralba Stoo, Lismore, NSW 2480 ‘and Postmenapause ‘Shows Tsmore and Distal Women’s Heath Ceri, 3 See CoUM’s web http//vww coum. org/courses page as at December 2014. (CoUM SBF case (1-50AXBVC) PAGE 17 0F 27Sensitive “THE ATO POSITION ON THE CASE FINDINGS 94. 96. 97. 98. 99. 100. 101. 102. ‘Code Course avaliabie for Length of course Where a class ie? nreiment ‘60008 | Being a woman nthe work | 4 hours ‘South Welbourve Town Hall Corwruniy Hub - tecay (hour pw for4 weeks) | Community Meeting Room 208.220 Bank St ‘South Meoume ooo Being e woman nthe word | S hours ‘Turramurta Community Carle: 1 Gikoy Read, tocay (1.25hours pwiora | Turamura weeks) GooTs | Exercise for weling = B hous ‘Goonalabah Business Conte [4737 Gurites | Women's Program, {6x1 hour sessions) __| Drive Goonellabah NSW 2430 ‘Coors | Understancing Anxiety in [7.5 hours ‘Goonelabah Comerunity Centre 27 Olver Men. (5x1 Shout sessions) _| Ave Goonelaban NSW 2480, GooeT | Heaty sep, heaiiy fe [7.5 hours ‘Goonelebah Business Contre [4/22 Guritee (Gx1 Shou sessions) | Drive Goonelabah NSW 2480 ‘cous | Your Bay ara is 75 hours ‘Goorelaban Business Centre [432 Gunes Connective Tiss (5x1 Shout sessions) | Drive Goonelabah NSW 2480, ‘GOTO | The Lving Sutras ofthe | 15 hours ‘rll of the Ageless Wisdom ~ 37 Comvenys Hierarchy (10x15 hoursessions) | Lane, off runner Highway, Wollongbat 2477 ‘The courses available for enrolment in December 2014 confirm that CoUM’s courses were short in length. The topic subjects were of the nature of selfsimprovement and life style change. CoUM does not have any full time teachers”. No full time teaching staff indicates a systematic teaching instruction is not likely to deliver as per curriculum and schoo! plan. In August 2014, CoUM has signed 27 appointments with 27 volunteers who are not employee, agent or contractor of the College and who will become a voluntary presenter or teacher for COUM™. A presenter is different from a teacher in both common term and practical function They should not be mixed in the context of a formal school teaching. Australian Oxford Dictionary defines ‘presenter’ as ‘a person who introduces and appears in a television or radio program’; and defines ‘teacher’ as ‘a person who teaches, especially in a schoo!’ ‘Appresenter’s job is not a teachers job. A presenter's job is based on events and current issues rather than on-going systematic knowledge teaching targets and curriculum. The details of the appointment of volunteers for CoUM are lacking distinction between a presenter and a teacher (between a presentation and a formal class). This finding indicates that CoUM is not a school, In the context of CoUM's sessions listed above offered by COUM in December 2014, it is confirmed that CoUM provides informal presentations or workshops rather than formal learning courses. In conclusion regarding the issue of school setting, we find that CoUM fails the requirements of a school for item 2.1.10 schoo! building fund purpose. Particularly, ‘CoUM has a set of curriculum in a form, but lacking the substance of a school. CoOUM also does not have valid and reliable assessments for quaiffication purpose. The qualifications of CoUM's courses are lacking the basic elements that a formal course should have. They are not likely to be recognised outside the organisation and you have not indicated any other organisations that would recognise qualifications gained from CoUM. ® See your submissions to the ATO. We could not identify any full time teaching staff members in CoUM. * Sce A9 of second submission to the ATO provided by COUM on 29 August 2014. (CoUM SBF case (1-S0AXBVC) PAGE 180F 27Sensitive “THE ATO POSITION ON THE CASE FINDINGS 103. Therefore we conclude CoUM is not a schoo! for item 2.1.10 schoo! building fund purpose. CoUM is more likely a domestic community college which is lacking the nature of a schoo! for item 2.1.10 schoo! building fund purpose. Building 104. The Australian Oxford Dictionary” defines building as follows: 1. a permanent fixed structure forming an enclosure and providing protection from the elements etc (e.g. @ house, school, factory or stable) 105. Paragraph 23 of TR 2013/2 states: “A part of a building is itself a building for the purposes of Item 2.1.10 where: ‘* itis a permanent, fixed and structurally delineated part of the building; and ‘+ itis capable of being made the subject of a separately identifiable legal or equitable interest’ 106. CoUM's founder Mr Serge Benhayon is leasing a part of his property at 37 Converys Lane Wollongbar NSW 2477 to CoUM for educational use. 107. The part of the property under lease at 37 Converys Lane Wollongbar is a warehouse. The area under lease is the warehouse hall that covers about 753 square metres. 