Edited version of private advice

Authorisation Number: 1052286056511

Date of advice: 3 October 2024

Ruling

Subject: Income tax exempt entity - community services purpose

Question

Is the Association exempt from income tax under section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as an association established for community service purposes under item 2.1 of the table in section 50-10 of the ITAA 1997?

Answer

Yes

The ordinary and statutory income of the association is exempt from income tax under section 50-1 of the ITAA 1997 as you are an association established for community service purposes under item 2.1 of the table in section 50-10 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 2015

Year ended 30 June 2016

Year ended 30 June 2017

Year ended 30 June 2018

Year ended 30 June 2019

Year ended 30 June 2020

Year ended 30 June 2021

Year ended 30 June 2022

Year ended 30 June 2023

Year ended 30 June 2024

The scheme commenced on:

1 July 2014

Relevant facts and circumstances

The Association is registered as an incorporated association.

The Association conducts its activities, incurs its expenditure, and employs its assets from and in the relevant area.

The Association is governed and managed in accordance with the Association's Rules.

The Rules comply with the requirements of the relevant Act.

The purposes of the association are to advance the interests of the relevant area by promoting and coordinating business, tourism and community activities.

Distribution of any surplus, income, or assets to members are prohibited by the Associations Rules.

The Association may be wound up voluntarily by special resolution.

In the event of the winding up or the cancellation of the incorporation of the Association, the surplus assets of the Association must not be distributed to any members or former members of the Association.

Subject to the Act and any court order, the surplus assets must be given to a body that has similar purposes to the Association and which is not carried on for the profit or gain of its individual members.

The body to which the surplus asses are to be given must be decided by special resolution.

Any person who supports the purposes of the Association is eligible for membership.

The Secretary must keep and maintain a register of members.

The business of the Association must be managed by or under the direction of a committee.

The Committee may exercise all the powers of the Association except those powers that these rules or the Act require to be exercised by general meetings of the members of the Association.

The committee consists of a President, a Vice-President, a Secretary, a Treasurer; and ordinary members (if any) elected.

Financial statements must be prepared each year by the Committee and presented to the association Annual General Meeting.

Financial records are retained for 7 years after the transactions covered by the records are completed.

Surplus income can only be used to further the purposes of the Association.

The activities undertaken by the Association continuously evolve as the focus and needs of the community change.

Regular activities of the Association include:

•                     Staging events which bring people to the area and showcase its landscape, businesses, and community. This includes markets and community events throughout the year.

•                     Representing the view of the community as need for infrastructure planning including installation of additional playground facilities, toilet facilities, town car and trailer parking, and advocating for lower speed limits for the main street.

•                     Planning and implementing local improvement projects that help develop and connect the local community through funds received and successful grant applications. Examples include installing bus shelters, improving public garden beds, installing flower barrels and outdoor furniture in the main street, and Christmas decorations.

•                     Promoting the area to visitors and locals through the creation and maintenance of a website and developing brochures and signage.

•                     Providing a governance structure and insurance for volunteers engaged in large and small community projects.

•                     Manage a key community building for use by the community for events such as morning teas and luncheons, health and fitness activities, skill training sessions, and programs for senior citizens.

•                     Providing training for volunteers and community organisations in topics such as food handling.

•                     Providing business networking opportunities and training.

These activities are undertaken by association members on a volunteer basis.

Surplus funds have been used for a range of community service activities including:

•                     Community improvement projects including a website with information on events, new and updated signage, and installation of flower gardens.

•                     Funding infrastructure such as installation of a local bus shelter and additional play structures for the local playground.

•                     Insurance and governance costs for members of the community performing volunteer services for the association.

•                     Meeting costs association with training services provided to local businesses, community organisations, and members of the community.

The Association has complied with the substantive governing conditions in its rules in its conduct of its Annual General Meetings. Financial statements have been prepared and presented at these meetings.

Relevant legislative provisions

Income Tax Assessment Act 1936 subparagraph 23(g)

Income Tax Assessment Act 1997 section 50-1

Income Tax Assessment Act 1997 section 50-10

Income Tax Assessment Act 1997 section 50-47

Income Tax Assessment Act 1997 section 50-70

Income Tax Assessment Act 1997 section 50-75

Charities Act 2013 section 12

Australian Charities and Non-for-profits Commission Act 2012 section 25-5