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Edited version of your written advice
Authorisation Number: 1013042541936
Date of advice: 28 June 2016
Ruling
Subject: Income tax exemption
Question
Is the entity a State/Territory Body (STB) exempt from income tax pursuant to section 24AM of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer
Yes
This ruling applies for the following periods:
Year ended 30 June 2017
Year ended 30 June 2018
Year ended 30 June 2019
The scheme commences on:
20 January 2013
Relevant facts and circumstances
The entity is an independent body corporate.
It is governed by legislation.
It is not a company limited by shares nor does it have share capital or shareholders.
It is not registered as a company with the ACCC under the Corporations Act.
Relevant legislative provisions
Income Tax Assessment Act 1936 - section 24AK
Income Tax Assessment Act 1936 - section 24AM
Income Tax Assessment Act 1936 - section 24AN
Income Tax Assessment Act 1936 - section 24AQ
Income Tax Assessment Act 1936 - section 24AT
Income Tax Assessment Act 1936 - section 24AU
Rail Safety National Law (South Australia) Act 2012
Rail Safety National Law
Reasons for decision
Detailed reasoning
Part III of Division 1AB of the ITAA 1936 provides that certain State and Territory bodies will be exempt from income tax.
Section 24AM provides that the income of an STB is except unless section 24AN applies to the STB.
Section 24AK of the ITAA 1936 provides:
A body that is a State or Territory body (an STB) is exempt from income tax under this Division unless it is an excluded STB. There are five different ways in which a body can be an STB.
The entity is to be considered under section 24AQ, the third way in which a body can be an STB.
Section 24AQ provides that a body is an STB if:
a) it is established by State or Territory legislation; and
b) it is not a company limited solely by shares; and
c) the legislation gives the power to appoint or dismiss its governing person or body only to one or more government entities.
Section 24AN provides that excluded STB's are not exempt under this division.
Section 24AT defines the term excluded STB.
1. Is the entity a STB pursuant to section 24AQ of the ITAA 1936?
The entity is a body that has been created by State legislation, is constituted as a body corporate with perpetual succession and is not a company limited solely by shares.
Section 24AU of the ITAA 1936 allows a Minister of the Crown of a State to be taken as a government entity.
The entity satisfies the third criterion in establishing itself as an STB.
Summary
It is accepted that the entity meets the requirements of section 24AQ of the ITAA 1936.
2. Is the entity an excluded STB as defined in section 24AT of the ITAA 1936?
Section 24AT states that an excluded STB means an STB that:
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(a) to (c) of the Income Tax Assessment Act 1997 applies; or
d) is a public hospital to which any of the paragraphs 50-55(a) to (c) of the Income Tax Assessment Act 1997 applies; or
e) is a superannuation fund.
The entity is not prescribed as an excluded STB within the Income Tax (Excluded STB's) Regulations 1997. The entity is not a municipal corporation, public educational institution, public hospital or a superannuation fund. Accordingly, none of these exclusions are satisfied.
Therefore the entity is not an excluded STB.
3. Is the income of the entity exempt from income tax pursuant to section 24AM of the ITAA 1936?
Section 24AM states:
The income of a State / Territory body (an STB) is exempt from income tax unless section 24AN applies to the STB.
It has been established that the entity is an STB pursuant to section 24AQ and is not an excluded STB.
As the entity is an STB that is not an excluded STB, its income is exempt from income tax pursuant to section 24AM of the ITAA 1936.
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