108. The building floor plans of 37 Converys Lane Wollongbar indicate the warehouse hall under lease will be converted as an auditory hall that contains a stage, a kitchen and two toilets. No classroom setting is identified in the floor plan. 109. We accept that the hall is a building, as the hall is a permanent, fixed structurally delineated part. However, itis required to examine whether the hall is a school building. The issue is related to whether the building has a nature of a schoo! building and whether is ‘used as a schoo!’ for the purpose of item 2.1.10 school building fund, Used as a schoo! 110. Paragraph 26 of TR 2013/2 states: “A building is ‘used as a schoot for the purposes of Iter 2.1.10 where: ‘© itis used to provide instruction of the kind described in paragraphs 13 to 19 of this Ruling; and ‘+ the extent and character of that use is such that the building can be described as “used as a schoo! as 2 mater of ordinary language. 111. The findings on school setting indicate that CoUM is not likely to be a schocl for schoo! building fund purpose”. 112. Therefore, the building at 37 Converys Lane Wollongbar NSW 2477 is not used as a ‘school building for item 2.1.10 schoo! building fund purpose. Altemative analysis 113. An alternative analysis was conducted. In which we assumed that CoUM had a formal school setting for schoo! building fund purpose. 2 See The Australian Orford Dictionary, 1999, Oxford University Press, Melbourne. » See ‘School setting’ above. (CoUM SBF case (1-5DAXBVC) PAGE 190F 27Sensitive ‘THE ATO POSITION ON THE CASE FINOINGS 114. Under this alternative analysis, we examined the extent and character of the building use in respect of the 753 square metres hall 115. Paragraph 168 of TR 2013/2 states that +... @ building is not ‘used as a schoo! merely because some form of systematic instruction occurs there. Rather, the reference in Item 2.1.10 to a ‘building used as a ‘schoo! is considered to be a reference to a building of a particular kind of character ‘Such a building must not merely be used by a school for the purposes of providing instruction; it must be a building whose use for school purposes is so significant that the building can itsef be described as ‘a school as a matter of ordinary language.” 146. Further, paragraph 30 of TR 2013/2 states that “A weighing of various factors is required to determine whether a building has the character of a schoo! building.” 117. Paragraph 34 of TR 2013/2 explains the various factors: “Other factors which are relevant to determining whether a building is used as a schoo! include: ‘the amount of time the building is put to school use relative to the amount of time itis put to non-school use; «the number of people involved in the school use of the building relative to the ‘number involved in its non-school use; «the physical area of the building put to school use relative to the physical area put to non-school use; and + the extent to which the building has been adapted or modified in order to accommodate its school or non-school use, 118. An analysis of these factors as they apply to COUM under this alternative assumption is set out below: Time and People 119. The submissions provided by CoUM did not give any information in respect of the amount of time put to and number of people involved in regarding to the building for ‘school use relative to for non-school use”. Physical area 120. The estimation made by Elders Real Estate indicates the hall under lease for COUM's use at 37 Converys Lane Wollongbar is about 753 square metres™. The figure of a floor plan confirms the area®®, 121, The submissions provided by CoUM did not give any information in respect of the physical area of the hall put to school use relative to for non-school use. Adapted or modified 122. The floor plan shows that the hall of 753 square metres contains a stage, a kitchen and two toilets. It does not include any fixed classroom setting. The details of See the first submission to the ATO provided by CoUM on 26 September 2013 and second submission to the ATO provided by CoUM on 29 August 2014. ™ See an evaluation letter issued by Elders Real Estate Alstonville on 20 August 2014 See the floor plans under item A16 of submission provided by CoUM on 29 August 2014, ‘CoUM SBF case (1-5DAX8VC) PAGE 200F 27Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS ‘schedule of works’ listed in the floor pian also do not include any work item relating to classroom fit-out™. 123. This finding indicates that the hall is an auditorium. 