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Ruling
Subject: Exemption from income tax
The entity is an STB under section 24AO of the Income Tax Assessment Act 1936 (ITAA 1936) and it is not an excluded STB in terms of section 24AT of the ITAA 1936. Therefore, the income of the entity is exempt from income tax pursuant to section 24AM of the ITAA 1936.
Question 1
Is the entity exempt from income tax under section 24AM of the ITAA 1936 as a State/Territory Body?
Answer
The entity is a State/Territory Body pursuant to section 24AO of the ITAA 1936.
The entity is exempt from income tax under section 24AM of the ITAA 1936.
This ruling applies for the following periods:
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
The scheme commences on:
1 July 2012
Relevant facts and circumstances
The entity is incorporated under the Corporations Law as a proprietary company limited by shares. The entity's share capital is beneficially owned by a state government entity.
The entity has received three previous private rulings collectively covering the period from 1 July 2003 to 30 June 2012 confirming that it was considered to be exempt from income tax as a State/Territory Body (STB). After issue of the private ruling for the period 1 July 2003 - 30 June 2006, its objects were amended and its share capital was acquired by a state government entity. This had no effect on its income tax exempt status as an STB.
The applicant has advised that no changes to the facts as per the previous ruling issued.
Relevant legislative provisions
Income Tax Assessment Act 1936 24AK,
Income Tax Assessment Act 1936 24AL,
Income Tax Assessment Act 1936 24AM,
Income Tax Assessment Act 1936 24AN,
Income Tax Assessment Act 1936 24AO and
Income Tax Assessment Act 1936 24AT.
Reasons for decision
Subdivision A of Division 1AB of the ITAA 1936 provides for certain State/Territory Body (STB) to be exempt from income tax in respect of income derived subject to key principles set out in section 24AK of the ITAA 1936.
The income of an STB will be exempt from income tax if it is not an excluded STB - refer sections 24AL, 24AM, 24AN and 24AT of the ITAA 1936.
There are five ways in which body can be an STB. The first way is set out in section 24AO in the following terms:
A body is an "STB" if:
(a) it is a company limited solely by shares; and
(b) all of the shares in it are beneficially owned by one or more government entities.
The entity is incorporated under the Corporations Law as a proprietary company limited by shares. The entity's share capital of is fully owned by a State Government entity.
Pursuant to section 24AT of the ITAA 1936, an STB is an excluded STB if it:
(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 (within the meaning of paragraph 23(e); or
(d) is a public hospital (within the meaning of paragraph 23(ea); or
(e) is a superannuation fund.
The entity is not an excluded STB under the terms of this provision.
The entity is an STB under section 24AO of the ITAA 1936 and it is not an excluded STB in terms of section 24AT of the ITAA 1936. Therefore, the income of the entity is exempt from income tax pursuant to section 24AM of the ITAA 1936.