Edited version of your written advice

Authorisation Number: 1012922358809

Ruling

Subject: Native Title Benefit

Is any part of the Initial Payment by A to B, C and D to be included in the assessable income of the XY People?

Answer

No

This ruling applies for the following period:

Year ending 30 June 2015

The scheme commences on:

1 July 2014

Relevant facts and circumstances

You have provided copies of the following documents, which should be read in conjuction with, and form part of the scheme of this private ruling;

1. The Binding Initial Agreement

2. The Binding Heads of Agreement

3. The Combination Agreement

4. XY Judgment

5. XY Determination

6. Internal Settlement Deed

7. Early Release Agreement

8. XY Charitable Trust Deed

9. XY Direct Benefits Trust Deed

10. XYZ Direct Benefits Trust Deed

11. Sub-Fund Agreement

The Private Binding Application outlines that;

• the XY People are 'Indigenous persons' as defined in Section 995-1 of the Income Tax Assessment Act (ITAA) 1997.

• the Initial Payments comprise a native title benefit (it meets the requirements under subsection 59-50(5) of the ITAA 1997)

• no part of the Initial Payment is an amount described in subsection 59-50(3) and subsection 59-50(4) of the ITAA 1997.

Relevant legislative provisions

Income Tax Assessment Act 1997Section 6-5 of the

Income Tax Assessment Act 1997 Section 6-10

Income Tax Assessment Act 1997 Section 59-50

Income Tax Assessment Act 1997Subsection 59-50(1)

Income Tax Assessment Act 1997Subsection 59-50(2)

Income Tax Assessment Act 1997Subsection 59-50(3

Income Tax Assessment Act 1997Subsection 59-50(4)

Income Tax Assessment Act 1997Subsection 59-50(5)

Income Tax Assessment Act 1997Section 995

Income Tax Assessment Act 1997Section 118-77

Reasons for decision

Is any part of the Initial Payment by A to B, C and D to be included in the assessable income of the XY People?

The initial payment received by the XY People is considered to be non-assessable non-exempt 'native title benefit' income under section 59-50(1) of ITAA 1997.

Non-Assessable Non-Exempt Native Title Benefits

Non-Assessable Non-Exempt Native Title Benefits is covered under section 59-50 of the ITAA 1997.

Subsection 59-50(1) of the ITAA 1997 states that;

To the extent that a *native title benefit would otherwise be included in your assessable income, it is not assessable income and is not *exempt income if you are an *Indigenous person or an *Indigenous holding entity.

Subsection 59-50(2) of the ITAA 1997 states that;

To the extent that an amount, or other benefit, arising directly or indirectly from a native title benefit would otherwise be included in your assessable income, it is not assessable income and is not exempt income if you are an Indigenous person or an Indigenous holding entity.

As stated in the facts, the XY are described as being those persons who are descendants of one or more of the ancestors in Schedule 6 of the XY Determination.

We are satisfied that the XY People satisfy the definition of 'Indigenous person' under section 995-1(1) of the ITAA 1997.

Furthermore, subsection 59-50(3) of the ITAA 1997 states that;

Neither subsection (1) nor (2) applies to an amount, or benefit, to the extent that it:

(a) is for the purposes of meeting the provider's administrative costs; or

(b) is remuneration or consideration for the provision of goods or services.

Subsection 59-50(4) of the ITAA 1997 states that;

Subsection (2) does not apply to an amount, or benefit, to the extent that it arises directly or indirectly:

(a) from so much of:

(i) the native title benefit; or

(ii) an amount, or benefit, arising directly or indirectly from the native title benefit;

as is not * non-assessable non-exempt income of an entity because of this section; or

(b)  from an entity investing any or all of:

(i) the native title benefit; or

(ii) an amount, or benefit, arising directly or indirectly from the native title benefit.

Based on the facts you have provided, we consider no part of the Initial Payment is an amount described in subsection 59-50(3) and subsection 59-50(4) of the ITAA 1997.

Meaning of Native Title Benefit

The Explanatory Material to the Native Title Exposure Draft explains at [1.16] that the definition of Native Title Benefit (in section 59-50(5) of the ITAA 1997) covers agreements under Australian legislation that provide payments for an action affecting native title. An action affecting native title is one that extinguishes native title rights and interests or is otherwise wholly or partly inconsistent with their continued existence, enjoyment and exercise.

Subsection 59-50(5) of the ITAA 1997 defines the term 'native title benefit':

A native title benefit is an amount, or non-cash benefit, that:

a) arises under:

i. an agreement made under an Act of the Commonwealth, a State or a Territory, or under an instrument made under such an Act; or

ii. an ancillary agreement to such an agreement;

to the extent that the amount or benefit relates to an act that would extinguish native title or that would otherwise be wholly or partly inconsistent with the continued existence, enjoyment or exercise of native title; or

b) is compensation determined in accordance with Division 5 of Part 2 of the Native Title Act 1993

Application to your situation

The XY People belong to a group of People who have made registered claims under the Native Title Act (NTA). Whilst there have been changes to the details of the claims, the XY People have continued to be a party to a registered claim. Furthermore, the XY People have been party to various agreements and ancillary agreements that have been made subsequent to claims being registered and any payments received have been pursuant to such agreements.

Therefore, based on the following;

• the XY People are 'Indigenous persons' (as defined in section 995-1(1) of the ITAA 1997);

• all of the Initial Payments comprise a native title benefit (as they meet the requirements under subsection 59-50(5) of the ITAA 1997) and

• no part of the Initial Payment is an amount described in subsection 59-50(3) and subsection 59-50(4) of the ITAA 1997.

We conclude, that the initial payment received by the XY People comprise non-assessable non-exempt 'native title benefit' income under section 59-50(1) of ITAA 1997 and does not need to be included in their assessable income.