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Edited version of your written advice
Authorisation Number: 1013021732511
Date of advice: 20 May 2016
Ruling
Subject: Fringe Benefits Tax - Rebatable Employer
Question 1
Is the entity a rebatable employer for the purposes of item 4 of the table in subsection 65J(1) of the FBTAA?
Answer
Yes
This ruling applies for the following periods:
FBT year ended 31 March 2014
FBT year ended 31 March 2015
FBT year ended 31 March 2016
FBT year ended 31 March 2017
FBT year ended 31 March 2018
FBT year ended 31 March 2019
The scheme commences on:
1 April 2013
Relevant facts and circumstances
The ATO has concluded in private rulings previously issued that:
• The entity is a society, club or association established for the encouragement of science which is covered by item 1.7 of the table in section 50-5 of the Income Tax Assessment Act 1997 (ITAA 1997) and is exempt from income tax and
• is a rebatable employer for the purpose of section 65J(1) Of the FBTAA.
The entity is a society, association or club as it carries out activities in pursuit of its objectives contained in its constitution.
The members of the entity include both government and non-government entities.
The entity is established for the encouragement of science.
Relevant legislative provisions
Income Tax Assessment Act 1997, section 50-5
Fringe Benefits Tax Assessment Act 1986, section 65J
Reasons for decision
Subsection 65J(1) of the FBTAA
Changes to subsection 65J(1) of the FBTAA commenced on 30 June 2013 and was effective from 1 April 2013. From the 2014 FBT year, an employer is a rebatable employer under subsection 65J(1) of the FBTAA if it:
• is exempt from income tax at any time during the FBT year, and
• satisfies any special condition.
In the new subsection 65(1) of the FBTAA the equivalent provision for the encouragement of science is contained in item 4 of the table in paragraph 65J(1)(b) of the FBTAA which states:
Type of employer |
Special condition |
a society, association or club: |
See subsection (5) of this section. |
(a) established for the encouragement of science; and |
|
(b) covered by item 1.7 of the table in section 50-5 of the Income Tax Assessment Act 1997 |
This effect of the amended definition in subsection 65J(1) of the FBTAA is to improve readability and limit the rebate to employer's who are also eligible for income tax exemption under relevant provisions within Division 50 If the ITAA 1997; in this case item 1.7 in the table of section 50-5.
Tax exempt entity
The Commissioner previously ruled the entity to be a tax exempt entity under item 1.7 in the table of section 50-5 of the ITAA 1997. The Commissioner agrees that item 1.7 in the table of section 50-5 of the ITAA 1997 applies to the entity at some point in the relevant FBT years in question, and as such item 4(b) of paragraph 65J(1)(b) is satisfied.
Society, Association or Club
The Commissioner previously issued Private rulings determining the entity to be a rebatable employer under the old subsection 65J(1) of the FBTAA. In that private ruling (and earlier ones) we concluded that paragraph 65J(1)(g) applied to the entity.
The Commissioner agrees that the entity, in the relevant FBT in question, was established for the encouragement of science based on there being no changes to the entity's constitution, purpose or activities since the previous private rulings issued.
Special conditions
Subsection 65J(5) of the FBTAA 1986 provides that a society, association or club is not covered by table item 4 in subsection 1 of 65J if the society, association or club is
(b) an incorporated company where the company is limited by guarantee and the interests and rights of the members in or in relation to the company are beneficially owned by:
i. the Commonwealth, a State or a Territory; or
ii. an authority or institution of the Commonwealth, a State or a Territory
ATO ID 2009/127 Fringe Benefits Tax Rebatable employer: meaning of 'non-profit association'-members include government bodies provides that an employer is a 'non-profit association' where not all member organisations are government bodies i.e. where the organisation has both government and non-government members then item 65J(5) does not apply.
Not all members of the entity were government bodies.
As not all of the member organisations (who beneficially own the interests and rights in the company) are relevant government bodies, subparagraph 65J(5) of the FBTAA does not apply.
As all the conditions for the purpose of item 4 of the table in subsection 65J(1) of the FBTAA is satisfied, for each of the relevant FBT years, the entity therefore is a rebatable employer.