ATO Interpretative Decision
ATO ID 2001/713
Income Tax
Income Tax Exemption - State/Territory Body (STB)FOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is a company limited solely by shares owned beneficially by one or more government entities exempt from Commonwealth income tax pursuant to Division 1AB of the Income Tax Assessment Act 1936 (ITAA 1936)?
Decision
Yes, such a company is exempt from Commonwealth income tax pursuant to Division 1AB of the ITAA 1936.
Facts
Corporation A, was established by the XX Act, is a statutory body, and is subject to the control and direction of the Minister. Company C was formed by Corporation A and subsequently changed its name to Company D which is a private company limited solely by shares. All issued shares are beneficially owned by Corporation A. Corporation A was statutorily succeeded by Company E pursuant to the XXX Act. Company E is a statutory body and is also subject to the control and direction of the Minister.
Reasons for Decision
Division 1AB of the ITAA 1936 states that income of an STB is exempt from income tax unless it is an excluded STB or an SGIO. There are five ways in which a body can be regarded an STB. One way a body is an STB is if:
- (a)
- it is a company limited solely by shares; and
- (b)
- all the shares in it are beneficially owned by one of more government entities.
A 'government entity' is defined, under Division 1AB of the ITAA 1936, as a State, Territory or another STB that is not an excluded STB.
Company D is limited solely by shares and all those shares are beneficially owned by Company E. Company E is considered a government entity under Division 1AB of the ITAA 1936.
Company D is not an excluded STB nor are Corporation A (and now Company E).
Company D is an STB because it is a company limited solely by shares, all shares in it are beneficially owned by one or more government entities. It is also not an excluded STB or an SGIO nor are Corporation A (and now Company E).
Date of decision: 3 October 2001Year of income: Year ended 30 June 1995 Year ended 30 June 1996 Year ended 30 June 1997 Year ended 30 June 1998 Year ended 30 June 1999 Year ended 30 June 2000 Year ended 30 June 2001 Year ending 30 June 2002 Year ending 30 June 2003 Year ending 30 June 2004
Legislative References:
Income Tax Assessment Act 1936
Part III, Division 1AB
Keywords
State/Territory Bodies
Excluded STB
Government entities
Tax exempt body
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 3 October 2001 | Original statement |
| 1 April 2010 | Archived |