SPED Foundation loses appeal over tax-free status James Salerno was the founder of the movement and led a trek into remote Western Australia. A GROUP who bought a luxury Rolls-Royce, Ferrari and a Hummer for members to drive around in the name of research have lost the tax-free status of a charitable institution after losing a tribunal appeal. An Administrative Appeals Tribunal judgment records that the Study and Prevention of Psychological Diseases (SPED) Foundation Incorporated claimed to be "research guinea pigs" seeking a utopian "ideal human environment." Members, mostly relatives, donated all their assets to SPED and therefore paid no income tax. They claimed to be full-time guinea pigs, researching poverty, opulence, crowded living, living alone, in cities and in remote areas of Australia. The foundation bought a $100,000 Hummer, $300,000 Ferrari and a $695,000 Rolls-Royce for members as part of their research, the tribunal judgment notes. Project India involved members visiting India for a wedding, while Project Gambling involved understanding gamblers' thoughts processes and addictive behaviour by "engagement in games of chance." But there was no evidence of SPED's "research" being published in medical or other journals, an tribunal member said in his judgment. In 2011 the Tax Commissioner revoked SPED's income tax exemption back to 2005, finding it was not a charitable institution. The tribunal recently upheld that decision in Brisbane. In the late 1990s founding member of the group, Vietnam veteran and Adelaide businessman James Salerno, led 60 Australians into a remote part of Western Australia. Living for months in hot, primitive conditions in the rugged Kimberley Outback, near El Questro station, they road tested the "ideal human environment." The tribunal decision records that the research team later claimed to provide assistance to thousands of young people through programs and a phone hotline. Foundation past president chiropractor Dr Naomi Perry said they then focused on prevention of psychological disease through members' their research. SPED, incorporated in 2005, claimed members undertook 24/7 "research" involving "intensive personal and interpersonal examination and self-exposure." The decision notes that by the end of 2005, 21 members, "all bound by blood ties, marriage or friendship" were donating all income, cash and all forms of property into the foundation, which provided living expenses. SPED's balance sheet at June 30, 2009, showed it had assets of $10.6 million and liabilities of $3.15 million, the Tax Commissioner revealed. The foundation claimed every outlay, including all its members' ordinary living expenses, as "research expenses." Administrative Appeals Tribunal deputy president Ian Molloy found SPED's activities were not research but merely ordinary activities of life carried out for the benefit of members. "SPED was not at any time a charitable institution," Mr Molloy found, also rejecting claims it was a health promotion charity.