Private ruling: Tax exempt entity
Published: June 2012
Ruling period: 1 July 2009 to 30 June 2010 | 1 July 2010 to 30 June 2011 | 1 July 2011 to 30 June 2012
Date scheme commenced: 1 July 2009

Ruling: Q1: Is the trustee of the trust exempt from income tax under section 50-1 and item 1.5 of the table in section 50-5 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No

Relevant facts and circumstances: The taxpayer became deceased during the financial year ended 30 June 2009. A trust was created as a result of a will. The trust assets will be distributed solely for charitable purposes. The trust is not endorsed as an Income Tax Exempt Charity (ITEC).

Relevant legislative provisions: Income Tax Assessment Act 1936 Paragraph 128B(3)(a). | Income Tax Assessment Act 1997 Section 50-1. | Income Tax Assessment Act 1997 Section 50-5. | Income Tax Assessment Act 1997 Section 50-52.

Reasons for decision: Summary: Section 50-1 and item 1.5 of the table in section 50-5 of the ITAA 1997, exempts from income tax, the income of a fund established for public charitable purposes by will before 1 July 1997. The exemption is subject to the special conditions contained in sections 50-52 and 50-57 of the ITAA 1997 being satisfied. Section 50-52 states that an entity covered by item 1.1, 1.5, 1.5A, 1.5B or 4.1 is not exempt from income tax unless the entity is endorsed as exempt from income tax under Subdivision 50-B. In this case the facts indicate; · The Trust was not created by will before 1 July 1997. As such it does not satisfy the requirements of item 1.5 or 1.5B of the table in section 50-5 of the ITAA 1997. · The trust has not been endorsed as an Income Tax Exempt Charity (ITEC) and therefore does not satisfy the special condition contained in section 50-52 of the ITAA 1997.

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