Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012612815217

Ruling

Subject: Income Tax Exemption - Community Service Organisation

Question 1

Is the entity exempt from income tax pursuant to the provisions of section 50-1 on the basis that it falls under item 2.1 of the table in section 50-10 of the Income Tax Assessment Act 1997?

Answer

Yes

This ruling applies for the following periods:

The scheme commences on:

1 July 2014

Relevant facts and circumstances

The entity was established as a company limited by guarantee on dd/mm/yyyy and sought extension of their income tax exemption status.

The establishment of the entity was the direct result of a legislative requirement.

The entity adopted a new Constitution on dd/mm/yyyy. The changes followed the implementation of a unitary governance structure. The new structure merged the functions of the formerly separate Board and Council.

Any changes between the superseded documents (Memorandum and Articles of Association and the Constitution) and the New Constitution are consequential, and as a result of the amalgamation exercise. The New Constitution did not make any significant changes to the following key clauses:

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 50-1

Income Tax Assessment Act 1997 Section 50-10

Income Tax Assessment Act 1997 Section 50-70

Reasons for decision

Issue 1

Is the entity entitled to an income tax exemption status as a community service organisation?

Question 1

Is the entity exempt from income tax pursuant to the provisions of section 50-1 on the basis that it falls under item 2.1 of the table in section 50-10 of the Income Tax Assessment Act 1997?

Summary

The Constitution of the entity prevents it from distributing income to its members either during its operation or on winding up. The entity has a physical presence in Australia, and carries out its activities in Australia. The activities of the entity are carried out in accordance with its objects. The entity is exempt from income tax as it is a community service association.

Detailed reasoning

Item 2.1 of section 50-10 of the Income Tax Assessment Act 1997 (ITAA97) states that the income of a society, association or club established for community services purposes will be exempted from Income tax provided section 50-70 does not apply.

Item 2.1 of the table in section 50-10 of the ITAA 1997, in conjunction with section 50-1 of the ITAA 1997, specifies that the total ordinary income and statutory income of a 'society, association or club established for community service purposes (except political or lobbying purposes)' is exempt from income tax. The special conditions in section 50-70 of the ITAA 1997 relevantly require that the entity is 'not carried on for the purpose of profit or gain of its individual members'.

The entity is considered to have a community service purposes as its establishment was the direct result of a legislative requirement.

The new Constitution of the entity prevents it from distributing income to its members either during its operation or on winding up. The entity has a physical presence in Australia, and carries out its activities in Australia.

The objects of the entity have not changed materially since being initially granted exempt status. The activities are carried out in accordance with the objects.

Therefore the entity meets the requirements of section 50-10 of ITAA97, and is exempt from income tax as a community service association.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).