Private ruling: Not for Profit-scientific institution
Date of advice: 25 September 2025
Published: 24 November 2025
Ruling period: Year ended 30June 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
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the Company exempt from income tax under Section 50-1 of the Income Tax Assessment Act (ITAA 1997) as a scientific institution under item 1.3 in section 50-5 of the ITAA 1997? | A1: Yes

Relevant facts and circumstances: The Company is registered as a public company under the Corporations Act 2001 . The Company was established as part of a government initiative to promote and develop the health technology industry. This initiative is part of a broader program implementing a government policy of promoting health research. The Company was established by a group comprising a number of public universities and the government. Any university, government authority or other entity with purposes aligned with those of the Company are also free to join. Applications for membership are decided on the absolute discretion of the company Board. The initial directors are named in the Company constitution. Thereafter directors are to be nominated by non-government members and no more than an equal number of government members. The Company is establishing facilities for research and development of health technologies to support public universities and other parties, including for profit entities in their development and commercialisation of health technologies. Initial funding for the establishment and operation of these facilities is to be drawn from government sources. The facilities are currently under construction and are to be operated by a private sector provider once completed. An agreement has been signed by the Company and the private sector provider to operate and maintain these facilities. The principal object of the Company is to promote the development and manufacturing of health technologies through collaborative research and stakeholder investment. Other stated objects include support for manufacturing health technologies and the development and commercialisation of intellectual property used or developed by the Company. Under the constitution the Board has the power to manage the company and its activities and may act on all matters that do not require a full meeting of Company members under the relevant legislation. The Company constitution stipulates that all profits, income or property of the Company must be applied solely towards the promotion of its objects. The constitution also prohibits the Company from paying or transferring any funds or property directly or indirectly to members, apart from payment for goods or remuneration for services in the ordinary and usual course of the Company business. The Company is also prohibited from paying fees to or on behalf of directors or a secretary for their service in these roles. Under the provisions of the company constitution any surplus assets remaining after payment of debts on the winding up of the company must be given or transferred to other entities with similar constitutional objects and not for profit provisions or entities recognised as charitable institutions for taxation purposes. In the event of the Company winding up each member is to contribute a nominal amount for payment of outstanding debts and liabilities. The Company constitution sets out the procedures for nomination of directors, the number of directors to be appointed, qualifications the nomination as a director, and procedures for managing director's interests. The board chairperson is to be appointed, removed, and replaced in accordance with the provisions given in the constitution. Under the Constitution the board may also nominate directors as managing directors and appoint secretaries. The board may also delegate any of its powers to a committee, a director, an employee, or any other person. Under the funding agreement signed with the private sector provider the Company will be overseeing and funding the fit out and initial operation of the new facilities. This agreement also sets conditions for the delivery of services related to the research, development, and commercialisation of health technologies by the private sector provider. The facilities are expected to be operational in another year. The Company will be engaged in selecting and supporting partners interested in making use of the facilities. Research undertaken by these partners is to be peer reviewed and research results are intended for public dissemination. Operational capacity of the facilities not used by entities selected by the Company will be marketed for use by other parties at commercial rates by the private sector provider. Payment for services provided by the facilities for these other parties will be made to the private sector provider and used for the ongoing operation and maintenance of the facilities. The Company will not be undertaking any research and development activity but will be developing and maintaining industry networks and promoting and brokering partnerships for use of the facilities. Any intellectual property developed or used by the Company in its work with the facilities will be strategically redeployed to further support its purpose. Any profit accruing from use of the intellectual property will be reinvested in the activities of the Company. To date the Company has managed contracts and funding related to the facilities. Ongoing funding for the operation of the facilities is to be drawn from government funds and provided by public universities. The Company will seek other sources of funding. Any surplus income is to be applied by the Company to the achievement of its objectives. The Company has not made a profit in the years since its inception. Based on the evidence submitted the Company has in the relevant financial years: • applied its income and assets solely for the purpose for which the entity is established • incurred its expenditure and pursued its objectives principally in Australia • complied with all the substantive requirements in its governing rules

Relevant legislative provisions: Income Tax Assessment Act 1997 section 50-1 | Income Tax Assessment Act 1997 section 50-5 | Income Tax Assessment Act 1997 section 50-45 | Income Tax Assessment Act 1997 section 50-47 | Income Tax Assessment Act 1997 section 50-55 | Income Tax Assessment Act 1936 subsection 23(e) | Charities Act 2013 section 12

