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Edited version of private advice
Authorisation Number: 1012624806602
Ruling
Subject: Community service organisation
Exemption from income taxation for a Community service organisation
Question 1
Is the organisation exempt from income tax pursuant to section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) on the basis that it is a community service organisation as described in section 50-10 of the ITAA 1997?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2012
The scheme commences on:
1 July 2011
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
The organisation is an incorporated association.
Its Mission Statement is to preserve and promote a particular country's heritage and goodwill between Australia and that particular country through social and cultural activities.'
The organisation is a non-profit organisation.
The organisation's activities predominantly comprise of social activities for members.
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
A community service organisation as described in section 50-10 of the Income Tax Assessment Act 1997 (ITAA 1997) is exempt from income tax pursuant to section 50-1 of the ITAA 1997.
Paragraph 4 of Taxation Determination TD 93/190 states,
However, the provision does not give exemption from income tax to a broad range of organisations that are established within the community but whose purposes are not of an altruistic nature. Altruistic purposes are an essential element of even the widest interpretation of 'community service purposes'.
In this case the organisation is not carried on for the purpose of profit or gain of its individual members. Its purpose as stated in its Mission Statement is to preserve and promote a particular country's heritage and goodwill between Australia and that particular country through social and cultural activities.
Paragraph 7 of TD 93/190 provides examples of organisations that are not considered to be exempt under this provision. Example (c) refers to 'clubs that provide a social forum for expatriates of a particular country;'
As this organisation is considered to be a non-profit organisation that provides a social forum for its expatriate members, it is not considered to be a community service organisation as described in section 50-10 of the ITAA 1997. It is therefore not exempt from income tax.
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