Private ruling: Income tax exemption - not for profit-community service
Date of advice: 11 December 2025
Published: 2 February 2026
Ruling period: Year ended 30 June 2023 | Year ended 30 June 2024 | Year ended 30 June 2025 | Year ending 30 June 2026
Date scheme commenced: 1 July 2022

Ruling: Q1: Is the Association exempt from income tax under section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as a community service organisation under item 2.1 of the table in section 50-10 of the ITAA 1997? | A1: Yes

Relevant facts and circumstances: The Association is a peak body for providers serving a particular sector of the community. The Association represents and assists these providers on key issues impacting the accessibility, sustainability, quality and affordability of their services. The Association is registered as an incorporated association under the appropriate legislation. The Association owns and operates a training college for professionals who deliver the services provided by their members. The college is registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC). The Association operates out of its head office in Australia. The current Association constitution has been in force for the period covered by this ruling. The stated purpose of the Association in this constitution is to advance the practice of the service members are providing and to support those members in providing that service, including through representation in discussion with government on the interests of its members. Under the Association constitution membership is open to providers in this sector and members are to pay a membership fee set by the management committee. The management committee keeps a register of members that is open to inspection by members on application. The management committee is comprised of an elected committee of member representatives who are suitably qualified to work in the sector. The management committee is required under the constitution to hold regular meetings and an annual general meeting after the end of each financial year. The constitution may only be changed on a vote in favour of the change at a general meeting of members. Not for profit provisions in the constitution include a requirement that the income and property of the Association shall be applied solely to the purpose of the Association, and no part of that shall be paid, distributed, or transferred to members other than as payment or remuneration for services or expenses. Under the Association constitution payment or distribution of property on the winding up of the Association is prohibited. Any such surplus must be given or transferred to another institution with similar purposes and not for profit provisions in their constitution. Activities undertaken In the relevant financial years the Association continued support for its college and took leading roles in a number of programs delivering direct and indirect benefits to members of the community it serves. The Association also continued to provide services to member organisations. In these years the Association also advocated for and represented the sector and providers working in the sector in discussions with government at all levels on the need for funding for courses and scholarships and proactively sought to develop and maintain programs to encourage participation and development in the sector. Through these years the Association also provided training and information on industry issues and initiatives, changes in industry regulation, safety, and professional development. The Association also continued to work to influence government policy and legislation in the interests of its members as well as the welfare of those in the sector its members serve and ran a social media campaign to extend this influence in the context of an election. The Association ran at a surplus in each of the relevant financial years, used this surplus in these years to further its purposes, and intends to continue using the accumulated surplus for these purposes in future years. The Association is an Australia resident and has pursued its objectives and incurred its expenditure in Australia in the relevant financial years. The Association has complied with its governing rules and applied its income and assets solely for the purpose for which it is established in the relevant financial years. The Association is not an ACNC type of entity.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 50 | Income Tax Assessment Act 1997 section 50-1 | Income Tax Assessment Act 1997 section 50-10 | Income Tax Assessment Act 1997 section 50-47 | Income Tax Assessment Act 1997 section 50-70 | Income Tax Assessment Act 1997 subsection 50-70(1) | Income Tax Assessment Act 1997 subsection 50-70(2) | Income Tax Assessment Act 1936 subparagraph 23(g)(v) | Australian Charities and Not-for-profits Commission Act 2012 subsection 25-5(1)

Reasons for decision: Summary: 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. 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, association or club established for community services (except political or lobbying purposes) is listed at item 2.1 in the table in section 50-10 of the ITAA 1997. As indicated in the table in section 50-10 of the ITAA 1997 the society, association or club must also meet the special conditions detailed in section 50-70 of the ITAA 1997 and section 50-47 of the ITAA to qualify for exemption from income tax. An entity is therefore exempt from income tax as a society, association or club established for community services if it: • is a society, association, or club, • is established for community services (except political or lobbying purposes) • satisfies the special conditions. | Detailed Reasoning - A Society, association, or club: The term 'society, association or club' is 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, association, or club 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 (NSW) [1966] 67 SR (NSW)...