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. Scientific institutions are listed as eligible entities for income tax exemption at item 1.3 in the table in section 50-5 of the ITAA 1997. As indicated in the table in section 50-5 of the ITAA 1997 the institution must also meet the special conditions detailed in section 50-55 of the ITAA 1997. To meet the special conditions in section 50-55 of the ITAA 1997 an entity must • have a physical presence in Australia, and to that extent, incur its expenditure and pursue its objectives principally in Australia • comply with all the substantive requirements in its governing rules • apply its income and assets solely for the purpose for which the entity is established Exemption from income tax under section 50-1 of the ITAA 1997 is also subject to the entity meeting the condition in section 50-47 of the ITAA 1997. Under section 50-47 of the ITAA 1997 income tax exemption will not apply to entities that are eligible for registration under the Australian Charities and Not-for-profits Commission Act 2012 unless they are already registered with the Australian Charities and Not-for-Profits Commission. | Detailed Reasoning - Scientific institution: Scientific institution is not defined in the Act. The definition takes on its ordinary meaning which has been considered by the courts. The meaning is discussed below. | Detailed Reasoning - Institution: In Stratton v Simpson (1970) 125 CLR 138 Gibbs J gave the following meaning of the term 'institution': In its ordinary sense "institution" means "an establishment, organisation, or association, instituted for the promotion of some object, especially one of public utility, religious, charitable, educational etc" (The Shorter Oxford English Dictionary). It means, as was said in Mayor etc. of Manchester v McAdam (...), "an undertaking formed to promote some defined purpose..." or "the body (so to speak) called into existence to translate the purpose as conceived in the mind of the founders into a living and active principle". Although its meaning must depend on its context, it would not ordinarily connote a mere trust... This view on the definition of the term has been adopted by the Commissioner in Taxation Ruling TR 2011/4 Income tax and fringe benefits tax: charities . As stated in paragraph 24 of TR 2011/4 the Commissioner considers that 'An institution is an establishment, organisation or association, instituted for the promotion of an object, especially one of public or general utility'. The purpose of the Company is set out in the objects listed in its Constitution. The Company is an organisation established for the promotion and development of research into health technologies and the application of these as this purpose is intended for public utility and not for profit the Company is an 'institution' within the ordinary meaning of the term. | Detailed Reasoning - Scientific institution: The term 'scientific institution' is not defined in the Act. In Royal Australian College of Surgeons v Federal Commissioner of Taxation (1943) 68 CLR 436 (Surgeons Case), the Full High Court considered the meaning of 'scientific institution' for the purposes of section 23(e) of the Income Tax Assessment Act 1936 (ITAA 1936), the predecessor of section 50-5. Each of the members of the Court held that the College was a scientific institution as the main, dominant or primary object of the College was to promote and advance the science of surgery. In the Surgeons Case Rich J stated the following on the meaning of 'scientific institution' at page 447: The test is whether it can be predicated that the College is in the main scientific. The inclusion of an institution in the exemption clause depends upon the intrinsic character of the object which it promotes and not upon the scope of the benefits which may result from its transactions... I have come to the conclusion that the main or real object of the College is the promotion and advancement of surgery. By this I mean that its essential purpose is to enlarge and extend the boundaries or area of the science of surgery. Its other objects are not collateral or independent but merely concomitant and incidental to the main object. And the fact that some of these subsidiary or ancillary functions and purposes may indirectly and incidentally be of benefit to the members of the profession does not destroy the exemption claimed. Starke J stated at pages 447-448: The substantial question is whether the college is a body for the advancement of professional objects and interests or for "something higher and larger", namely, the promotion of science in the advancement of surgical knowledge and practice. The college would not be the less a scientific institution because it does not confine its activities to abstract or speculative science but applies scientific knowledge and practices to the advancement of surgery. William J stated at page 451: ...whether it is a scientific institution...depends upon whether the main or dominant object for which the college is incorporated is to promote the science of surgery. In Australian Tea Tree Oil Research Institute Ltd (in liq.) v Commissioner of Taxation (2008) FCA 1653 at [225] Edmonds J stated that a 'scientific institution' must also be for the public benefit: For an entity to claim status as a 'scientific institution', the results..., of the subject entity's activities should be freely available to the community at large; the public community as well as the scientific community. Scientific Institutions are primarily set up to advance science. 'Science' is not limited to the physical sciences and includes the human and applied sciences. In the Commissioner of Inland Revenue v Forrest (Institute of Civil Engineers) (1890-1898) 3 TC 117 Lord Macnaghten stated the following on the meaning of 'science' in the term 'Scientific Institution' (which was accepted by Starke J in the Surgeons Case at pages 447-448): The first question is what is the meaning of the word science...I see no reason why it should be confined to pure, or speculative, science. The expression plainly includes applied science, and it was intended, I think, to denote a particular branch of science, as well as universal science or science generally... I cannot therefore doubt that mechanical science...is science... Scientific institutions are therefore primarily established to advance science. Common ways of advancing science include research, exploration and teaching. Disseminating information will often be involved. Further, a scientific institution must be for the benefit of the public and an entity that operates for the interests or profit of its members does not have a main purpose of advancing and promoting science. The purpose or purposes for which an organisation is established are determined by reference to the objects set out in its governing documents, its activities, and other relevant factors including: • Other elements in the governing documents such as its powers, rules, not for profit and winding up clauses, and clauses governing who can benefit from the institutions activities and in what ways. • How the institution is operated. • Any legislation governing its operation. • The circumstances in which it was formed. • Its history. • Its control. Direct and indirect activities which may encourage the advancement of science include: • encouraging increased and wider participation in scientific activities • providing purchased or leased facilities for scientific