124, Paragraph 105 of TR 2013/2 provides an example that an aucitorium or lecture theatres will not be buildings in their own right for the purpose of item 2.1.10 school building fund, as they are not a permanent, fixed and separately identifiable part of a school, The setting of movable partitions is not able to give a school nature to this ‘adapted design, as the physical attributes of the building as a whole prevent it from being regarded as a building to be ‘used as a school’ as a matter of ordinary language. Although the hall will be put to school use, its size and design indicate that it does not have the character of a schoo! building. 425. The physical nature of the building indicates the hall is not a school building to the extent of its adaption and its design. After considering the other factors, even if we assume that CoUM satisfies the other factors of time, people and physical area; the other factors are not able to change the physical nature of the hall 126. Where the condition of alternative assumption is removed, CoUM fails to satisfy all the factors under paragraph 34 of TR 2013/2. 127. Therefore, the hall at 37 Converys Lane Wollongbar NSW 2477 is not a school building for item 2.1.10 schoo! building fund purpose anyway. Qualifying Body 128. Paragraph 47 of TR 2013/2 states that “In particular, Item 2.1.10 requires that the use of a buiding as a school be by @ government, a public authority, or a society or association which is carried on otherwise than for the purposes of profit or gain to its members. 128. We accept that CoUM is a qualifying body, as its constitution indicates CoUM has effective non-profit clause and dissolution clause that prohibit any gain or surplus of the organisation passing to individuals”. 130. CoUM is acting as a qualifying body who manages the schoo! building fund. CoUM is expected to be responsible for not ony its schoo! operation, but also the building fund's activities including record keeping and fund management. 131. Item (b) under paragraph 9 of Taxation Ruling TR 95/27 Income tax: Public funds states that (0) gifts to the fund must be kept separate from any other funds of the sponsoring ‘organisation (f there is one). A separate bank account and clear accounting procedures are required; 192. Financial statements of COUM School Building Fund indicate that CoUM did not maintain a separate set of accounts for its school building fund”. The mixture with *4 See footnote above. » See Article 8 of CoUM’s constitution for non-profit clause and article 71 for a dissolution clause, See Financial statements 2013 and 2014 of CoUM School Building Fund. t was found thatthe operational {income was included in the income statements with DGR donation income. Some non-building related items were including in the financial statements of the SBF, for example, acquisitions of HiFi system and speakers and Web / Intemet Expenses, Items of other expenses were not apportioned accordingly, and included the costs of non- building related components. (CoUM SBF case (1-5DAX8VC) PAGE 21 OF 27Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS: related items with the SBF items in the accounts of SBF means CoUM fails to maintain the public money in appropriate way. It is threatening the safe guard of the public fund. 133. Paragraph 35 of TR 2013/2 states that ‘Where a qualifying body carries on @ school organisation and also acts in one or more other capacities (for example as a church), itis necessary to have regard to the extent to which the school organisation is able to control the use of the building. While regard must also be had to the actual use of the building, the inabilty of the school organisation to control the use of the building is an indication that the building is not used as ‘school.’ 134, We are aware that CoUM has established a set of Rules of CoUM School Building | Fund. The above finding indicates that CoUM breached the Rules of CoUM SBF This further indicates COUM is lacking the ability to exercise the requirements to control the use of the building. 136. This finding indicates the responsible persons of CoUM are not ready to conduct the duties a qualifying body ought to do. This is an indication that ‘the building is not used as a schoo’. Acquisii truction or maintenance; 136, Paragraphs 53 and 54 of TR 2013/2 state that 53, In order for Item 2.1.10 to apply an entty must acquire, construct or maintain a buiiding or have an objective intention to do so 54, A building is acquired for the purposes of Item 2.1.10 where: ‘+ an entity obtains ownership of a legal or equitable interest in a building (including a leasehold interest); and + that interest is sufficient to enable the entity to control the building's use. 137. CoUM is entering into a lease with Mr Serge Benhayon®. Under the lease, Mr Serge Benhayon is going to lease a part (about 753 square metres) of the premises at 37 Converys Lane Wollongbar to CoUM for $80,000 per year*’. Mr Serge Benhayon will provide the ready-to-use building to CoUM. Mr Serge Benhayon was paying the costs of renovations making the premises suitable for CoUM's use™. 