Private ruling: Income tax exemption
Published: May 2013
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017

Ruling: Q1: Is the entity exempt from income tax pursuant to section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as a public authority constituted under an Australian law as described in item 5.2 of section 50-25 of the ITAA 1997? | A1: Yes

Relevant facts and circumstances: The entity is a company limited by shares and responsible for the distribution of water. The entity is prevented from distributing profits to its members. The entity is prevented from distributing to its members any property on dissolution or winding up.

Relevant legislative provisions: Income tax assessment act 1997 section 50-1 and | Income tax assessment act 1997 section 50-25.

Reasons for decision: Summary: Section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) exempts from income tax the income of the entities described in the tables listed in Subdivision 50A of the ITAA 1997. Section 50-25 of the ITAA 1997 is contained in Subdivision 50A of the ITAA 1997. The table in section 50-25 of the ITAA 1997 describes at item 5.2 'a public authority constituted under an *Australian law'. The term 'public authority constituted under an Australian Law' is not defined in the ITAA 1997. The Commissioner has however issued Taxation Ruling No. IT 2632 Income tax: meaning of 'public authority' in definition of 'exempt public body' in Division 16D (Taxation Ruling IT 2632). Taxation Ruling IT 2632 discusses the meaning of the term public authority and what is meant by the expression 'constituted under a law' of the Commonwealth, State or Territory. The entity is responsible for the distribution of water. The objective of the entity is to supply water, establish and maintain reserves, invest moneys for replacement of supply and draining infrastructure, enter commercial arrangements for the supply of water, and hold the necessary licences. The entity is a non-profit entity. For the above reasons we consider the entity is a public authority constituted under an Australian law as described in section 50-25 of the ITAA 1997. The entity is therefore exempt from income tax pursuant to section 50-1 of the ITAA 1997.