Private ruling: Income tax exemption - not-for-profit
Date of advice: 3 September 2025
Published: 27 October 2025
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: 1 MM 20XX

Ruling: Q1: Is the Company 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 Australian industrial resources pursuant to item 8.2(c) of the table in section 50-40 of the ITAA 1997? | A1: No. | Q2: Is the Company a rebatable employer pursuant to section 65J of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) for the purpose of promoting the development of the Australia industrial resources under item 9 (a)(iii) in section 65J of the FBTAA? | A2: No.

Relevant facts and circumstances: The Company is a company limited by guarantee. It has a board of directors, and various share classes with differing rights attached. It is governed by its constituent document, its Constitution. The Company has provided a copy of its Constitution and details of its activities. The Company's Constitution includes clauses stating that the income and property of the Company must be applied solely towards the promotion of the objects. The Company must not pay or transfer (directly or indirectly) by way of dividend, bonus or otherwise any portion of the income or property to any Member. The Constitution also includes winding up clauses that state that no property whatsoever is to be paid or distributed among the Company's members. The Company is an association representing a particular industry in Australia. Its objects, amongst others, are to promote the interests of its members, provide advice and services to members, advance development of the industry, and organise events such as seminars and conventions. Its activities include lobbying, commissioning research, engaging with government on policy, and production of information for members. The Company's main revenue sources are subscriptions from members. Its main expenses relate to employment costs, research and reporting papers, political memberships and travel to attend industry and political events. The Company is not currently registered with the Australian Charities and Not-for-Profits Commission. The Company is registered for GST.

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(c) | Income Tax Assessment Act 1997 section 50-47 | Income Tax Assessment Act 1997 section 50-70 | Income Tax Assessment Act 1997 subsection 995-1(1) | Income Tax Assessment Act 1936 former paragraph 23(h) | Australian Charities and Not-for profits Commission Act 2012 subsection 25-5(5) | Charities Act 2013 section 12 | Fringe Benefits Tax Assessment Act 1986 section 65J

Reasons for decision: Detailed Reasoning - Detailed reasoning: Section 50-1 of the ITAA 1997 states: 'The total *ordinary income and *statutory income of the entities covered by the following tables is exempt from income tax. In some cases, the exemption is subject to special conditions.' (* as defined in section 995-1 of the ITAA 1997) The tables referred to in section 50-1 of the ITAA 1997 are contained in sections 50-5 to 50-45 of the ITAA 1997.\> A society or association established for the purpose of promoting the development of Australian industrial resources is listed at item 8.2(c) in the table in section 50-40 of the ITAA 1997.\ Section 50-47 contains an additional condition for the entities covered by tables in sections 50-5 to 50-45 of the ITAA 1997. These entities, to be exempted from income tax, cannot be an ACNC type of entity. Accordingly, to be exempt from income tax under item 8.2(c) in section 50-40, the entity must: • be a society or association; • be established for the purpose of promoting the development of Australian industrial resources; • not be carried on for the profit or gain of its individual members; and • is not an 'ACNC type of entity'. | Detailed Reasoning - Society or association: The terms society and association are not defined in the ITAA 1997. The term is therefore construed according to the ordinary meaning of the words. In Douglas v. Federal Commissioner of Taxation 97 ATC 4722 reference was made by the court to the definitions contained in the Concise Oxford Dictionary for each of these terms. Society and association was accepted by the court as referring to a voluntary organisation having members associated together for a common or shared purpose (at 4726). In Pro-campo Ltd. v. Commr of Land Tax (NSW) 81 ATC 4270 the court considered the meaning of 'society, club or association'. The court stated at 4279: In Theosophical Foundation Pty. Ltd. v. Commr. of Land Tax (1966-1967) 67 S.R. 70...Sugerman JA stated at 82: A society, in the relevant sense, is a number of persons associated together by some common interest or purpose, united by a common vow, holding the same belief or opinion, following the same trade or profession, etc; an association'... The meaning of "society" as the Oxford English Dictionary definition shows can be the equivalent of "association" and I do not think that any relevant distinction in nature exists between the two. It merely seems to have happened that some organisations are called "associations", others are called "societies" but no meaningful difference can be detected between the two...Although clubs can in some respects and in some instances be seen to be distinguishable by reason of their purposes from societies or associations, they nevertheless fall squarely within the dictionary definition of "society" set out above. In short the three words are describing bodies made up of groups of persons who have come together to implement common purposes and objects... The meaning of society or association as described above, emphasises a 'body of