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Edited version of private advice
Authorisation Number: 1012651507369
Ruling
Subject: Income Tax ~~ Exempt entities ~~ not for profit organisations
Question 1
Is the organisation exempt from income tax pursuant to section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) on the basis that it is a resource development organisation as described in item 8.2(a) of section 50-40 of the ITAA 1997?
Answer
Yes
This ruling applies for the following periods:
Period ended 30 June 2014
Period ended 30 June 2015
Period ended 30 June 2016
Period ended 30 June 2017
The scheme commences on:
1 July 2013
Relevant facts and circumstances
The organisation is an incorporated association established primarily for the purpose of promoting the development of Australian agricultural resources.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 50-1
Income Tax Assessment Act 1997 section 50-40
Reasons for decision
Issue 1
Question 1
Summary
The organisation satisfies all requirements of item 8.2(a) of section 50-40 of the ITAA 1997 and is therefore exempt from income tax pursuant to section 50-1 of the ITAA 1997.
Detailed reasoning
Section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the ordinary and statutory income of the entities described in the tables which follow that section are exempt from income tax.
Included in those tables is item 8.2(a) within section 50-40 of the ITAA 1997 that applies to income derived on or after 1 July 2000 and refers to a society or association established to promote the development of agricultural resources in Australia.
The special condition imposed on the society or association by section 50-40 for the exemption to apply is that it is not carried on for the profit or gain of its individual members.
Accordingly the issues that need to be addressed to ascertain an organisation's income tax status under item 8.2(a) of section 50-40 of the ITAA 1997 is to determine whether:
• the entity is a non-profit association or society; and
• the dominant or principal purpose for which the entity is established is promoting resource development; and
• the resources whose development is being promoted are within the umbrella of resources specified in the relevant section; and
• the resources, are resources of Australia and
• the entity is not carried on for the profit or gain of its individual members.
If the association fails to satisfy these requirements, its income will not be exempt under this provision.
In this instance the organisation satisfies all the above requirements under 8.2(a) of section 50-40 of the ITAA 1997 and is therefore exempt from income tax pursuant to section 50-1 of the ITAA 1997.