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Edited version of private advice
Authorisation Number: 1052325614164
Date of advice: 5 November 2024
Ruling
Subject: Income Tax Exempt Entity
Question
Is the Entity 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 an Australian agricultural resources in accordance with item 8.2(a) of the table in 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 agricultural resources under item 8.2(a) of the table 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 ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
The Entity is a company limited by guarantee incorporated on X.
The Entity is not registered with the Australian Charities and Not-for-profits Commission (ACNC) as a charity.
The Entity conducts its main activities in Australia.
The Entity is governed by its Constitution which was adopted on X.
The Entity's Constitution (the Constitution) outlines the Entity's objectives, which aligns with the requirements of item 8.2(a) of the table in section 50-40 of the ITAA 1997.
The Constitution confirms the entity is not-for-profit and must not distribute any income or assets directly or indirectly to its members.
The application of surplus assets clause of the Constitution further confirms the Entity status as not-for-profit:
Winding up and application of surplus assets
On the winding up of the Entity, any surplus remaining following the satisfaction of all debts and liabilities of the Entity will not be paid to or distributed amounts Members, but will be given or transferred to another corporation or body which, by its constitution, is:
(a) required to pursue only objects similar to those of the Entity and to apply its income solely towards
(b) promoting those objects and
(c) prohibited from making any distribution to its members and paying fees to its directors, to at least the
(d) same extent of such prohibitions under this Constitution
such corporation or body to be determined by the Members, and in default, by application to the Supreme Court of the relevant state for determination.
Payments by the Entity to its directors will only be made as reasonable consideration for services provided and expenses incurred.
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(a)
Income Tax Assessment Act 1997 section 50-47
Australian Charities and Non-for-profits Commission Act 2012 section 25-5