persons' and 'an organisation of people' with a 'common purpose'. | Detailed Reasoning - Application to your circumstances: The Company is registered under the Corporations Act 2001 as a public company limited by guarantee and has its own members with a common purpose, being representing its members and the industry as outlined above. Consequently, the Company is a society or association within the meaning contained in section 50-40 of the ITAA 1997, as it represents its members in the industry in Australia. | Detailed Reasoning - Established for the purpose of promoting the development of Australian industrial resources: To be exempt from income tax under section 50-40 of the ITAA 1997, an association must be established principally or predominantly for the purpose of promoting development of the specified resources. It is not sufficient that promoting the development of the resource(s) may be a consequence of or incidental to, involved with, or a consequence of an association's purposes. Determining the dominant purpose will largely be a matter of fact and degree. 'Established' refers not only to the motives and objectives which lead to the formation of the association but also to its purpose since that time. The term 'development' is used in section 50-40 of the ITAA 1997 in a commercial or business sense. It comprehends all the elements which must be taken into account to ensure that the specified resources are best used. The meaning of 'development' was examined by the High Court in the case of FC of T v. Broken Hill Pty Co. Ltd 69 ATC 4028; 1 ATR 40 where, in considering the phrase 'development of mining property' the majority of the High Court accepted the interpretation of Kitto J: In its ordinary English sense the word 'development' when used in relation to a property refers to the unfolding, the bringing out, of some latent capability of that property...It covers I think, any preparation, adaption or equipment of the property for the exploration of an inherent potentiality which cannot be exploited or fully exploited, without some such preliminary treatment. Promoting development can be by various means, including research, providing facilities, training, improving marketing methods, facilitating cooperation and similar activities. The concept of industrial resources is considered in Taxation Ruling IT 2415 Income tax: associations promoting development of Australian resources (IT 2415). Paragraph 6 of IT 2415 states: ..... the Court concluded that the expression "industrial resources" in paragraph 23(h) refers to resources such as those of the building, mining, quarrying, shipping and transport industries - it does not extend to business or commercial resources or resources of the kind promoted by the Association. IT 2415 states at paragraphs 7 and 8: 7. The reasoning in the decision in the Australian Insurance Association case highlights the matters that need to be satisfied in any case before exemption under paragraph 23(h) applies:- a) Promotion of the specified resources must be the predominant purpose for which a particular body is established. b) The resources, the development of which is being promoted, must come within the umbrella of the specified resources. 8. It is important to note that paragraph 23(h) does not refer to the promotion of specified resources - it is directed to the promotion of the development of the specified resources. In the context of paragraph 23(h) the term "development" must be taken to be used in a commercial or business sense, i.e. it comprehends all the elements which must be taken into account to ensure that the specified resources are used in the best interest of Australia. In Co-operative Bulk Handling Ltd v Federal Commissioner of Taxation [2010] FCA 508, Gilmour J (at first instance) accepted that 'promoting the development of resources' under section 50-40 of the ITAA 1997 entails "unlocking, exploiting or bringing out the inherent potentialities and latent capabilities" of the resources. (at paragraph 80). In Federal Commissioner of Taxation v Co-operative Bulk Handling Ltd [2010] FCAFC 155, Mansfield and McKerracher JJ made the following comments on the meaning of 'established' and 'purpose' in section 50-40 of the ITAA 1997: Two aspects, at least, of s 50-40 may be disposed of at the outset as they are common ground. First, "established" means maintained at the time at which qualification under the section is at issue... Secondly, "for the purpose" means "for the sole or dominant purpose" of conducting the relevant activity... In Boating Industries, it was held that the requirement of s 23(h), a predecessor of s 50-40, was that the relevant organisation be "established" for, and not merely "involved" in, the purpose stated... The focus must be upon the periodic or recurrent purposes of the body in the year of income... (at paragraphs 13-15). The promotion of development may be direct or indirect (direct promotion includes research, education, and new or improved products, and indirect promotion includes marketing), and may be promoted by facilitating the cooperation of businesses and instrumentalities. It is also important to note that promoting the development of a resource is not just development of the resource but promoting the use of inherent capacity that would otherwise not be used. | Detailed Reasoning - Australian industrial resources: The use of the word 'Australian' applied to resources in section 50-40 of the ITAA 1997 limits the exemption to associations whose activities are directed towards Australian resources. The expression 'industrial resources' is not defined in the ITAA 1997. In Australian Insurance