1012328303702 | Legal database

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Authorisation Number: 1012328303702

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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 periods:

1 July 2012 to 30 June 2015

The scheme commences on:

Late September 2007

Relevant facts and circumstances

This is a company limited by shares registered late September 2007.

All of the shares are owned by a Council.

Relevant legislative provisions

ITAA 1936 Section 24AM

ITAA 1936 Section 24AN

ITAA 1936 Section 24AO

ITAA 1936 Section 24AT

Issue 1

Question 1:

Summary

This 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 this is a company limited solely by shares and whose shares are entirely owned by a municipal corporation, it is accepted that this company is an STB.

Section 24AM of the ITAA 1936 provides that the income of an STB will not be exempt if section 24AN 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:

· at a particular time, is prescribed as an excluded STB in relation to that time; or

· is a municipal corporation or other local governing body

· is a public educational institution to which any of paragraphs 50-55(a) to (c) of the Income Tax Assessment Act 1997 applies; or

· is a public hospital to which any of paragraphs 50-55(a) to (c) of the Income Tax Assessment Act 1997 applies; or

· is a superannuation fund.

This company is not any of the above therefore it is not an excluded STB.

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