138. We accept the lease arrangement, as a building can be acquired through the acquisition of a leasehold interest. The building is acquired when the lease is entered into. 139. The submissions to the ATO provided by CoUM did not give any information in respect of the maintenance account of the building. We are aware that Mr Serge Benhayon is providing the ready-to-use building to CoUM. It indicates COUM SBF will have minimal maintenance costs, 3 See Article 20 of Rules of CoUM School Building Fund, itis required separate accounts for the fund. "See the draft lease agreement between Mr Serge Benhayon and CoUM under item A10 provided on 29 August 2014. © See the Draft lease above * See the second submission to the ATO provided by CoUM on 29 August 2014, CCOUM SBF case (1-5DAXBVC) PAGE 22 0F 27Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS Requisite purpose 140. Paragraph 67 of TR 2013/2 states that ‘Item 2.1.10 requires a schoo! building fund to be established and maintained solely in crder to provide money for particular purposes. This requirement is referred to as the ' sole purpose test’ in this Ruling.’ 141. Paragraph 64 of TR 2013/2 states that “A fund will not satisfy the sole purpose test where its constituent documents indicate that it has a purpose other than to provide money for the acquisition, construction or ‘maintenance of a schoo! building for school use. * 142. A fund will not satisfy the sole purpose test fit is established or maintained for the Purpose of, or for purposes which include, providing money to acquire, construct, or maintain a building that is not used or not objectively intended to be used as a school to any extent; or that is not used or objectively intended to be used by a qualifying body. 143. Where a schoo! does not provide formal teaching instruction as required by TR 2013/2, the school is not a school for item 2.1.10 school building fund purpose. The schoo''s building fund fails the sole purpose test, as the requisite purpose for item 2.1.10 school building is not existed 144, The findings that CoUM is not a school for item 2.1.10 purpose and the hall at 37 Converys Lane Wollongbar is not a schoo! building for item 2.1.10 purpose confirm that CoUM SBF is lacking the requisite purpose. 145. Therefore, CoUM SBF does not pass the ‘requisite purpose’ requirement. Special Conditions 148. The special condition applicable to Item 2.1.10 requires that the public fund: (2) be registered under the Australian Charities and Notfor-profits Commission Act 2012, or (b) not be an “ACNC type of entity 147. ATO Interpretative Decision ATO ID 2013/62 provides a response to the question that whether a schoo! building fund is an ACNC type of entity: ‘isa schoo! building fund that is established and maintained by a church an ‘Australian CCharties and Not-or-profts Commission (ACNC) type of entity’ 2s defined in section {996-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?" This interpretative decision concludes that ‘No, where the school building fund is not established by trust deed the schoo! building fund is not an ‘ACN type of entity’ 148. Accordingly, COUM is registered under ACNC as at the time of this letter, and COUM SBF is under the administration of COUM. The document of ‘Rules of the College of Universal Medicine School Building Fund’ is considered to be a trust deed established between CoUM and CoUM SBF“. It means that the special condition is satisfied in the current circumstances, See Appendix B of the first submission to the ATO by CoUM on 26 September 2013. (CoUM SAF case (1-SDAXBVC) PAGE 29 OF 27Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS Public Fund and gift money 149. 160. 151. 182. 153. 154, 156. 156. 157. Taxation Ruling TR 95/27 Income tax: public funds provides guidance on what the ATO will accept as a public fund. Paragraph 20 of TR 95/27 states that where a public fund is required, the fund must have its own rules and objects. The rules and objects can be set out in a separate founding document or incorporated in its constitution or other founding documents of the sponsoring organisation. The organisations constitution or founding document must authorise the establishment of the fund, for example in the organisations objects. TR 95/27 provides that for the ATO to accept a fund as a public fund, the founding documents of the public fund must reflect certain requirements. One of these requirements is stated at subparagraph 9(b) of the ruling: “the fund must be kept separate from any other funds of the sponsoring organisation. A separate bank account and clear accounting procedures are required” ‘CoUM has established the ‘Rules of the College of Universal Medicine