Association v Federal Commissioner of Taxation 79 ATC 4569 ( Australian Insurance Association ), Sheppard J considered the meaning of 'industrial resources' for the purposes of paragraph 23(h) of the Income Tax Assessment Act 1936 (ITAA 1936) (the predecessor to section 50-40 of the ITAA 1997): There is a degree of specificity in the words used in the section. It refers to aviation, then to four resources of primary industry, then to manufacturing and finally to industrial resources. The use of these various expressions does not suggest that the draftsman intended to give the word "industrial" any wide meaning intended to embrace business or commercial resources... The building, mining and quarrying industries, and the resources which these industries have... are industries in the accepted sense of the word.... Thus a reference to the resources of those industries as the industrial resources of Australia does not impose upon the language any strain... (at 4574 and 4575) Sheppard J also stated that 'industrial resources' include the businesses and their assets of an industry: ... the undertakings of the Australian insurance companies, viewed as a whole, are resources of Australia. I use the "undertakings" in the broadest sense. I include within it not only the businesses of the various companies but also their assets and the knowledge and skills of their staffs. (at 4573). 'Resources' or their elements also include infrastructure, personnel, knowledge, expertise and skill. The term 'industrial resources' was discussed in Australian Insurance Association v. FCT (1979) 10 ATR 333; 79 ATC 4574. It was held that the term 'industrial resources' was intended to mean the building, mining, quarrying, shipping and transport industries and the resources which these industries have. Importantly, the meaning does not include business or commercial resources. | Detailed Reasoning - Application to your circumstances: Your objects as stated in your Constitution, amongst other things, are: • to encourage, promote, protect and advance the interests of its members and the industry • to advocate for the interests of members who are employers • obtain advice for members in relation to the industry • provide for the development and improvement of the industry, and • to represent and advance the interests of the members and the industry in dealings with all stakeholders, including the Australian Government and the governments of the Australian states and territories. You state that your purpose and activity is, amongst other things, to: • represent members • encourage, promote, protect and advance the interests of its members, being engaged in retail sale of products in Australia • advocate for the interests of employers who are members and engaged in retail sale in Australia, and • provide services to members Your circumstances are comparable to Australian Insurance Association . The establishment of the Company is to promote the protection and furtherance of an Australian resource, namely, the business of the particular industry group. However, this resource could not be described as an "industrial resource" of Australia within the meaning of section 50-40 of the ITAA 1997. The term "industrial resource" was intended to cover such resources as those of the building, mining, quarrying, shipping and transport industries. It did not cover business or commercial resources and resources of the kind promoted by the Company. Although the Company's constitution provides that one of its objects is to 'provide for the development and improvement' of the particular industry, Sheppard J discusses the use of such clauses in Australian Insurance Association : "It follows that the appellant will be entitled to succeed on its primary submission if the resources it was established to promote are ''industrial resources'' within the meaning of the section. I turn to consider that matter. In a number of documents which were tendered the expressions ''insurance industry'' and ''Australian insurance industry'' are used. Those expressions are also used in some of the paragraphs which I have quoted from cl. 1 of the appellant's Memorandum of Association. It may be that the draftsman of the Memorandum had an eye for the provisions of sec. 23(h) of the Act here in question. But the matter is one of substance, not of form. It is a question of deciding what the words ''industrial resources of Australia'' in the section mean. The fact that in common parlance or in the appellant's document of incorporation the expression ''insurance industry'' may be used, does not provide any guide as to what the meaning of the expression is when used in the section." The purpose referred to in section 50-40 of the ITAA 1997 must be the principal or dominant purpose for which the association was established. You contend that the Company falls into the Australian industrial resources category through promoting the development of the particular industry group in Australia. Based on the Company's Constitution objects, your purpose and activities, the dominant purpose of the Company is to represent and benefit its own members, who, in fact, sell industry products in Australia, that have been manufactured overseas. Your activities align to those that are considered business and commercial in nature. Further, the term 'industry', which refers to the sale, agency and facilitation of the sale of products in Australia as defined in the Company's Constitution and presented in its objects, cannot be said to be consistent with the term 'Australian industrial resources' pursuant to item 8.2(c) in the table in section 50-40 of the ITAA 1997. This view is supported