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Edited version of private advice
Authorisation Number: 1052276889637
Date of advice: 22 July 2024
Ruling
Subject: Income tax exempt entity
Question
Is the Association exempt from income tax under section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as a society or association established for the purpose of promoting the development of manufacturing resources in accordance with item 8.2(d) of section 50-40 of the ITAA 1997?
Answer
Yes.
Your ordinary and statutory income is exempt from income tax under section 50-1 of the ITAA 1997 on the basis that you were established for the purpose of promoting the development of Australian manufacturing resources under item 8.2(d) of section 50-40 of the ITAA 1997, your activities are not carried on for the profit or gain of your individual members as outlined in your constitution and you are not a charity.
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
The Association is an incorporated entity.
The Association is a not-for profit organisation.
The Association is not registered with the Australian Charities and Not-for-profits Commission (ACNC) as a charity.
The Association conducts its main activities in Australia.
The Association Constitution (the Constitution) outlines the Association objectives, which aligns with the requirements of section 50-40 of the ITAA 1997.
The Constitution confirms the entity is not-for-profit andmust not distribute any income or assets directly or indirectly to its members as members.
The application of surplus assets clause of the Constitution further confirms the Association status as not-for-profit:
Application of surplus assets
(a) If after winding up of the Association there remains 'surplus assets' as defined in the Act (Association Incorporation Act 1985), such surplus assets will be distributed to any organisation which has similar objects and has rules which prohibit the distribution of its assets and income to its members.
(b) The Association may determine to distribute surplus assets to charities.
(c) Such organisation(s) or Charity(s) shall be identified and determined by a special resolution of the members in a general meeting.
(d) In compliance with Section 43 of the Act the Association is prohibited to distribute any surplus assets at the completion of winding up to members or former members or associates of those persons.
The Association submitted a copy of the Constitution, income, and expenditure summaries for the relevant financial year, and copies of general and committee meetings to support the application.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 50-1
Income Tax Assessment Act 1997 section 50-40
Income Tax Assessment Act 1997 section 50-40 item 8.2(d)
Income Tax Assessment Act 1997 section 50-47
Australian Charities and Non-for-profits Commission Act 2012 section 25-5
Charities Act 2013 section 5
Charities Act 2013 section 12