Schoo! Building Fund"* . The rules cover the purpose of the school building fund and the rules of administration of the fund, including the requirement that a separate account is needed. te toner of CoUM also includes the dissolution clause of the school building fund, We accept that CoUM SBF is a public fund. Financial statements of COUM SBF indicate the total DGR donation income was about $581,757 as at end of June 2014. Bank statements of CoUM SBF confirm that the following balances of donation money have been kept in the separate bank accounts: Bank | Account ‘Account holder Date Balance Westpac | Term deposit College of Universal | 26/05/2014 | $55,638 400397 Medicine Building Fund Westpac | Term deposit College of Universal | 26/04/2014 | $494,512 438088 Medicine Westpac | Community Solution | College of Universal | 31/07/2014 | $27,083 Cheque account —_| Medicine Building Fund 401198 E | _ Westpac | Community Soiution | College of Universal | 31/07/2014 | $7.65 Cash Reserve Medicine Building Fund 39925 CoUM's second submission to the ATO categorised the above bank accounts as CoUM SBF's bank accounts”. However, the bank statements indicate that one of those bank accounts (Westpac account number is 438088) was owned by COUM rather than its school building fund. The bank account was in term deposit Keeping the balance of $494,512 gift donations as at 28 April 2014. It was about 85% ($494,512 / $581,757) of total gift money received by CoUM SBF and it is considered to be significant. “ See footnote above. “ See article 72 of Constitution of CoUM. “ See the income statements and balance sheets of CoUM SBE for year 2014, “7 See Item A19 of second submission to the ATO by CoUM on 29 August 2014. (CoUM SBF case (1-SDAXBVC) PAGE 24 0F 27Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS 158. 159, 160. This finding indicates that, although a separate bank account was set up, the ‘ownership of the account was not under CoUM Schoo! Building Fund. It means the public money was flowing to the College rather than to a Public Fund, This finding is an indication that the safe guard of public money is threatened and it is. also an indication that the DGR money for schoo! building purpose is potentially able to be used by CoUM for other purposes Therefore, the responsible persons of CoUM acting for a qualifying body breach due responsibility and obligation as public trustee. Revocation clause 161 162. 163. 164. ‘Subsection 30-125(6) of the ITAA 1997 requires that the constitution or rules of an entity state that the surplus of the gift fund will be transferred to another DGR when the fund, authority or institution they are operating is wound up or the DGR endorsement is revoked, Article 72 of CoUM's constitution contains a winding-up clause for its gift building fund: 72 Winding Up of the Gift Fund In the event that the Gift Fund is wound up, or the Gift Fund's deductible gift recipient ‘endorsement is revoked, any surplus assets remaining after the payment of the fund's liabilties shall be transferred to another fund, authority or institution which has similar objects and to which income tax deductible gifts can be made under the ITAA, Article 22 of Rules of College of Universal Medicine Schoo! Building Fund also contains a winding-up clause for the gift fund 22 Winding up of the Gift Fund In the event that the Gift Fund is wound up, or the Gift Fund's deductible gift recipient endorsement is revoked, any surplus assets remaining after payment of the fund's liabilities shall be transferred to another fund, authority or institution which has similar objects and to which income tax deductible gifts can be made under the Act We accept that CoUM SBF and its qualifying body CoUM have effective revocation clauses. Therefore, the requirements of subsection 30-125(6) of the ITAA 1997 have been satisfied. Retros, revocation of DGR 165. 166. ‘Section 30-17 of the ITAA 1897 requires an entity to be endorsed for the operation of its school building fund to be a deductible gift recipient. Under subsection 30-125(2) of the ITAA 1997, an entity is entitled to DGR endorsement for the operation of a fund, authority or institution that is described in item 1, 2 or 4 of the table in section 30-15 of the ITAA 1997, except for entities named in subdivision 30-8 if: (a) the entity has an ABN {(b)_ the entity legally owns the fund or includes the authority or institution, (c) the fund, authority or institution meets the Special conditions of their item, (@) the entity meets the requirements of subsection 30-125(6) and (©) the entity meets the requirements of section 30-130. CoUM SBF case (1-SDAXBVC) PAGE 25 0F 27Sensitive ‘THE ATO POSITION ON THE CASE FINDINGS 167. 168. 169. 170. 