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Ruling
Subject: Income tax exemption for the encouragement of sport
Question 1
Will the attainment of a new lease cause the Entity to lose its status as an exempt entity under item 9.1 (c) of the table in section 50-45 of the Income Tax Assessment Act 1997 established for the encouragement of sport?
Answer
No
This ruling applies for the following period:
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
Relevant facts and circumstances
The Entity is a public company limited by guarantee.
The Entity has previously applied for private binding rulings confirming it is an entity exempt from income tax on the basis it is established for the encouragement of sport.
The Entity has sought a new private binding ruling to confirm it will still be an entity established for the encouragement of sport should it, obtain a new lease for property and grant sub-leases and/or the undertaking of all other associated steps to facilitate these arrangements.
The Entity relies on the facts relating to the previous rulings as it submitted that there has been no change to the terms of its Constitution or its principal objects of encouraging the game or sport.
The objects of the Entity's constitution provide that it is to encourage, promote and further the game or sport
The principal activities of the Entity' since its inception has been to provide activities associated with a game or sport and other services to members. It organises and participates in a significant number of competitive activities.
The constitution of the Entity provides that no portion of its income or property can be distributed by way of profit to its members; and also provides that any surplus on winding up or dissolution cannot be distributed to members but must be transferred to similar organisations with similar prohibitions.
The Entity has various classes of memberships.
Any income derived by the Entity due to new lease arrangements will be applied to support and encourage the game or sport.
Relevant legislative provisions
Income Tax Assessment Act 1997 50-1
Income Tax Assessment Act 1997 50-5
Income Tax Assessment Act 1997 50-45
Income Tax Assessment Act 1997 50-70
Income Tax Assessment Act 1997 995-1
References
St Marys Rugby League Club Limited v. FC of T 97 ATC 4528; (1997) 36 ATR 281
Terranora Lakes Country Club Limited v. FC of T 93 ATC 4078; (1993) 25 ATR 294
Tweed Heads Bowls Club v. FC of T 92 ATC 2087; AAT Case 8267 (1992) 24 ATR 1068.
Case X25 90 ATC 251; (1990) 21 ATR 3257.