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Edited version of your written advice
Authorisation Number: 1012788488166
Ruling
Subject: Fringe benefits tax
Question
Is Entity X entitled to the fringe benefits tax (FBT) rebate under the provisions of the Fringe Benefits Tax Assessment Act 1986?
Answer
Yes
This ruling applies for the following periods
FBT year ending 31 March 20XX
FBT year ending 31 March 20XX
FBT year ending 31 March 20XX
FBT year ending 31 March 20XX
The scheme commences on
1 April 20XX
Relevant facts and circumstances
Entity X is an association established under the Associations Incorporation Act 1981 (QLD).
A copy of the most recent Annual Report has been provided.
A copy of the Constitution has been provided.
The Constitution contains appropriate non-profit and winding up clauses.
The Commissioner has previously issued a private ruling determining that the income of Entity X was exempt from income tax under section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997).
Relevant legislative provisions
Section 65J of the FBTAA
Section 50-1 of the ITAA 1997
Section 50-40 of the ITAA 1997
Reasons for decision
Subsection 65J(1) of the FBTAA provides that an employer will be a rebatable employer if it is exempt from income tax at any time during the year of tax under any of the provisions set out in the table; and satisfies the special conditions also set out in the table.
Item 9 of the table is relevant in this instance:
A society or association
(a) established for the purpose of promoting the development of any of the following Australian resources:
(i) agricultural resources;
(ii) horticultural resources;
(iii) industrial resources;
(iv) manufacturing resources;
(v) pastoral resources;
(vi) viticultural resources;
(vii) aquacultural resources;
(viii) fishing resources; and
(b) covered by item 8.2 of the table in section 50-40 of the ITAA 1997.
Assessable income of a taxpayer is exempt under section 50-1 of the ITAA 1997 where the taxpayer falls within the description contained in item 8.2 of section 50-40 of the ITAA 1997:
A society or association established for the purpose of promoting the development of any of the following Australian resources:
(i) agricultural resources
(ii) horticultural resources
(iii) industrial resources
(iv) manufacturing resources
(v) pastoral resources
(vi) viticultural resources
(vii) aquacultural resources
(viii) fishing resources
The exemption is subject to a special condition that the society or association is not carried on for the profit or gain of individual members.
The matters to be satisfied before exemption under section 50-40 of the ITAA 1997 applies are:
• the organisation is a non-profit association or society; and
• the dominant or principal purpose for which the organisation is established is promoting resource development; and
• the resources whose development is being promoted are within the umbrella of resources specified in the relevant section; and
• the resources, are resources of Australia.
• If the association fails to satisfy these requirements, if will not be exempt from income tax under section 50-40 of the ITAA 1997.
The Commissioner considered in a private ruling that Entity X is a non-profit association that meets the requirements of section 50-40 of the ITAA 1997 and that its ordinary and statutory income is exempt from income tax under section 50-1 of the ITAA 1997.
There have been no changes to the relevant legislation, or to factors that the Commissioner considered at that time to reach this conclusion.
Therefore, the Commissioner considers that Entity X also meets the requirements of item 9 of the table in subsection 65J(1) of the FBTAA.
The special conditions for item 9 of the table are found in subsection 65J(5) of the FBTAA. This subsection provides that a society, association or club is not covered by table item 9 for a year of tax if it is:
(ix) an incorporated company where all the stock or shares in the capital of the company is or are beneficially owned by:
(i) the Commonwealth, a State or a Territory; or
(ii) an authority or institution of the Commonwealth, a State or a Territory; or
(x) an incorporated company where the company is limited by guarantee and the interests and rights of the members in or in relation to the company are beneficially owned by:
(i) the Commonwealth, a State or a Territory; or
(ii) an authority or institution of the Commonwealth, a State or a Territory.
Entity X is not excluded by the special conditions as it is not an incorporated company.
Conclusion
As Entity X meets the requirements of section 65J of the FBTAA, it is determined to be a rebatable employer.
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