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Edited version of your written advice

Authorisation Number: 1012797357676

Ruling

Subject: Fringe benefits tax - rebatable employer

Question 1

Is Employer X a rebatable employer pursuant to section 65J of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer:

Yes.

This ruling applies for the following fringe benefits tax year:

Year ended 31 March 2016

The scheme commences on:

The scheme has commenced.

Relevant facts and circumstances

Employer X is an incorporated association with its own statement of rules and purposes and is governed by a board of directors.

Employer X is established to promote the development of listed Australian resources.

Employer X has employees.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 50-40

Fringe Benefits Tax Assessment Act 1986 section 65J

Reasons for decision

Subsection 65J(1) of the FBTAA states:

(a) is exempt from income tax at any time during the year of tax under any of the provisions set out in the following table; and

(b) satisfies the special conditions (if any) set out in the following table.

The relevant table item in these circumstances is item 9 which states:

9

a society or association:

See subsection (5) of this section.

 

(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 Income Tax Assessment Act 1997

Under item 9(b) of the table under subsection 65J(1) of the FBTAA, Employer X must also be covered by item 8.2 of the table in section 50-40 of the Income Tax Assessment Act 1997 (ITAA 1997).

Item 8.2 of the table in section 50-40 of the ITAA 1997 lists categories of entities whose ordinary and statutory income will be exempt from income tax, which includes an association established for the promotion of listed Australian resources, where its objects and activities are not carried on for the profit or gain of its individual members.

In Cronulla Sutherland Leagues Club Limited v FCT 90 ATC 4215, the court held that, in determining whether the club was exempt under section 23 of the Income Tax Assessment Act 1936 (ITAA 1936) (corresponding to section 50-45 of the ITAA 1997) it was relevant to look at the objects or purposes for which the body was incorporated, including the objects clauses in the Memorandum of Association, and also any subsequent activities of the body which may throw light on its activities in the relevant year of income.

The Commissioner accepts, based on the objects in Employer X's constituent document and a review of its activities, that Employer X was established to promote the development of listed Australian resources.

There is no provision in the constituent document of Employer X for the declaration, making, or paying of a payment in the nature of a dividend or for a distribution of a surplus of funds to members of Employer X.

Employer X is not an ACNC type of entity as defined in subsection 995-1(1) if the ITAA 1997 which would be subject to the special conditions under section 50-47 of the ITAA 1997.

Therefore, the Commissioner accepts that Employer X is a non-profit association which would be an exempt entity under item 8.2 of the table in section 50-40 of the ITAA 1997.

Accordingly, Employer X satisfies the conditions set out in item 9(b) of the table in subsection 65J(1) of the FBTAA to be a rebatable employer.

A further qualifying condition for Employer X to be a rebatable employer is set out in subsection 65J(5) of the FBTAA which states:

A society, association or club is not covered by table item 4, 5, 8, 9, 10, 11 or 12 in subsection (1) for a year of tax if it is:

(a) 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

(b) 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.

Employer X is not an incorporated company as detailed in subsection 65J(5) of the FBTAA.

In conclusion, as Employer X satisfies all the conditions set out in subsections section 65J(1) and (5) of the FBTAA, the Commissioner accepts that Employer X is a rebatable employer pursuant to section 65J of the FBTAA.

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