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Edited version of private advice
Authorisation Number: 1051599214280
Date of advice: 24 October 2019
Ruling
Subject: Income tax exemption
Question
Is the entity exempt from income tax under section 24AM of the Income Tax Assessment Act 1936 (ITAA 1936) as a State/Territory Body?
Answer
Yes
This ruling applies for the following periods:
Year ended 30 June 2021
Year ended 30 June 2022
Year ended 30 June 2023
Year ended 30 June 2024
Year ended 30 June 2025
The scheme commences on:
1 July 2020
Relevant facts and circumstances
The entity is incorporated under the Corporations Law as a proprietary company limited by shares. The entity's share capital is beneficially owned by State Government.
The entity has received previous private rulings confirming that it was considered to be exempt from income tax as a State/Territory Body (STB).
The applicant has confirmed that there have been no changes to the facts as per the previous ruling issued.
Relevant legislative provisions
Income Tax Assessment Act 1936 Division 1AB
Income Tax Assessment Act 1936 Section 24AM
Income Tax Assessment Act 1936 Section 24AO
Income Tax Assessment Act 1936 Section 24AT
Income Tax Assessment Act 1936 Section 24AL
Income Tax Assessment Act 1936 Section 24AN
Reasons for decision
Summary
The entity is a State/Territory Body (STB) under section 24AO of the ITAA 1936 and it is not an excluded STB as defined in section 24AT of the ITAA 1936. Therefore, the income of the entity is exempt from income tax pursuant to section 24AM of the ITAA 1936.
Detailed reasoning
Subdivision A of Division 1AB of the ITAA 1936, and specifically section 24AM of the ITAA 1936, provides for certain State/Territory Bodies (STB) to be exempt from income tax in respect of income derived.
However, the income of an STB will not be exempt from income tax if it is an excluded STB (sections 24AL, 24AM, 24AN and 24AT of the ITAA 1936).
There are five ways in which a body can be an STB. The first way is set out in 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.
As defined in section 24AT of the ITAA 1936 'government entities' includes 'a State'.
The entity is incorporated under the Corporations Law as a proprietary company limited by shares. The entity's share capital is fully owned by the State Government through its Department.
Pursuant to section 24AT of the ITAA 1936, an STB is an excluded STB if it:
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 (within the meaning of section 50-25 of the Income Tax Assessment Act 1997); or
c) is a public educational institution to which any of paragraphs 50-55(1)(a) to (c) of the Income Tax Assessment Act 1997 applies; or
d) is a public hospital to which any of paragraphs 50-55(1)(a) to (c) of the Income Tax Assessment Act 1997 applies; or
e) is a superannuation fund.
The entity is not an excluded STB as defined in section 24AT of the ITAA 1936.
The entity is a STB under section 24AO of the ITAA 1936 and it is not an excluded STB as defined in section 24AT of the ITAA 1936. Therefore, the income of the entity is exempt from income tax pursuant to section 24AM of the ITAA 1936.