Antinuclear

In a decision welcomed by the State Government, Business SA on Thursday lost its multimillion-dollar legal row with the taxman after failing to prove it was eligible for charity status.

A Supreme Court judge dismissed its claims against Revenue SA, which collects state taxes, to claw back almost $2.6 million in payroll tax.

The 178-year-old lobby group, which markets itself as the “voice” of business in SA, claimed it was tax exempt because it is a charity.

The Government, currently locked in a political brawl with the lobby groupover the bank tax, argued its “dominant purpose” was to advocate, and lobby, for members.

Ministers urged Business SA to not appeal the precedent-setting ruling and “waste” taxpayers’, and its members’, money. The government is seeking costs.

In a damning, and highly complex, 90-page judgment published Thursday, Justice Malcolm Blue rejected Business SA’s case, revealed by the Sunday Mail in 2015.

The judge found that to be a “charitable purpose” under state law, a “purpose must be to provide a public benefit as opposed to a private advantage or benefit”.

Business SA, he ruled, “failed to prove that, on a stand-alone basis, its policy advocacy, member services or commercial services activities are undertaken for the purpose of advancing trade and commerce in South Australia”.

“In conclusion, the Chamber has failed to prove that its dominant purpose was the advancement of trade and commerce and hence was charitable,” he ruled.

“On the evidence adduced I am not satisfied that the dominant purpose of selling commercial services was incidental to the advancement of South Australian trade and commerce generally.”

The court heard that it had “overpaid” $2,574,844 to Revenue SA, between July 2009 to May 2014 and an undisclosed amount since June 2014.

Revenue SA denied the claim, arguing Business SA’s “sole or dominant” purpose was to lobby and advocate for its members, which was in breach of the Statute of Charitable Act.

The loss comes days after the group, known as South Australian Employers’ Chamber of Commerce and Industry Inc, launched a highly critical campaign against the government’s bank tax.

Revealing unions pay the same taxes, State Treasurer Tom Koutsantonis labelled the legal fight as “hypocritical” as Business SA was not the same as St Vincent de Paul, the Cancer Council or UNICEF, the UN’s children’s charity.

These guys (Business SA) seriously have some front,” he told The Advertiser.

“To compare themselves, and get the same tax status, as charities that fight cancer, try and help the poor and disadvantage, is laughable. I think South Australians would be horrified if they knew.

“This is an organisation that has been spending their time trying to help five East Coast banks protect their super profits.”

The case, listed against the State Commissioner for Taxation, Graeme Jackson, went to trial in December last year after several failed meditation attempts to settle the row.

Business SA chief executive Nigel McBride, who gave evidence, refused comment.

In a statement, he said: “It is a complex matter and we are considering Justice Blue’s decision in conjunction with our legal team.”