By Corey Everitt
Berwick Church of Christ is taking the State Revenue Office (SOR) to VCAT as they have been hit with a retrospective tax debt amounting to over $500,000 after their land tax exemption was partially lifted, a move the church labels ‘unjust’.
The news dropped in Parliament last week as Liberal MPs Anne-Marie Hermans and Brad Battin pressed the State Government on an ongoing tax dispute between the SOR and Berwick Church of Christ that is now being dragged into VCAT.
It was in late 2021 when the church was notified that their exemption under section 74(1) of the Land Tax Act, which defers land taxation for charitable institutions, was being stripped for an undeveloped portion of their 4.85 hectares plot of land.
This was too applied retrospectively, debt accruing from 2014 with a claimed 20 percent interest applied on the charges.
The church claims the retrospective debt stands at $552,142.50.
An objection was submitted to the SOR, where the Berwick church argued this portion of land was used on a recurring basis for solely charitable activities and will be developed in the future to support the capability of the church as a whole.
According to a letter sent from Berwick Church of Christ’s Chair, Glenda Hutchinson to MP Anne-Marie Hermans, the SOR Commissioner Paul Broderick recently responded to their objection.
Hutchinson’s letter quotes the Commissioner saying, “Whilst it is not denied that some church-related activities may have taken place at the Centre Road Land during the 2014 to 2022 land tax years, the Commissioner is of the view that the frequency and intensity of those activities is not sufficient to suggest active use of the Centre Road Land or to prevail over the proposition that the Centre Road Land was substantially unused during that period.”
Hutchinson argued in response that there is no standard of qualifying use laid out in the Land Tax Act.
As a not-for-profit organisation, Hutchinson says it threatens the church’s ongoing operation.
“The amount of this unexpected retrospective and on-going tax liability threatens to cripple the church and its ability to continue serving the community,” Hutchinson said in the letter.
“We feel very strongly that the retrospective application of the SRO’s removal of the tax exemption is extremely unfair, particularly when they also added penalty interest at a rate of
20 per cent; on those retrospective charges.“
The church felt blind-sided by the ruling in 2021, the decision to apply retrospective debt for 7 years prior argued to be without any consideration of the church’s leaders.
“It denied the church leadership the opportunity to modify priorities and decisions that could have been made during that retrospective period to better steward church resources,” Hutchinson wrote.
“At the very least, had we been aware that this exemption was about to be removed, we could have more intentionally documented how we use the land as proof of compliance with the SRO Commissioner’s exemption.”
The church also questioned how the SOR could segment a single piece of their land without exemption.
“Are these same SRO rules being applied to all not-for-profit organisations? If so, many may not
survive; if not, why is the church being targeted?” Hutchinson wrote.
Berwick Church of Christ has been a place of worship since 1987, today they run a community food pantry, youth programs, counselling and playgroups for families from predominantly Casey and Cardinia.
In the letter, Hutchinson noted that the church had opened a proceeding to VCAT on the matter.
The Gazette contacted the SOR and spokesperson said, “The State Revenue Office is unable to comment on individual taxpayer matters or matters before VCAT.”
