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This edited version has been archived due to the length of time since original publication.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.

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Edited version of your written advice

Authorisation Number: 1013031098737

Date of advice: 10 June 2016

Ruling

Subject: Exempt income

Question 1

Is the Company a public authority constituted under an Australian law as described in item 5.2 of the table in section 50-25 of the Income Tax Assessment Act 1997 (ITAA 1997) and therefore its income exempt from income tax?

Answer

Yes

This ruling applies for the following periods:

Year ended 30 June 2017

Year ended 30 June 2018

Year ended 30 June 2019

Year ended 30 June 2020

Year ended 30 June 2021

Year ended 30 June 2022

The scheme commences on:

The scheme has commenced

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 Company is registered as an Australian public company limited by guarantee.

The constitution provides the objects for which the Company is established. It is to act as a body authorised by governments to undertake a particular function for government programs and projects.

It will operate as a non-profit organisation and in the event of winding up its surplus income and assets would be transferred to a body approved as a charitable institution.

The Company is established by state and commonwealth legislation and is accordingly regulated and governed by commonwealth and state government regulations and guidelines.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 50-1 and

Income Tax Assessment Act 1997 section 50-25.

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you understand how we reached our decision.

Section 50-1 of the ITAA 1997 provides that the ordinary and statutory income of entities covered by the tables listed in Subdivision 50-A of the ITAA 1997 is exempt from income tax.

Section 50-25 of the ITAA 1997 covers exempt government entities. Item 5.2 of the table in section 50-25 provides that 'a public authority constituted under an Australian law' is an exempt entity. There are no special conditions that must be met for this item.

The term public authority constituted under an Australian law is not defined in the ITAA 1997. Taxation Ruling IT 2632 Income tax: meaning of 'public authority' in definition of 'exempt public body' in Division 16D (IT 2632) provides the Commissioner's view on whether a particular body is public authority.

IT 2632 at paragraph 14 states that in determining whether a particular body is a 'public authority' it is necessary to: 

Since the publication of IT 2632, there have been Federal Court cases involving the nature of a public authority.

In FC of T v. Bank of Western Australia Limited; FC of T v. State Bank of New South Wales Limited 96 ATC 4009 at 4027, after considering a number of cases in relation to the meaning of public authority, Hill J derived the following propositions:

Having regard to the public duties and powers conferred on the Company, it is accepted that it has been established and operates to perform a particular function of government for the community. It is also accepted that it operates in a non-profit manner. The Company does not have features that are inconsistent with the concept of a public authority.

Therefore, the Company's income is exempt from income tax pursuant to section 50-1 of the ITAA 1997 on the basis that it qualifies as a public authority constituted under an Australian law under item 5.2 of the table in section 50-25 of the ITAA 1997.


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