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Edited version of your written advice
Authorisation Number: 1012783669661
Ruling
Subject: Income Tax Exemption
Question 1
Is the entity exempt from income tax under section 24AM of the Income Tax Assessment Act 1936 (ITAA 1936) as a State/Territory Body?
Answer
Yes
This ruling applies for the following periods
Year ended 30 June 2016
Year ended 30 June 2017
Year ended 30 June 2018
Year ended 30 June 2019
Year ended 30 June 2020
The scheme commences on
1 July 2015
Relevant facts and circumstances
The entity is incorporated under the Corporations Law as a proprietary company limited by shares. The entity's share capital is beneficially owned by State Government.
The entity has received previous private rulings confirming that it was considered to be exempt from income tax as a State/Territory Body (STB).
The applicant has advised that there have been no changes to the facts as per the previous ruling issued.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 24AM
Income Tax Assessment Act 1936 Section 24AO
Income Tax Assessment Act 1936 Section 24AT
Income Tax Assessment Act 1936 Section 24AL
Income Tax Assessment Act 1936 Section 24AN
Reasons for decision
Subdivision A of Division 1AB of the ITAA 1936, and specifically section 24AM of the ITAA 1936, provides for certain State/Territory Bodies (STB) to be exempt from income tax in respect of income derived.
However, the income of an STB will not be exempt from income tax if it is an excluded STB (sections 24AL, 24AM, 24AN and 24AT of the ITAA 1936).
There are five ways in which a body can be an STB. The first way is set out in section 24AO of the ITAA 1936:
A body is an STB if:
(a) it is a company limited solely by shares; and
(b) all of the shares in it are beneficially owned by one or more government entities.
As defined in section 24AT of the ITAA 1936 'government entities' includes 'a State'.
The entity is incorporated under the Corporations Law as a proprietary company limited by shares. The entity's share capital is fully owned by the State Government through its Department.
Pursuant to section 24AT of the ITAA 1936, an STB is an excluded STB if it:
(a) at a particular time, is prescribed as an excluded STB in relation to that time; or
(b) is a municipal corporation or other local governing body (within the meaning of
section 50-25 of the Income Tax Assessment Act 1997); or
(c) is a public educational institution to which any of paragraphs 50-55(1)(a) to (c) of the Income Tax Assessment Act 1997 applies; or
(d) is a public hospital to which any of paragraphs 50-55(1)(a) to (c) of the Income Tax Assessment Act 1997 applies; or
(e) is a superannuation fund.
The entity is not an excluded STB as defined in section 24AT of the ITAA 1936.
The entity is a STB under section 24AO of the ITAA 1936 and it is not an excluded STB as defined in section 24AT of the ITAA 1936. Therefore, the income of the entity is exempt from income tax pursuant to section 24AM of the ITAA 1936.
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