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Edited version of private ruling
Authorisation Number: 1011475181568
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Ruling
Subject: Exemption from income tax
Question 1
Will the Association continue to be exempt from income tax pursuant to section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) on the basis that it falls under item 9.1(a) of the table in section 50-45 of the ITAA 1997?
Answer
Yes
Facts
The Association seeks confirmation that it will continue to be exempt from income tax for the income year ending 30 June 2011 and subsequent income years.
The Association advised that changes have been made to its governing documents, which include its constitution.
The governing documents are materially the same as the constitution at the time of the previous private ruling application. The amendments to the governing documents are administrative changes to the operation of the Association without impacting on the primary object described in constitution.
The private ruling application states that the changes to the governing documents are not material and do not affect the conclusion that the Association:
· is a society, association or club
· was established for the encouragement of animal racing
· is not carried on for the purpose of profit or gain of its individual members; and
· has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives in Australia.
Governing Documents
A clause of the constitution lists the Association's objects and states that the primary object for which the Association is established is for the encouragement and promotion of animal races.
The constitution contains non-profit and dissolution clauses that prohibit the distribution of income and property to its members when it is operating and in the event of winding up.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 50-1.
Income Tax Assessment Act 1997 Section 50-5.
Income Tax Assessment Act 1997 Section 50-45.
Income Tax Assessment Act 1997 Section 50-70.
Summary
The Association is exempt from income tax on the basis that it falls under item 9.1(a) of the table in section 50-45 of the ITAA 1997.
Detailed reasoning
Pertinent to the matter of this private ruling is the question of whether the Association will continue to be exempt from income tax on the basis that it falls under item 9.1(a) of the table in section 50-45 of the ITAA 1997 subject to the changes to the governing documents.
The changes that have occurred to the governing documents relate to matters which refer to the Association's operations and are incidental to the objects of the Association. The objects have not changed and the Association also retains its requisite non-profit character.
Consequently, the Association is within the provisions of item 9.1(a) of the table in section 50-45 of the ITAA 1997 and is therefore exempt from income tax pursuant of section 50-1 of the ITAA 1997.