Private ruling: Not-for-profit-public authority
Date of advice: 28 October 2025
Published: 15 December 2025
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the Cooperative exempt from income tax under section 50-1 of the Income Tax Assessment Act (ITAA 1997) as a public authority constituted under an Australian law under item 5.2 in the table in section 50-25 of the ITAA 1997? | A1: Yes. The Cooperative is a public authority constituted under an Australian law to deliver a public benefit by providing a safe and secure utility service that would not otherwise be available to the community. The Cooperative is not an ACNC type entity and section 50-47 of the ITAA 1997 will not apply in this case.

Relevant facts and circumstances: Background The Cooperative is member owned. The Cooperative operates a utility service. This service is delivered to members and non-members within the service area. The utility service was originally established some decades ago by a state government to ensure a safe and reliable service that had not previously been available within the service area. The service was operated by a government owned corporation. The service, including the business, assets, and liabilities, has now been transferred to local management arrangements under state government legislation and is operated as a cooperative. Under the local government arrangements users of the service were automatically entitled to membership of the cooperative. The Cooperative is registered as a non-trading cooperative under the appropriate state government legislation. Under this legislation the Cooperative must report annually to the relevant state government regulator on its governance, finances, and activities. The Cooperative is a registered utility service provider under the relevant state government legislation. Under that legislation registered service providers must submit operating plans and annual reports on their service provision. The purpose of the Cooperative is set out in the registered cooperative rules. This purpose is to own, operate, and manage the utility service and facilitate trade in the service commodity, and do all such other lawful things as are conducive to this purpose. Under the non-profit provisions of the Cooperative rules the Cooperative must use all surplus for the continued benefit of the cooperative and no part must be paid to transferred directly or indirectly to members. No distributions or returns are to be made to members and the assets and income of the Cooperative must be applied solely to the furtherance of its constitutionally stated purpose. Any surplus assets remaining on the winding up or dissolution of the Cooperative after payment of its debts must be given or transferred to another body with a similar purpose and responsibilities and that has similar not for profit provisions in its constitution. The state legislation that authorises the registration of the Cooperative as a service provider states that the purpose of the legislation is to provide for safe and reliable utility service provision. Under this legislation registered service providers must prepare and maintain service standards that take public submissions into account. These service standards must state a target for the level of service to be provided and the process for service connections, billing, metering, accounting, customer consultation, complaints and dispute resolution. The service provider must comply with this customer service standard when supplying services to customers who do not have a service contract. Registered service providers have powers under this legislation to • disconnect unauthorised service connections • issue notices requiring remedial work to rectify or remove defective or improper equipment or equipment that adversely affects the service infrastructure. If the work is not done within a reasonable notice period the service provider may authorise a person to enter the place where the work is required and do the work. • install meters within the boundary of premises where the service is supplied. The meter is to remain the property of the service provider. • authorise a person to enter a place at any reasonable time to read, check the accuracy, or maintain or replace a meter • authorise a person to enter a place to inspect, operate, change, maintain, remove, repair or replace a service provider's infrastructure at the place or install a device to reduce the service to the premises with consent of the occupant and a reasonable period of notice, or erect a sign on public land to warn individuals of the risks of entering an area in which service infrastructure is located. • authorise a person to enter a place at any reasonable time to read a meter, check the accuracy of a meter, or maintain or replace a meter • restrict, when considered necessary, the service supplied to a customer or type of customer, the hours the service is provided on the customer premises, or the way the service may be used on those premises. In the relevant financial years the Cooperative provided the utility service, maintained the service delivery infrastructure, and developed that infrastructure. The Cooperative has also implemented service monitoring, ordering, and management software. The cooperative has generated surplus funds in the previous X financial years. The Cooperative maintains surplus funds in a sinking fund that is used to fund ongoing service provision and maintain and replace service infrastructure.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 50-1 | Income Tax Assessment Act 1997 section 50-25 | Income Tax Assessment Act 1997 section 50-47 | Income Tax Assessment Act 1997 section 995-1 | Income Tax Assessment Act 1997 subsection 995-1(1) | Income Tax Assessment Act 1936 section 23(d) | Australian Charities and Not-for-profits Commission Act 2012 subsection 25-5(5) | Cooperatives National Queensland Act 2020 (Qld) Part 2.6 | Cooperatives National Queensland Act 2020 (Qld) Part 3.3 | Water Supply (Safety and Reliability) Act 2008 (Qld) Part 4 | Water Act 2000 (QLD) Chapter 4A