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Ruling
Subject: Fringe benefits tax rebate
Question 1
Are fringe benefits provided by the entity to its employees, benefits to which section 65J(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) would apply?
Answer
Yes
This ruling applies for the following periods:
Year ended 31 March 2013
Year ended 31 March 2014
Year ended 31 March 2015
Year ended 31 March 2016
The scheme commences on:
1 April 2002
Relevant facts and circumstances
The objectives of the entity are outlined in the constitution.
The constitution has suitable non-profit and dissolution clauses.
Details of services have been provided.
The entity is not registered as an income tax exempt charity.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 50-10
Fringe Benefits Tax Assessment Act 1986 Subsection 65J(1)
Fringe Benefits Tax Assessment Act 1986 Subsection 65J(1)(j)
Fringe Benefits Tax Assessment Act 1986 Subsection 65J(3)
Fringe Benefits Tax Assessment Act 1986 Subsection 65J(5)
Reasons for decision
Detailed reasoning
Some non-profit, non-government employers are eligible for a rebate of 48 per-cent of the fringe benefits tax payable in accordance with subsection 65J(1) of the FBTAA.
Established for community service purposes
Paragraph 65J(1)(j) of the FBTAA 1986 provides:
"65J(1) Rebatable employer. For the purposes of this section, an employer is a rebatable employer for a year of tax if the employer is not a public benevolent institution, is not a health promotion charity, and is covered by any of the following paragraphs at any time during the year of tax:
(j) a non-profit society, non-profit association, or non-profit club, established for community service purposes (not being political purposes or lobbying purposes);
Paragraph 3 of Taxation Determination 93/190 states in part:
"The term 'community service purposes' has a broader meaning than other purposes beneficial to the community which are also charitable". The Explanatory Memorandum to subparagraph 23(g)(v) confirms that the words 'community service purposes' are to be given a wide interpretation. Those words extend to a range of altruistic purposes that are not otherwise charitable, such as promoting, providing or carrying out activities, facilities or projects for the benefit or welfare of the community or any members of the community who have a particular need by reason of youth, age, infirmity or disablement, poverty, or social or economic circumstances."
The objectives and activities of the entity show that it is established for the purpose of providing support and assistance to families in the local area.
The constitution has suitable non-profit and dissolution clauses.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 50-10
Income Tax Assessment Act 1997 Section 50-70
Fringe Benefits Tax Assessment Act 1986 Subsection 65J(1)
Fringe Benefits Tax Assessment Act 1986 Subsection 65J(1)(j)
Fringe Benefits Tax Assessment Act 1986 Subsection 65J(3)
Fringe Benefits Tax Assessment Act 1986 Subsection 65J(5)
Reasons for decision
Paragraph 65J(1)(j) of the FBTAA 1986 provides:
"65J(1) Rebatable employer. For the purposes of this section, an employer is a rebatable employer for a year of tax if the employer is not a public benevolent institution, is not a health promotion charity, and is covered by any of the following paragraphs at any time during the year of tax:
(j) a non-profit society, non-profit association, or non-profit club, established for community service purposes (not being political purposes or lobbying purposes);
Paragraph 3 of Taxation Determination 93/190 states in part:
"The term 'community service purposes' has a broader meaning than other purposes beneficial to the community which are also charitable". The Explanatory Memorandum to subparagraph 23(g)(v) confirms that the words 'community service purposes' are to be given a wide interpretation. Those words extend to a range of altruistic purposes that are not otherwise charitable, such as promoting, providing or carrying out activities, facilities or projects for the benefit or welfare of the community or any members of the community who have a particular need by reason of youth, age, infirmity or disablement, poverty, or social or economic circumstances."
The information provided shows that the entity is a community service organisation established for the purpose of providing support and assistance to families in the local area. This is reflected in the objects in the entity's constitution and its activities.
The entity does not confer private benefits on its members and its activities are not of a political or lobbying purpose.
It is therefore considered that the entity operates for altruistic community service purposes directed to members of the community in need. Accordingly, the entity is entitled to a rebate of the fringe benefits tax liability on benefits provided to its employees pursuant to subsection 65J(1) of the FBTAA 1986.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 50-10
Income Tax Assessment Act 1997 Section 50-70
Fringe Benefits Tax Assessment Act 1986 Subsection 65J(1)
Fringe Benefits Tax Assessment Act 1986 Subsection 65J(1)(j)
Fringe Benefits Tax Assessment Act 1986 Subsection 65J(3)
Fringe Benefits Tax Assessment Act 1986 Subsection 65J(5)
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