Private ruling: Income Tax Exemption ~ Resource Development
Published: October 2013
Ruling period: Period ended 30 June 2010 | Period ended 30 June 2011 | Period ended 30 June 2012 | Period ended 30 June 2013

Ruling: Q1: Is the Association exempt from income tax pursuant to section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) on the basis that it is a resource development organisation as described in item 8.3 of section 50-40 of the ITAA 1997? | A1: No

Relevant facts and circumstances: The Association is a not-for-profit organisation that represents the community to foster growth and assist in policy discussions at various levels on information and communication technology. The Association provides services to its members only. The Association does not provide any services to non-members.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 50-1 | Income Tax Assessment Act 1997 section 50-40

Reasons for decision: Summary: The Association is not exempt from income tax pursuant to section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as it has failed to satisfy all the requirements of item 8.3 of in the table in section 50-40 of the ITAA 1997. | Detailed Reasoning - Detailed reasoning: Section 50-1 of the ITAA 1997 provides that the ordinary and statutory income of the entities described in the tables which follow that section are exempt from income tax. Included in those tables is item 8.3 in the table in section 50-40 of the ITAA 1997.It refers to a society or association established to promote the development of information and communications technology resources in Australia. The special condition imposed on the society or association by section 50-40 of the ITAA 1997 for the exemption to apply is that it is not carried on for the profit or gain of its individual members. Accordingly to ascertain an organisation's income tax status under item 8.3 of the table in section 50-40 of the ITAA 1997 it is necessary to determine whether: § the entity is a non-profit association or society; and § the dominant or principal purpose for which the entity is established is promoting resource development; and § the resources whose development is being promoted are within the umbrella of resources specified in the relevant section; and § the resources, are resources of Australia and § the entity is not carried on for the profit or gain of its individual members. If the association fails to satisfy these requirements, its income will not be exempt under this provision. In this instance the Association does not meet the above requirements under item 8.3 of section 50-40 of the ITAA 1997 as it has failed to benefit the broader community and is therefore not exempt from income tax pursuant to section 50-1 of the ITAA 1997. Given the above situation, the tax liability of the Association cannot be amended as it is not considered to be a non-profit association which meets the requirements of item 8.3 of the table in section 50-40 of the ITAA 1997.