Edited version of private advice

Authorisation Number: 1051941541310

Date of advice: 4 February 2022

Ruling

Subject: Entity for the purpose of the Income Tax Assessment Act 1997

Question

Are you the same 'entity' for all purposes under the ITAA 1997 after the conversion from an incorporated co-operative to a company?

Answer

Yes.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX.

Relevant facts and circumstances

You are a distributing co-operative incorporated under the Co-operatives National Law Application Act 2013 (Victoria) ('Co-op Act').

You intend to transfer your incorporation under the Co-op Act to become a company registered under the Corporations Act 2001 ('Corps Act') in accordance with section 403 of the Co-Op Act.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 960-100(1)(b)

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

Detailed reasoning

Pre-conversion

You are a corporation incorporated under the Co-op Act. Under section 4 of Part 1.1 to Chapter 1 of the Annexure to the Co-op Act, a corporation includes a company or body corporate.

Section 995-1 of the ITAA 1997 defines 'company' to mean:

(a) a body corporate; or

(b) any other unincorporated association or body or persons; but does not include a partnership.

Section 995-1 of the ITAA 1997 defines an 'entity' to have the meaning in section 960-100 of the ITAA 1997. An 'entity' means any of the following:

(a) an individual;

(b) a body corporate;

(c) a body politic;

(d) a partnership;

(e) any other unincorporated association or body of persons;

(f) a trust;

(g) a superannuation fund;

(h) an approved deposit fund.

You are therefore an 'entity', 'body corporate' and 'company' for the purposes of the ITAA 1997.

Post-conversion

Subsection 409(1) of the Co-op Act states "when a co-operative transfers to a new body, the corporation constituted by the new body is taken to be the same entity as the corporation constituted by the co-operative". In addition, paragraph 601BM(1)(a) of the Corps Act states "registration under this Part does not create a new legal entity". Therefore, the Co-op Act and Corps Act both provide that the taxpayer remains the same entity.

Subsection 413(2) of the Co-op Act provides that the assets, rights and liabilities of the Taxpayer vest in and are preserved when the Taxpayer is registered under the Corps Act without the need for any conveyance, transfer or assignment or assurance. Therefore, the assets, rights and liabilities of the original body become the assets, rights and liabilities of the new body.

ATO Interpretative Decision 2004/798 Income Tax: change from a co-operative to a company (ATO ID 2004/798) confirms the Commissioner's view that the taxpayer will be the same 'entity' for all purposes under the ITAA 1997 after the conversion from an incorporated co-operative to a company. The facts presented by the Taxpayer align with ATO ID 2004/798. The Victorian and New South Wales Co-op Acts mirror each other, where sections 316, 321 and 342 of the Co-operatives Act 1992 (NSW) align with sections 403, 409 and 413 of the Co-operatives National Law Application Act 2013 (VIC), respectfully.

Therefore, you will continue to be an 'entity', a 'body corporate' and a 'company' after conversion for the purposes of the ITAA 1997.