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This edited version has been archived due to the length of time since original publication.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

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012116379650

    This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

    Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.

Ruling

Subject: Income Tax Exemption

Questions:

Is the rulee exempt from income tax pursuant to section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as a public authority constituted under an Australian law as described in item 5.2 of section 50-25 of the ITAA 1997?

Answers:

Yes.

This ruling applies for the following period(s):

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

Year ended 30 June 2016

The scheme commences on:

1 July 2012

Relevant facts and circumstances

The rulee is registered as an Australian public company limited by guarantee.

The constitution provides the objects for which the rulee is established. It is to act as a body authorized by governments to undertake funding allocation 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 rulee is established by state and commonwealth legislation and is accordingly regulated and governed by commonwealth and state government regulations and guidelines.

In practice, the Governments will authorise specific funding to be provided to the rulee under specific funding programs which are established by statute.

The rulee will be required to invite appropriate bodies to make applications for grants and funding and to make recommendations to the appropriate Ministers regarding the suitability for the purpose of funding approval or refusal.

The rulee will oversee and, where necessary, enforce each body's compliance with the binding agreement on behalf of the relevant governments and will have ability under the Commonwealth and State Acts to grant further limited funds to bodies approved by the Ministers.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 50-1.

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 to understand how we reached our decision.

Section 50-1 of the ITAA 1997 exempts from income tax the income of the entities described in the tables listed in Subdivision 50A of the ITAA 1997.

Section 50-25 of the ITAA 1997 is contained in Subdivision 50A of the ITAA 1997 which describes at item 5.2 'a public authority constituted under an Australian law'.

The term 'public authority constituted under an Australian Law' is not defined in the ITAA 1997. The Commissioner has however issued Taxation Ruling No. IT 2632 'Income tax: meaning of 'public authority' in definition of 'exempt public body' in Division 16D of the Income Tax Assessment Act 1936' (ITAA 1936).

Taxation Ruling IT 2632 discusses the meaning of the term public authority and what is meant by the expression 'constituted under a law' of the Commonwealth, State or Territory.

Paragraphs 4-11 of IT 2632 consider a number of court decisions which have been made in relation to 'public authority' in paragraph 23(d) of the ITAA 1936 which is equivalent to item 5.2 in section 50-25 of the ITAA 1997.

Paragraphs 15 -19 of IT 2632 discuss the meaning of 'constituted by or under' a law. It essentially provides that a year by year consideration is necessary of whether the body is set up, founded or established as a public authority by or under the relevant law, or whether it has acquired the attributes and qualities of a public authority.

In Renmark Hotel Incorporated v. Federal Commissioner of Taxation (1949) 79 CLR 10; 9 ATD 106; (1949) 4 AITR 157 (Renmark), the High Court noted that a public authority should:

    · carry on some undertaking of a public nature for the benefit of the community or some section or geographical division of the community;

    · have power or authority conferred upon it by Commonwealth, State or Territory legislation to do acts in relation to the public which would otherwise be beyond its power or unauthorised; and

    · not make private profits although there is no objection to profits made for the public benefit.

Public authority constituted by an Australian Law

In applying the principles that emerged from Renmark to the facts of this ruling, it is clear that in terms of its establishment by government legislation, its objects & the activities it conducts it is undertaking activities that are of benefit to the community in general, it is authorized to do so by the relevant government legislation, it operates under strict guidelines and regulations of the government and conducts these activities on a non-profit basis.

All of these facts indicate clearly that the rulee has the power and authority conferred upon it by legislation to undertake activities which are of benefit to the general community in a state of Australia, which would otherwise be beyond its power or unauthorised.

In light of the above facts and discussion the rulee is considered to be 'a public authority constituted under an Australian law' as described in item 5.2 of table in section 50-25 of the ITAA 1997. The income of the rulee is therefore exempt from income tax pursuant to section 50-1 of the ITAA 1997.