Edited version of private advice

Authorisation Number: 1052368856113

Date of advice: 05 March 2025

Ruling

Subject: Fringe benefits tax - exemption

Question 1

Is the Company a rebatable employer for the purposes of section 65J of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer 1

Yes.

This ruling applies for the following periods:

Year ending 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 Company was incorporated in 19XX as a public company limited by guarantee.

The Company is an association established for the purpose of promoting the development of Australian manufacturing resources.

The Company's sole constitute document is its Constitution.

The Company is not a registered charity with the Australian Charities and Not-for-profits Commission.

The Company submitted a copy the Constitution to support the application.

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 winding-up clause of the Constitution further details and confirms the Company status as not-for-profit:

Winding Up

(a)           If any surplus remains following the winding up of the Company, the surplus will not be paid to or distributed among Members, but will be given or transferred to another institution(s) or corporation(s) which has:

...

a)             objects which are similar to the Objects;

b)             a constitution which requires its income and property to be applied in promoting its objects; and

c)             a constitution which prohibits it from paying or distributing its income and property amongst its Members to an extent at least as great as imposed on the Company by clause X.

...

(b)           The identity of the corporation(s) or institution(s) referred to in clause XY is to be determined:

(i) by the Board; or

(ii) if the Board does not decide or does not wish to decide, then by the Members,

in writing at or before the time of dissolution, and failing such determination being made, by application to the Supreme Court of the Australian Capital Territory for determination.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 50-40

Fringe Benefits Tax Assessment Act 1986 section 65J

Reasons for decision

All references - Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986) unless otherwise stated.

Paragraph 65J(1)(a) of the FBTAA states that an employer will be a rebatable employer if it is exempt from income tax at any time during the year of tax under any of the provisions set out in the table listed at paragraph 65J(1)(b).

Item 9 in the table in paragraph 65J(1)(b) of the FBTAA refers to a society or association established for the purpose of promoting the development of Australian resources and the entity must be covered by item 8.2 of the table in section 50-40 of the Income Tax Assessment Act 1997 (ITAA 1997).

The Company meets the requirements of an exempt entity under item 8.2(d) of the table in section 50-40 of the ITAA 1997 as a society or association established for the purpose of promoting the development of Australian manufacturing resources.

A special condition in item 9 of the table in paragraph 65J(1)(b) of the FBTAA refers to subsection 65J(5) of the FBTAA which provides that an entity is not covered by item 9 if it is:

(a)           ...

(b)           an incorporated company where the company is limited by guarantee and the interests and rights of the members in or in relation to the company are beneficially owned by:

                               (i)                  the Commonwealth, a State or a Territory; or

                              (ii)                  an authority or institution of the Commonwealth, a State or a Territory.

The company is a company limited by guarantee, comprised of members which are part of the same industry. Therefore, the interests and rights of the members are not considered to be beneficially owned by the Commonwealth, a State or Territory or by the relevant government organisation or institution. The Company is not formed by government or controlled by government, nor it is performing functions on behalf of the government. Therefore, subsection 65J(5) of the FBTAA is not considered to be satisfied such that the Company would still be covered by item 9 in the table in paragraph 65J(1)(b) of the FBTAA.

Accordingly, it is considered that the Company meets the requirements to be a rebatable employer under section 65J(1) of the FBTAA and can access the Fringe Benefits Tax rebate.