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Ruling
Subject: Income Tax Exemption
Question 1
Is the income of the Organisation exempt from income tax pursuant to section 50-1 and section 50-10 of the Income Tax Assessment Act 1997 (ITAA 1997) as an association established for community service purposes which meets the special condition under section 50-70 of the ITAA 1997?
Answer
Yes
This ruling applies for the following periods:
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
The scheme commences on:
1 July 2011
Relevant facts and circumstances
The Organisation requests a private ruling that it is exempt from income tax under section 50-1 of the ITAA 1997 as a community service organisation pursuant to item 2.1 in section 50-10 of the ITAA 1997. The organisation has previously been given favourable rulings on the same subject.
The Organisation provides services to the unemployed and disadvantaged.
The Organisation's major project is a program established to assist unemployed people in turning a viable business idea into their own small business. The community benefits on the whole, by helping these people.
The revenue of The Organisation is obtained predominantly from government grants.
Non Profit
The Organisation is a non profit organisation and the Constitution contains a suitable non profit and winding up clauses.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 50-1
Income Tax Assessment Act 1997 Section 50-10
Income Tax Assessment Act 1997 Section 50-70
Reasons for decision
Item 2.1 of section 50-10 of the Income Tax Assessment Act 1997 (ITAA 1997) states that the income of a society, association or club established for community services purposes will be exempt from income tax provided section 50-70 of the ITAA 1997 does not apply.
The Constitution of the Organisation prevents the entity from distributing income to its members either during its operation or on winding up. The Organisation has a physical presence in Australia and carries out its activities in Australia.
The objects of the Organisation have not changed materially since being granted exempt status previously. The activities are carried out in accordance with the objects.
The Organisation continues to satisfy the requirements of an association established for community service purposes. Its income is exempt pursuant to sections 50-1 and 50-10 of the ITAA 1997.