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, association, or club as described above, emphasises a 'body of persons' and 'an organisation of people' with a 'common purpose'. Application to your circumstances The Association is registered as an incorporated association under the relevant legislation. The Association is comprised of members who are service providers to a sector of the community and have a common purpose of promoting and advancing their professional practice to ensure high quality service to those in that sector. The Association is a society, association, or club. | Detailed Reasoning - Established for Community Services: The Commissioner's view on the meaning of community services, as the term is used in section 50-10 of the ITAA 1997, is discussed in Taxation Determination TD 93/190 Income tax: what is the scope of the exemption from income tax provided by subparagraph 23(g)(v) of the Income Tax Assessment Act 1936? While subparagraph 23(g)(v) of the Income Tax Assessment Act 1936 (ITAA 1936) has been replaced by the equivalent section 50-10 of the ITAA 1997, the discussion in TD 93/190 is also relevant to the application of the newer provision. For the purposes of section 50-10 of the ITAA 1997 this term is to be given a wide interpretation, but altruistic purposes are an essential element of this interpretation. As noted in paragraph 3 of TD 93/190: Those words extend to a range of altruistic purposes that are not otherwise charitable, such as promoting, providing, or carrying out activities, facilities or projects for the benefit or welfare of the community or any members of the community who have a particular need by reason of youth, age, infirmity or disablement, poverty, or social or economic circumstances. As discussed in paragraphs 4 and 5 of TD 93/190 the provision does not extend to organisations that are established within the community but do not have altruistic purposes or are not of an altruistic nature. Common association as such is not considered altruistic, or the non-profit nature of any such association. Organisations that are established solely to advance the interests of their members are not motivated by an altruistic purpose and will not be established for community purposes. Only when the purposes of an association are altruistic can they be considered community service purposes. The Explanatory Memorandum to Taxation Laws Amendment Bill (No 2) 1990, the legislation introducing subparagraph 23(g)(v) into the ITAA 1936, provides further information on when an organisation's purposes can be considered community services: When purposes are directed to the benefit or welfare of members of the community in particular need, that need must arise by reason of youth, age, infirmity or disablement, poverty or social or economic circumstances. These causes of need are intended to be read broadly. Infirmity or disablement, for example, could be intellectual or physical, and could be congenital or the product of disease or of injury. Similarly, social or economic circumstances could include such varied matters are sex, living in a remote area, or inability to speak English. As noted in paragraph 6 of TD 93/190 organisations established for 'political or lobbying purposes' are excluded from exemption from income tax under this provision. The Explanatory Memorandum to Taxation Laws Amendment Bill (No.2) 1990 explains what is meant by the term 'political or lobbying purposes': Political or lobbying purposes include standing candidates for election, campaigning for changes to the law or to government policy, and the like. Community service organisations may engage in political or lobbying activities, provided these are no more than merely incidental to other purposes beneficial to the community. But a body will be unable to claim exemption from income tax under this subparagraph if its only undertakings for the benefit of the community are political or lobbying ones. Paragraph 7 of TD 93/190 states that 'the purposes for which an organisation is established are demonstrated by its current operations and activities, which may show different purposes to those suggested by a cursory reading of its constitution'. In a discussion on determining the purpose of an organisation Taxation Ruling TR 2011/4 Income tax and fringe benefits tax: charities makes a distinction between main or predominant purposes, incidental or ancillary purposes, and independent purposes in the context of determining charitable purposes. The Commissioner's view on how these terms are to be understood is set out in paragraphs 27, 28, and 29 of TR 2011/4: 27. A purpose is the 'main or predominant or dominant' purpose of an institution if any other purpose the institution has is no more than incidental or ancillary to that purpose. 28. A purpose is incidental or ancillary to a charitable purpose if tends to assist, or naturally goes with, the achievement of the charitable purpose. It does not mean a purpose that is minor in quantitative terms. 29. A purpose is independent rather than incidental or ancillary if it is an end in itself, or of substance in its own right or is not intended to further a charitable purpose. While these explanations are given in the context of determining charitable purposes they are based in case law and applicable to determining the purpose of an organisation under any section of Division 50 of the ITAA 1997. Further guidance on determining the purpose of an organisation when the stated objects serve more than one purpose can be found in case law. In considering this issue in Royal Australasian College of Surgeons v Federal Commissioner of Taxation 68 CLR 436Latham CJ observed that: ... the question-difficult or easy to answer-must always be-what is the true nature and the objects and activities of the particular society? If these objects and activities are of a mixed character then the question must be decided according to the prevalent or main character. On reviewing previous case law on the question, the court in this case adopted an approach that examined not only constitutional objects, but also the manner in which an organisation fulfills its objects, the sources of its income and how that income was used. In this case the High Court found that while membership of the College conferred benefits on members it was doing more than promoting their professional interests and was actively engaged in the promotion of science. Factors in this decision included the value to the practice of surgery of activities including the dissemination of professional information and the intended establishment of a school to meet the need for the further professional development of practitioners and research into surgical practice. Application to your circumstances The Association has taken a leading role in providing programs in the relevant financial years that directly and indirectly benefit those served by the sector it represents and those in that sector are listed as being in need in paragraph 3 of TD 93/190. The Association also represented and provided services to members through these years, and sought to influence legislation, government policy, and public opinion in the interests of its members. While the provision of benefits to those in the sector it serves constitute a community service the Association has also worked for the benefit of its members and undertaken lobbying activity. As these