171 CoUM and its schoo! building fund does not meet the requirements of a school and a school building as per item 1 of the table in section 30-15 of the ITAA 1997 for the reasons set out above CoUM is not entitled to be endorsed as a deductible gift recipient for the operation of a school building fund under subparagraph 30-125(2) of the ITAA 1997 As a result, the Commissioner of Taxation may revoke the endorsement under section 426-55 of Schedule 1 of the Taxation Administration Act 1953 (TAA) The revocation date in accordance with subsection 426-55(2) of Schedule 1 to the ‘TAA is retrospectively from 25 August 2011 The retrospective revocation is due to the following reasons: © CoUM was endorsed as a DGR on 25 August 2011. However, CoUM did not have school paperwork until our continuous review started in April 2014. '* Documents and information provided in our continuous review indicate the following findings: = CoUM has not had a school for item 2.1.10 school building fund purpose since it was established in August 2011 + The hall in the building at 37 Converys Lane Wollongbar 2477 is not a schoo! building for item 2.1.10 school building fund purpose. + The responsible persons of CoUM acting for a qualifying body for COUM SBF failed to distinguish the accounts between CoUM and CoUM SBF. A number of operational items have been included in the accounts of COUM SBF. Significant amount of gift donation income (public money) has been passed to CoUM and saved under the name of CoUM rather than CoUM SBF. These findings indicate the responsible persons failed to conduct the duties as required as being a public fund's trustee. ‘* CoUM has not been entitled to the DGR endorsement for a school building fund under item 2.1.10 since it was established on 25 August 2011. Consequence 172. 173. ‘As CoUM is not entitled to a DGR endorsement for a schoo! building fund operation, its DGR endorsement of CoUM is revoked retrospectively from 25 August 2011 ‘Subsection 30-125(6) of the ITAA 1997 states: ‘Alaw (outside this Subdivision), a document constituting the entity or rules governing the entity's activities must require the entity, at the frst occurrence of an event described in ‘subsection (7), to transfer to a fund, authority or institution gifts to which can be deducted under this Division: (@) any surplus assets of the gift fund (see section 30-130); or (b) ifthe entity is not required by this section to meet the requirements of section 30- 130-any surplus: (i) gifts of money or property forthe principal purpose of the fund, authority or institution; and (i) contributions described in item 7 or of the table in section 30-15 in relation toa fund-raising event held for that purpose; and (ii) money received by the entity because of such gifts or contributions (CoUM SBF case (1-5DAXBVC) PAGE 26 OF 27Sensitive ‘THE ATO POSTON ON THE CASE FINDINGS 174, 175. 176. 477. 178. 179. 180. ‘Subsection 30-125(7) of the ITAA 1997 further states, Events requiring transfer The events are: (@) the winding up of the fund, authority or institution; and (b) ifthe entity is endorsed because of a fund, authority or institution—the revocation of the entity's endorsement under this Subdivision relating to the fund, authority or institution. The above provisions require the qualifying body of CoUM SBF to exercise the winding-up clause in its constitution and the Rule of CoUM SBF to transfer the surplus of the school building fund to another DGR entity with similar objects of COUM SBF. ‘The total surplus of the CoUM SBF was about $581,757 as at 28 April 2014. The value of the balance amount may be increased, due to the bank interests up to the date of transfer and further gift fund received by CoUM SBF up to the date of revocation. CoUM as a qualifying body of CoUM SBF is required by the Commissioner of Taxation to transfer the above surplus of the gift fund money to another DGR entity under item 1 in the table of section 30-15 of the ITAA 1997 as soon as possible after the date of the DGR revocation. CoUM and its founder or related parties are not allowed to generate or set up another DGR entity for the purpose of being a recipient to receive the balance of the fund money mentioned above, From the date of the DGR revocation, CoUM is not allowed to invite the public to make further tax-deductible donation into CoUM SBF, From the date of the DGR revocation, CoUM is also not allowed to receive further tax- deductible donation for its SBF. From the date of the DGR revocation, CoUM is required to remove the statement that contains the wordings and the meaning in respect of DGR status of CoUM and the invitation of tax-deductible donation from any publication including web pages, email heading/footing, social media, app software and hard copy materials. (COUM SBF case (1-SDAXAVC) PAGE 27 OF 27