ATO Interpretative Decision

ATO ID 2001/336

Income Tax

Income tax exemption - State or Territory Bodies
FOI status: may be released

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CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 an entity established by Act of Parliament of a State to manage superannuation funds exempt from income tax?

Decision

Yes. The entity is exempt from income tax under section 24AR of the Income Tax Assessment Act 1936 (ITAA 1936).

Facts

The functions of the entity are to invest and manage the public sector superannuation funds.

The entity is established by State or Territory legislation. The entity is not a company limited solely by shares. The legislation gives the power to direct its governing person or body as to the conduct of its affairs only to one or more government entities.

No income is generated other than through funds management investment activities.

Reasons for Decision

Superannuation funds for the benefit of employees of the Commonwealth, State and Territory governments and government or semi-government authorities are generally referred to as public sector funds. These funds have been subject to tax as complying superannuation funds under Pt IX of the ITAA 1936 since 1 July 1988.

Division 1AB of the ITAA 1936 provides that bodies classified as State or Territory Bodies (STBs) and which are not excluded STBs will be exempt from income tax.

There are five ways in which a body will be regarded as being controlled by one or more government bodies and therefore be considered an STB. The tests for determining whether a body is controlled by one or more government entities are set out in section 24AO to section 24AS of the ITAA 1936.

The entity was established under an Act of a State Parliament that gave considerable level of direction and control to Government entities. This included the power of the relevant Minister to determine which funds are to be administered, the appointment of management, access and input to performance plans and books of account.

Date of decision: 30 August 2001

Legislative References:
Income Tax Assessment Act 1936
   Part IX
   Division 1AB
   Section 24AP
   Section 24AQ
   Section 24AR
   Section 24AS
   Section 24AT
   Section 24AU

Keywords
Public sector superannuation funds
Constitutionally protected superannuation funds
State and territory bodies

Business Line: Private Groups and High Wealth Individuals

Date of publication: 15 September 2001

ISSN: 1445-2782

history

	Date:	Version:
You are here	30 August 2001	Original statement
	1 April 2010	Archived

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