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Edited version of private ruling
Authorisation Number: 1011302384480
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Ruling
Subject: Income tax exempt status
Question 1
Is the entity exempt from income tax under section 24AM of the Income Tax Assessment Act 1936 (ITAA 1936) on the basis that it is a State/Territory body (an STB)?
Answer
Yes
This ruling applies for the following period/s:
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
Relevant facts and circumstances
The entity is a company limited by shares registered.
All of the shares in the entity are owned by the local council.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 24AM,
Income Tax Assessment Act 1936 Section 24AN,
Income Tax Assessment Act 1936 Section 24AO and
Income Tax Assessment Act 1936 Section 24AT.
Reasons for decision
Summary
The entity is an STB because it is a company limited solely by shares and its shares are beneficially owned by a government entity.
Detailed reasoning
Under section 24AO of the ITAA 1936 a body is an STB if:
§ it is a company limited solely by shares; and
§ all of the shares in it are beneficially owned by one or more government entities.
A government entity is defined under section 24AT of the ITAA 1936 as:
a State; or
a Territory; or
a municipal corporation or other local governing body.
Given that the entity is a company limited solely by shares and whose shares are entirely owned by the local council which is a municipal corporation, it is accepted that the entity is an STB.
Section 24AM of the ITAA 1936 provides that the income of an STB will not be exempt if section 24AN of the ITAA 1936 applies to the STB.
Section 24AN of the ITAA 1936 provides that an STB will not be exempt from income tax if it is an excluded STB.
An excluded STB is defined under section 24AT of the ITAA 1936 as an STB that:
(a) at a particular time, is prescribed as an excluded STB in relation to that time; or
(b) is a municipal corporation or other local governing body
(c) is a public educational institution to which any of paragraphs 50-55(a) to (c) of the Income Tax Assessment Act 1997 applies; or
(d) is a public hospital to which any of paragraphs 50-55(a) to (c) of the Income Tax Assessment Act 1997 applies; or
(e) is a superannuation fund.
The entity is not any of the above, therefore it is not an excluded STB.
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