activities, however, occurred alongside and as part of the community services activities undertaken by the Association they will not prevent recognition as a community services organisation under section 50-10 of the ITAA 1997. | Detailed Reasoning - Section 50-70 of the ITAA 1997: Subsection 50-70(1) of the ITAA 1997 states that an entity covered by item 2.1 is not exempt from income tax unless the entity is not carried on for the profit or gain of its members (not-for-profit requirement) and it has a physical presence in Australia and, to that extent it pursues its objectives and incurs its expenditure: • principally in Australia; or • it is a deductible gift recipient; or • it is prescribed by law in the income tax regulations and it is located outside Australia and is exempt from income tax in its country of residence. Subsection 50-70(2) of the ITAA 1997 provides that the Association 'must: • comply with all the substantive requirements in its governing rules; and • apply its income and assets solely for the purpose for which the entity is established'. Non-profit requirement In discussing whether an entity meets the not for profit requirement in subsection 50-70(1) TR 2022/2 Income tax: the games and sports exemption states the following: 11.... The club must not be carried on for the purposes of individual members' profit or gain, either while the club is operating or on its winding up. 12. Club members may receive communal membership benefits, such as the use of the facilities, that are incidental to the club's objects. This will not prevent the club meeting the not-for-profit requirement. The club may also pay members reasonable remuneration for services they perform for the club. 13. Clubs can use various mechanisms to ensure they meet the not-for-profit requirement. 'Not-for-profit' clauses in governing documents are the most common way. These prevent the distribution of profits or assets for the benefit of particular persons while the club is operating and on winding up. Application to your circumstances The Association has appropriate not for profit provisions in its constitution. There is nothing to indicate that the Association does not, or will not, operate in accordance with the conditions in these provisions. The association satisfies the not for profit requirement. Has a physical presence in Australia, and to that extent it pursues its objectives and incurs its expenditure principally in Australia The meaning of physical presence in Australia for the purposes of subsection 50-70(1) if the ITAA 1997 is discussed in paragraph 53 of Taxation Ruling TR 2019/6 Income tax: the 'in Australia' requirement for certain deductible gift recipients and income tax entities. An entity is considered to have a physical presence in Australia when it employs its assets and or people in conducting its physical operations in Australia. The question of whether an entity incurs its expenditure principally in Australia is discussed in paragraphs 59 to 62 of TR 2019/6. An entity is considered to have incurred its expenditure in Australia where it makes its payments or disburses money, or is liable to do so, in Australia. This can often be established when the decision to make that payment is made in Australia and the payment is made through an account held with an Australian financial institution. Application to your circumstances The Association is an Australia resident and has pursued its objectives and incurred its expenditure in Australia in the relevant financial years. Complies with substantive requirements in its governing rules Taxation Ruling TR 2015/1 Income tax: special conditions for various entities whose ordinary and statutory income is exempt provides guidance in respect of the conditions in subsection 50-70(2) of the ITAA 1997. Paragraph 9 of TR 2015/1 provides that an entity's 'governing rules' are those rules that authorise the policy, actions and affairs of the entity. Paragraphs 18 and 19 of TR 2015/1 explain that the substantive requirements in an entity's governing rules are those rules that define the rights and duties of the entity and: include rules such as those that: • give effect to the object or purpose of the entity • relate to the non-profit status of the entity • set out the powers and duties of directors and officers of the entity • require financial statements to be prepared and retained • set out the criteria for admission as a member of an entity • require an entity to maintain a register of members, and • relate to the winding-up of the entity. Application to your circumstances The Association complied with its governing rules in the relevant financial years. Applies its income and assets solely for the purpose for which the entity is established In discussing how to determine whether an entity has applied its income and assets solely for the purpose for which it is established TR 2015/1 describes the factors to be taken into account in determining that purpose. The main factors to be considered are the objects given in the entity's constituent documents and the activities of the entity. Other factors that may also be considered include policies and plans, administration, finances, history and control, and any legislation governing the operation of the entity. Application to your circumstances The Association has applied its income and assets solely for the purpose for which it is established in the relevant financial years. | Detailed Reasoning - 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. 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'. Under section 50-47 of the ITAA 1997 ACNC type entities must be registered with the ACNC to be exempt from income tax. The Charities Act 2013 (CA) sets out the requirements to be a charity. Section 5 of the CA defines a charity as a not-for-profit entity all the purposes of which are charitable or for the public benefit, or ancillary to purposes that are for the public benefit. Section 12 of the CA provides purposes that are a 'charitable purpose' and includes purposes such as advancing health, education, social or public welfare, religion, and culture. Application to your circumstances As the Association has maintained independent purposes that are not charitable in the relevant financial years it is not an ACNC type of entity. | Detailed Reasoning - 1. Conclusion: The Association is a community service organisation for the purposes of item 2.1 of the table in section 50-10 of the ITAA 1997, meets the special conditions for recognition as such in section 50-70 of the ITAA 1997, and is not an ACNC type of entity. The Association is exempt from income tax under section 50-10 of the ITAA as a community service organisation.