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Ruling
Subject: Fringe benefits tax rebatable employer
Question 1
Is the employer a fringe benefits tax (FBT) rebatable employer pursuant to paragraph 65J(1)(j) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Answer
Yes
This ruling applies for the following periods:
Year ended 31 March 2014
Year ended 31 March 2015
Year ended 31 March 2016
The scheme commences on:
On or after 1 January 2013
Relevant facts and circumstances
The employer is a company limited by guarantee.
It has a Memorandum and Articles of Association (a copy of which was provided) which contains its objects and the functions are contained in its Constitution.
The Annual Report describes their current activities.
The Memorandum and Articles of Association contains no-profit and dissolution clauses.
Relevant legislative provisions
FBTAA subsection 65J(1)
FBTAA section 65J(5)
Reasons for decision
Summary
The employer is a rebatable employer for the purposes of section 65J as it is a non-profit society, non-profit association, or non-profit club established for community service purposes (not being political or lobbying purposes).
Detailed reasoning
Subsection 65J(1) states in part :
For the purposes of this section, an employer is a rebatable employer for a year of tax if the employer is not a public benevolent institution, is not a charitable institution described in subsection 57A(5), and is covered by any of the following paragraphs at any time during the year of tax: . . .
(j) . . .a non-profit society, non-profit association, or non-profit club established for community service purposes (not being political or lobbying purposes); . . .
The issue of community service purposes has been discussed in a number of documents including Taxation Determination TD 93/190 Income tax: what is the scope of the exemption from income tax provided by subparagraph 23(g)(v) of the Income Tax Assessment Act 1936?
The stated objects functions and activities demonstrate that the employer has a community service purpose.
In respect of non-profit requirements the Commissioner accepts that an entity is non-profit where its constituent documents prevent it from distributing uts profits or assets to members while in operation or when winding up. The employer's constituent documents contains clauses prohibiting distribution to members whilst in operation and upon winding up.
The information provided also shows that subsection 65J(5) of the FBTAA has also been satisfied.