by the Australian Insurance Association decision and IT 2415, as comparable industries would not qualify for exemption. In weighing up all factors and information, based on the objects the Company as provided for in its governing document, and its activities, the Company has not demonstrated that the dominant purpose and activities are to promote the development of Australian industrial resources. Therefore, the ordinary and statutory income of Company is not exempt from income tax in accordance with section 50-1 of the ITAA 1997, as it's not considered a non-profit association established for the purpose of promoting the development of Australian industrial resources for the purposes of item 8.2(c) in the table in section 50-40. As your Constitution and the activities you undertake may change from year to year, you should evaluate your status on a regular basis and seek further advice on this matter if there are substantial changes in the nature or character of your association. | Detailed Reasoning - Special conditions: Although the Company has not satisfied the requirements of item 8.2 (c) in the table in section 50-40 of the ITAA 1997, we have considered the special conditions below for completeness. | Detailed Reasoning - Non-profit requirement - 'Not carried on for the Profit or Gain of its individual Members': The exemption under item 8.2 of section 50-40 is also subject to the special condition that the entity is not carried on for the purposes of profit or gain of its individual members. An association or society will fail the non-profit test if the members, in their individual capacity, are to receive any benefits. The Commissioner considers that to qualify, the entity must be prevented by law or its constitution documents from distributing its profits or assets among members, either while the entity is functional or on its winding up, and it must act consistently with those restrictions. The phrase 'carried on for the purpose of profit or gain of its individual members' is not defined in the tax legislation. In Commissioner of Taxation v Co-operative Bulk Handling Ltd [2010] 81 ATR 312, the Full Federal Court considered the operation of section 50-40, a special condition of which is that an entity 'must not be carried on for the profit or gain of its individual members'. Mansfield and McKerracher JJ stated the following on the expression 'not carried on for the profit or gain of individual members': ...if as a consequence of pursuing the purpose, the members derive a benefit or gain..., that gain or benefit will not preclude exemption unless it is a gain produced only by reason of individual membership... In all cases of exemption, it must be the position that it is not open to the body to disburse any profits or dividends to members... (at paragraph 94). This was also the approach of the court in Repromed Pty Ltd v. Lucas and Anor (2000) 44 ATR 452 where the court considered whether Repromed Pty Ltd was exempt from payroll tax on the basis that it was an employer who provided health services 'otherwise than for the purpose of profit or gain'. Debelle J held that Repromed Pty Ltd was carried on for the purpose of profit or gain as its constitution did not provide barriers to individual profit, and profits could find their way into pockets of individuals (at paragraph 35). The above authorities indicate that the phrase 'not carried on for the purpose of profit or gain to its individual members' requires an absolute prohibition against profits or gains arising to individual members. | Detailed Reasoning - Application to your circumstances: The Constitution of the Company includes a relevant non-for-profit clause that prevents the Company from disposing of its income and gains to its members. Moreover, the winding-up clause contained in the Company's Constitution prevents the distribution to the Company's members in case of the Company's dissolution. Therefore, it is considered that the Company is not carried on for the profit or gain of its individual members. Consequently, the Company satisfies non-profit requirements. Section 50-47 of the ITAA 1997 Section 50-47 of the ITAA 1997 provides a special condition for all entities covered by section 50-1 of the ITAA 1997, and states that an entity that: (a) is covered by any item; and (b) is an ACNC type of entity; is not exempt from income tax unless the entity is registered under the Australian Charities and Not-for-profits Commission Act 2012 . Broadly, an entity that can be registered as a charity with the Australian Charities and Not-for profits Commission (ACNC) is an 'ACNC type of entity'. The Charities Act 2013 (CA) sets out the requirements to be a charity. Section 12 of the CA provides purposes that are a 'charitable purpose' and includes various charitable purposes. | Detailed Reasoning - Application to your circumstances: The Company's purpose is a non-charitable purpose. It is not capable of being a registered charity and is not an ACNC type of entity. Section 50-47 of the ITAA 1997 does not apply to the Company. | Detailed Reasoning - Question 2: 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 industrial resources and the entity must be covered by item 8.2 of the table in section 50-40 of the ITAA 1997. As discussed in the answer to Question 1, the Company does not meet the requirements of an exempt entity under item 8.2(c) 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 an Australian industrial resource and is not carried on for the profit or gain of its individual members. Accordingly, the Company does not meet the requirements of section 65J of the FBTAA and is therefore not a rebatable employer.