Private ruling: Change from a co-operative to a company
Published: February 2017
Ruling period: X period
Date scheme commenced: DD MM YYY

Ruling: Q1: Is the taxpayer the same 'entity' for all purposes under the Income Tax Assessment Act (ITAA 1997) after the conversion from an incorporated co-operative to a company? | A1: Yes. The taxpayer's registration as a company under the Corporations Act 2001 (Cth) (Corporations Act) does not create a new legal entity. Therefore it is the same 'entity' for all purposes of the ITAA 1997 as defined in section 960-100 of the ITAA 1997.

Relevant facts and circumstances: The taxpayer is a co-operative incorporated under the Co-operatives (Adoption of National Law) Act 2012 (NSW) (Co-op Act). The taxpayer is treated as a body corporate pursuant to its incorporation under the Co-op Act. The taxpayer will transfer its incorporation under the Co-op Act to become a company registered under the Corporations Act. It will continue to be regarded as a body corporate pursuant to its registration under the Corporations Act. The taxpayer is regarded as the same entity with the same rights under the relevant provisions of the Co-op Act (sections 409 and 413) and the Corporations Act (subsection 601BM(1)).

Relevant legislative provisions: Co-operatives (Adoption of National Law) Act 2012 (NSW) section 28, | Co-operatives (Adoption of National Law) Act 2012 (NSW) section 34, | Co-operatives (Adoption of National Law) Act 2012 (NSW) section 409, | Co-operatives (Adoption of National Law) Act 2012 (NSW) section 413, | Corporations Act 2001 section 601BM, | Corporations Act 2001 subsection 601BM(1), | Corporations Act 2001 paragraph 601BM(1)(a), | Income Tax Assessment Act 1997 section 960-100, | Income Tax Assessment Act 1997 paragraph 960-100(1)(b) and | Income Tax Assessment Act 1997 section 995-1.

Reasons for decision: Summary: The co-operative incorporated under the Co-op Act is a body corporate under that Act and at general law. Section 995-1 of the ITAA 1997 defines an 'entity' to have the meaning in section 960-100 of the ITAA 1997. An 'entity' is defined to mean any of the following: (a) an individual; (b) a body corporate; (c) a body politic; (d) a partnership; (e) any other incorporated association or body of persons; (f) a trust; (g) a superannuation fund; (h) an approved deposit fund. In addition, section 995-1 of the ITAA 1997 defines a 'company' to mean: (a) a body corporate; or (b) any other unincorporated association or body or persons; but does not include a partnership... Relevant to both definitions is the meaning of 'body corporate' which takes it's meaning at general law. However, for the purposes of the ITAA 1997, the taxpayer as incorporated under the Co-op Act is an 'entity' as defined in paragraph 960-100(1)(b) of the ITAA 1997. It is also a 'company' as defined in section 995-1 of the ITAA 1997. After the taxpayer's registration under the Corporations Act, it will continue to be a 'body corporate', 'company' and 'entity' as relevantly defined in the ITAA 1997. Notwithstanding the taxpayer's transfer of incorporation to a separate Act, the taxpayer preserves its identity and continues to be the same legal entity. The provisions in the Co-op Act and the Corporations Act both provide for the continuation of the taxpayer as the 'same entity as the corporation' which was the co-operative, and the act of registration under a different Act of itself will not create a 'new legal entity' (subsection 409(1) of the Co-op Act and paragraph 601BM(1)(a) of the Corporations Act). In addition, the assets, rights and liabilities of the taxpayer vest in and are preserved when the taxpayer is registered under the Corporations Act without the need for any 'conveyance, transfer or assignment or assurance' (subsection 413(2) of the Co-op Act). This indicates that the identity of the body corporate is preserved and continues with the same assets, rights and liabilities, albeit as a company by registration. Therefore, the taxpayer is the same body corporate and 'entity' for the purposes of the ITAA 1997 both before and after it completes its transfer of incorporation to the Corporations Act.