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This edited version has been archived due to the length of time since original publication.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

Authorisation Number: 1012665182763

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 of section 50-40 of the ITAA 1997?

Answer

Yes

This ruling applies for the following periods:

Period ended 30 June 2015

Period ended 30 June 2016

Period ended 30 June 2017

Period ended 30 June 2018

The scheme commences on:

1 July 2014

Relevant facts and circumstances:

The organisation is incorporated as a company limited by guarantee and established primarily for the purpose of promoting the development of specified Australian resources pursuant to item 8.2 of the table in section 50-40 of the ITAA 1997.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 50-1

Income Tax Assessment Act 1997 section 50-40

Reasons for decision

Question 1

Summary

The organisation satisfies all requirements of item 8.2 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 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 the following resources in Australia:

    • agricultural resources;

    • horticultural resources;

    • industrial resources;

    • manufacturing resources;

    • pastoral resources;

    • viticultural resources;

    • aquacultural resources;

    • fishing resources

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 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 requirements of item 8.2 of section 50-40 of the ITAA 1997 and is therefore exempt from income tax pursuant to section 50-1 of the ITAA 1997.


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