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Edited version of private ruling

Authorisation Number: 1011494949391

Ruling

Subject: Rebatable employer status

Question

Is the trustee for the Trust (the trustee) a rebatable employer pursuant to paragraph 65J(1)(i) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer: No

This ruling applies for the following period(s):

Year ending 31 March 2005

Year ending 31 March 2006

Year ending 31 March 2007

Year ending 31 March 2008

Year ending 31 March 2009

Year ending 31 March 2010

The scheme commences on:

1 April 2004

Relevant facts and circumstances

The taxpayer is the trustee for the Trust. The Trust is a Reserve Trust, established by Section 92 of the Crown Lands Act 1989 (the CL Act). Section 92 authorises the Minister to appoint a Trust Board as Trustee. It also authorises the Minister to dissolve a Trust.

The Trust is a body that as Trustee holds the Title Deeds to the Land and is charged with the care, control and management of the Reserve.

The trust receives no funding from Government, nor does it provide from its activities any funds to Government.

Trust Board Members receive no remuneration and are selected members of the public.

The Trust is required to fund maintenance of the Reserve from the conduct of activities that are consistent with the dedicated use of the Reserve. In the case of the trust, it was established under the Public Parks Act in 1885 for the purposes of public recreation. Crown lands are now administered and managed under the CL Act.

The Trust employs persons and provides certain fringe benefits for these employees.

Upon request for further information, the following was stated:

Extensive information regarding the Trust, its activities and the members of the Board of Trustees is available in the trust's 2009 Annual Report. The main points are:

Crown lands are now administered and managed under the CL Act. Sections 10 and 11 set out the objects of the CL Act and the principles of crown land management as follows:

11 Principles of Crown land management

Section 12 of the CL Act makes the relevant Minister responsible for achieving the stated objectives.

Part 5 of the CL Act provides for the formation of reserve trusts. The Minister has the authority to establish and dissolve reserve trusts and to appoint and remove trustees. Reserve trusts are constituted as corporations and have the functions conferred on them by or under the CL Act. Reserve trusts are charged with the care, control and management of any reserve for which they have been appointed as trustees.

Division 5 of Part 5 of the CL Act specifies that a reserve trust requires the approval or consent of the Minister to:

purchase, lease, or acquire for the benefit of easement, land required in connection with the reserve;

Division 6 of Part 5 of the CL Act provides that the Minister can either prepare a draft plan of management for a reserve or direct a reserve trust to prepare such a plan. Plans prepared by the reserve trust may be altered by the Minister as the Minister thinks fit.

Once a plan is adopted the reserve trust must only carry out operations that are in accordance with the plan.

In the event of a reserve trust being dissolved, property of the trust is to be disposed of in accordance with section 111 of the CL Act which states:

ATO systems information indicates that the trust is registered as a Government entity and has self-assessed as being income tax exempt.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 65J.

Summary

The trust is not considered to be a reabatable employer pursuant to section 65J of the FBTAA.

Detailed reasoning

Paragraph 65J(1)(i) of the FBTAA states:

Section 65(J)(i) is relevant:

The meaning of "non-profit society", "non-profit association" or "non-profit club" is defined by Section 65J(5):

Section 65J(5):

The terms 'association' and 'society' are not defined. They have their ordinary meaning. They can include incorporated bodies: Theosophical Foundation v. Commr of Land Tax (1966) 67 SR (NSW) 70 at 82-83.

The Shorter Oxford English Dictionary defines 'association' to be 'a body of persons associated for a common purpose; the organization formed to effect their purpose'.

The Macquarie Dictionary defines it as 'an organisation of people with a common purpose and having a formal structure'. 'Society' has an equivalent meaning (Pro-campo Ltd v. Commr of Land Tax (NSW) 81 ATC 4270 at 4279; (1981) 12 ATR 26 at 35). This is the approach of Taxation Determination TD95/56, at paragraph 2 which states:

These approaches emphasise 'body of persons' and 'organisation of people'. There is the forming of a purpose of various people; for there to be a 'common purpose' there needs to be more than one person. Accordingly, a single entity, without more, could not constitute an association or society. There isn't a group or body or the forming of any common intention.

Tax Determination TD 95/56 is relevant in regards to whether a body which is formed by government, is controlled by government and performs functions on behalf of government can be an 'association' for the purposes of section 65J of the FBTAA. Paragraph 3 and 4 of TD 95/56 state:

Section 24AQ of the Income Tax Assessment Act 1936 (ITAA 1936) states that a body can be a State or territory body where:

The trust is established by the CL Act, a NSW State Government Act. It is not a company limited by shares and the CL Act gives the power to appoint and dismiss the trust board to the relevant Minister.

Therefore, the trust qualifies as a State body under section 24AQ of the ITAA 1936. No exclusions apply. This outcome is confirmed by ATO systems information that indicates that the trust is registered as a Government entity and has self-assessed as income tax exempt.

TD 95/56 provides an example of a body which is formed by government, is controlled by government and performs functions on behalf of government. It states:

The trust was created under a State Act, and is controlled by a trust board appointed by the State Minister. Whilst the trust board controls the day to day running of the trust, the CL Act gives the Minister ultimate control over the trust board.

The ultimate control is established because:

The Trust's mission is to manage and administer the affairs of the Trust so that the trustees effectively and efficiently fulfil their assigned responsibilities for the care, control and management of the trust land in a professional, competent and accountable manner. Pursuant to section 92(4) of the CL Act , those functions are conferred upon it by a Government Act.

Conclusion.

In accordance with TD 95/56, it is our view that the trust does not satisfy the conditions under paragraph 65J(1)(i) of the FBTAA for a non profit association established for the encouragement or promotion of animal races. A body cannot be an 'association' for the purposes of section 65J of the FBTAA where it is held to be formed by government, is controlled by government and performs functions on behalf of government.

For the reasons outlined above, the trust is not considered to be a rebatable employer pursuant to section 65J of the FBTAA.


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