Private ruling: Income Tax Exemption
Date of advice: 10 May 2016
Published: June 2016
Ruling period: 1 January 2016 to 1 January 2017
Date scheme commenced: 1 January 2016

Ruling: Q1: Is the Entity exempt from taxation under section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) on the basis that it is an exempt entity under Item 2.1 of section 50-10 of the ITAA 1997? | A1: No

Relevant facts and circumstances: The Entity is a not-for-profit society. The income and assets of the Entity is applied for the purposes for which it was established. The Entity runs free events and publications for the community, with aim to better inform and connect people in its field of study. The Entity aims to benefit and enhance the wellbeing of students and the broader public via its website. The Entity also provides free public events operated to enrich university student's education and increase student's and the community's engagement in its field of study.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 50-1 | Income Tax Assessment Act 1997 section 50-10

Reasons for decision: Detailed Reasoning - What is a community service organisation?: Section 50-10 of the ITAA 1997 allows income tax exemption for community service organisations. A community service organisation is a not-for-profit society, association or club established for community service purposes except political or lobbying purposes. The ATO Publication 'Non-Profit/Your Organisation' states that the main purpose of the organisation must be community services. Any other purpose of the organisation must be incidental, ancillary or secondary to the community service purpose. Community service purposes are altruistic meaning that they are established and operated for the wellbeing and benefit of others. Community service organisations promote, provide or carry out activities, facilities or projects for the benefit or welfare of the community or other members who have a particular need by reason of youth, age, infirmity or disablement, poverty or social or economic circumstances. Organisations that seek to advance the common interests of their members are not altruistic and cannot be community service organisations. The Entity's objectives are listed in its Constitution. Its objectives include but are not limited to provide guidance for students in choosing their study paths and their career pathways, assist members in creating a personal relationship with the broader community and to assist in the development of their skills set in its field of study. The ATO Publication 'Non-Profit/Your Organisation' outlines that to qualify for the income tax exemption as a community service organisation the main purpose of the organisation must be community services. In the case at hand the Entity has multiple objectives, none of which are for the benefit or welfare of the community. As a result it cannot be said that community service is its main purpose. Therefore the Entity does not qualify for income tax exemption as a community service organisation under section 50-10 of the ITAA 1997.