ATO Interpretative Decision
ATO ID 2001/65
Income Tax
Taxation Classification of a TrustFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 trust which is established for the purposes of administering the property and assets of a religious group, a 'religious institution' or a 'charitable institution' under Items 1.1 and 1.2 of section 50-5 (Income Tax Assessment Act 1997 (ITAA 1997))?
Decision
No. The trust is neither a 'religious institution' nor a 'charitable institution' under Items 1.1 and 1.2 of section 50-5 (ITAA 1997) as the trust is not an 'institution'.
Facts
A trust is set up for the purpose of administering the property and funds of a particular unincorporated religious group. The trustees are members of the congregation of the group. Under the trust deed, the trustees hold the property and funds of the congregation for trust purposes, namely to carry on the service of God.
Reasons For Decision
Taxation Ruling TR 92/17 discusses the meaning of the term 'institution' for the purposes of the ITAA 1997. Taxation Ruling TR 92/17 states that a body is an 'institution' if it is an establishment, organisation, or association, instituted for the promotion of some object. This definition was accepted by the High Court in Stratton v Simpson (1970) 125 CLR 138. In this case the Court held that a trust which had been set up to hold property for charitable purposes was a 'mere trust' and not an 'institution' (see also Commissioner for Land Tax (NSW) v Joyce & Ors 132 CLR 22). The Court also held that although a body or organisation which holds property upon a charitable trust and carries out the trust purposes is commonly called a charitable institution, it is really an instrument for carrying a purpose into effect.
The present trust is not an 'institution' under Items 1.1 and 1.2 of section 50-5 (ITAA 1997) but is rather a 'mere trust', merely an instrument for carrying a purpose into effect.
Date of decision: 20 July 1999
Legislative References:
Income Tax Assessment Act 1997
section 50-5, item 1.1
section 50-5, item 1.2
Case References:
Stratton v Simpson
(1970) 125 CLR 138
132 CLR 22
(1974) 5 ATR 32 Mayor of Manchester v McAdam
(1896) 3 TC 491 Pamas Foundation (Inc) v DFC of T
92 ATC 4161
23 ATR 189
Related Public Rulings (including Determinations)
TR 92/17
Keywords
Charitable trusts
Exempt entities
FBT religious institutions
Charitable organisations
Religious organisations
Trusts
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 20 July 1999 | Original statement |
| 24 April 2014 | Archived |
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