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This edited version has been archived due to the length of time since original publication.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: 1012832390106

Date of advice: 1 July 2015

Ruling

Subject: Exempt income - State or Territory body

Question 1

Is the company exempt from income tax under section 24AM of the Income Tax Assessment Act 1936 (ITAA 1936) on the basis that it is a State/Territory Body (STB)?

Answer

Yes

This ruling applies for the following periods:

1 July 2014 - 30 June 2015

1 July 2015 - 30 June 2016

1 July 2016 - 30 June 2017

1 July 2017 - 30 June 2018

1 July 2018 - 30 June 2019

1 July 2019 - 30 June 2020

1 July 2020 - 30 June 2021

1 July 2021 - 30 June 2022

1 July 2022 - 30 June 2023

1 July 2023 - 30 June 2024

The scheme commences on:

1 July 2014

Relevant facts and circumstances

    • The company is limited solely by shares.

    • All shares are beneficially owned by a regional council, a municipal corporation.

Relevant legislative provisions

    • Income Tax Assessment Act 1936 Section 24AM

    • Income Tax Assessment Act 1936 Section 24AN

    • Income Tax Assessment Act 1936 Section 24AO

    • Income Tax Assessment Act 1936 Section 24AT

Reasons for decision

Question 1

Is the company exempt from income tax under section 24AM of the Income Tax Assessment Act 1936 (ITAA 1936) on the basis that it is a State/Territory Body (STB)?

Detailed reasoning

Under section 24AO of the ITAA 1936 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.

A government entity is defined under section 24AT of the ITAA 1936 as:

    (a) a State; or

    (b) a Territory; or

    (c) a municipal corporation or other local governing body.

Given that the entity is a company limited solely by shares and those shares are entirely owned by a regional council which is a municipal corporation, it is accepted that the entity is an STB.

Section 24AM of the ITAA 1936 provides that the income of an STB will not be exempt if section 24AN applies to the STB.

Section 24AN of the ITAA 1936 provides that an STB will not be exempt from income tax if it is an excluded STB.

An excluded STB is defined under section 24AT of the ITAA 1936 as an STB that:

    (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

    (c) is a public educational institution to which any of paragraphs 50-55(a) to (c) of the Income Tax Assessment Act 1997 applies; or

    (d) is a public hospital to which any of paragraphs 50-55(a) to (c) of the Income Tax Assessment Act 1997 applies; or

    (e) is a superannuation fund.

The entity is not any of the above therefore it is not an excluded STB.


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