activities • co-ordinating activities of a scientific nature In putting its principal or main object into effect the Company will be undertaking activities which encourage increased and wider participation in scientific activity, providing facilities for this activity, and coordinating activities of a scientific nature. The greater part of the further objects of the company, such as attracting organisations to further develop and diversify this research and development support this principal objective. Further aims such as supporting the development and production of health technology goods and services and maximising the value and benefits of intellectual property rights are incidental to or support the principal object of the company. Other parties benefitting from the commercial sale of products and services provided using the excess manufacturing capacity of the facilities will be paying commercial fees for their use of the facilities. These fees will be used by the contracted private sector provider to maintain the facilities. In seeking to maximise the benefit of intellectual property accruing to it the Company will be looking to strategically share that intellectual property so that it effectively advances the development of the science that produces health technologies. Any surplus income produced by this activity will be used to further the principal object of the company. Research subsidised by the Company is directed to the public benefit, Company subsidised research will be peer reviewed, and the results are intended for public dissemination. The Company has the required not for profit articles in its constitution. The Company falls within the definition of a scientific institution for the purposes of section 50-5 of the ITAA 1997. | Detailed Reasoning - Section 50-55 of the ITAA 1997: The special conditions listed in section 50-55 include: • has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia; • 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. Application to your circumstances The Company has a physical presence, incurs its expenditure, and pursues its objectives principally in Australia. The Company complies with the substantive requirements of its governing rules and applies its income and assets solely for the purpose for which it was established. | 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 Division 50 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'. The Charities Act 2013 (CA) sets out the requirements for recognition as a charity. Section 12 of the CA provides purposes that are considered to be a 'charitable purpose' and includes a list of purposes including advancing health, education, social welfare, religion, culture, or any other purpose beneficial to the general public that is analogous to the purposes previously listed that section. The Commissioner's views on the meaning of 'charitable' in terms such as 'charitable institution' or 'established for charitable purposes" for the purpose of section 50-5 of the ITAA 1997 are discussed in Taxation Ruling TR 2011/4 Income tax and fringe benefits tax: charities . This discussion explains the circumstances in which an institution will be considered charitable and the determination of whether an institution has a charitable purpose. The word 'charitable' is not defined in the ITAA 1936 or the ITAA 1997. Through an extensive body of case law the courts have determined that it does not bear its ordinary meaning but instead is given its technical legal meaning. For a purpose to come within the technical legal meaning of 'charitable' it must be • Within the spirit and intendment of the Statute of Elizabeth, or deemed to be charitable by legislation applying for that purpose • For the public benefit, or deemed to be for the public benefit by legislation applying for that purpose The Statute of Elizabeth is a reference to the Preamble to the Statute of Charitable uses 1601 43 Elizabeth 1c.4. Charitable purposes have commonly been grouped in case law as the 'four heads of charity': • the relief of poverty • the advancement of education • the advancement of religion • other purposes beneficial to the community A purpose is for the public benefit if: • It offers a benefit to the community that is real and of value, either tangible or intangible • That benefit is available to the public Where the constituent documents of an institution indicate it has been established solely for a charitable purpose it can be charitable even if its activities are not intrinsically charitable. If, however, the constituent documents of an institution indicate it does not have a sole purpose which is charitable paragraph 34 of TR 2011/4 notes: • It cannot be charitable even if some or all of its activities are charitable in nature • It is not charitable simply because it uses means that are commonly used by charities, for example educational means; and • The fact that charitable consequences may result from its activities does not mean that it is charitable. For example, an institution cannot be characterised as charitable simply because it provides financial or other support to a charity. The purposes of government in carrying out its functions and activities are not charitable. As stated in paragraphs 64 to 67 of TR 2011/4 64. The purposes of government in carrying out its functions and activities are not charitable. 65. This does not mean that an institution cannot be charitable if in carrying out its purpose it has the effect of helping to achieve government policy. As long as the institution independently carries out its purpose, it can still be charitable. 66. Government funding of an institution does not mean the institution cannot be charitable. If the sole purpose of the institution is charitable, the fact that it is substantially funded by government will not affect its characterisation as a charitable institution. 67. However, if an institution is funded by government in order to give effect to government policy, and carries out its functions in order to discharge a responsibility of government, its sole purpose will not be charitable. The Company was established as part of a government initiative that is part of a broader government policy promoting research and development of health technologies. This purpose is clearly articulated in the main or principal object of the Company constitution. The remaining objects listed in the Company constitution are incidental to or support this principal objective. The Company is being funded by the government to give effect to a government policy. The Company is not an ACNC type of entity. | Detailed Reasoning - Conclusion: The Company is a scientific institution for the purposes of item 1.3 in the table in section 50-5 of the ITAA 1997, meets the special conditions set for such recognition in section 50-55 of the ITAA 1997, and is not an ACNC type of entity. The Company is exempt from income tax under section 50-5 of the ITAA 1997 as a scientific institution.