Private ruling: Exemption from income tax under the public educational institution provisions

Ruling: The Association has requested a private ruling confirming it has the character of a public educational institution. | The Association has the following Objects: | The objects of the association are to: | (a) Represent the professional interests of personnel in its industry. | (b) Maintain and improve the level of professional competence and practice in the field | (c) Promote and facilitate the professional development of members. | In support of the application the Association has provided the following information: | 1) Associations Incorporations Act 1981 - Schedule 5 Rules for an Incorporated Association | 2) Audited financial accounts of the entity | 3) 2010 Conference brochure. | 4) Copy of the Association's magazine | 5) Best Practice Guidelines for the profession | 6) Conference Outline 2009, and | 7) 2009 Research Paper competition | You will note from the above that a major conference is held every 2 years and that the content is structured and organised such that the information is educational and directly benefits our members. | The Association generates income from various sources, including: | (a) Annual membership fees | (b) Positions vacant advertising service | (c) Advertising in the Association's magazine | (d) Bi-annual conference | The Association has suitable clauses indicating its non-profit character. | Section 50-5 of the Income Tax Assessment Act 1997 (ITAA 1997) lists entities who are exempt from income tax. Listed at Item 1.4 is 'public educational institution': | Charity, education, science and religion | Item | Exempt entity | Special conditions | 1.1 | charitable institution | see sections 50-50 and 50-52 | 1.2 | religious institution | see section 50-50 | 1.3 | scientific institution | see section 50-55 | 1.4 | public educational institution | see section 50-55 | 1.5 | fund established for public charitable purposes by will before 1 July 1997 | see sections 50-52 and 50-57 | 1.5A | trust covered by paragraph 50-80(1)(c) | see sections 50-52 and 50-60 | 1.5B | fund established in Australia for public charitable purposes by will or instrument of trust (and not covered by item 1.5 or 1.5A) | see sections 50-52 and 50-60 | 1.6 | fund established to enable scientific research to be conducted by or in conjunction with a public university or public hospital | see section 50-65 | 1.7 | society, association or club established for the encouragement of science | see section 50-70 | 1.8 | Global Carbon Capture and Storage Institute Ltd | only amounts included in assessable income: (a) on or after 1 July 2009; and (b) before 1 July 2013 | As the Association has a physical presence in Australia, the requirements of section 50-55 are met. | In Lloyd v. Federal Commissioner of Taxation 1955) 93 CLR 645 Dixon CJ commented on the description of an organisation as being for 'public educational purposes: | It is a compound phrase and like most compound phrases its application cannot safely be ascertained by taking each separate word of which it is composed and then exploring the uses of which by itself the word is capable. No doubt the word 'educational' may be used with reference to any process of instruction direction or control to which the young are submitted, however intermittently, if it has a purpose or tendency, or supposed tendency, of developing some of the faculties or of forming character. Again the word 'public' is not incapable of a use which implies nothing more than that the thing to which it refers must not be 'private' either in the sense of being conducted for private profit or of being established for the private advantage of a class of individuals and not for the benefit of the public at large or a section of the public. | The constitution and activities of the Association confirm it is an educational institution operated for the benefit of its members. As the Association is being conducted for the private advantage of its members and not for the public at large, it cannot be described as a public educational institution. | The Association is not a public educational institution.




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