Private ruling: Community services organisation
Date of advice: 29 May 2026
Published: 17 August 2026
Ruling period: Year ended 30 June 20XX | Year ended 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 1997 (ITAA 1997) as a society, association or club established for community service purposes under item 2.1 in section 50-10 of the ITAA 1997? | A1: No.

Relevant facts and circumstances: The Rulee is an Australian resident company. Person B is the sole shareholder and sole director of the company. The company's constitution includes a number of clauses, including: • The company's liability is limited by shares, • The company is prohibited from distributing assets, income, profits or dividends to the members, • The company's profits are to be retained for the company's purposes, • The company's sole purpose is to pursue charitable purposes, • If the company reduces or buys back its share capital, it must retain the proceeds, • On winding up of the company, a liquidator is required to vest any remaining assets of the company in one or other entities which have charitable purposes and which is restricted from making distribution to its members, and • The company is prohibited from paying directors fees to directors. Activities The Rulee was established with the sole purpose of providing support to Individual A. Individual A is an National Disability Insurance Scheme (NDIS) participant. The Rulee provides support for Individual A 24 hours a day, 7 days a week. This support is provided: • At Individual's residence, • At the place of Indiviual's A employment, and • In the community. The Rulee has a team of support workers who provide support services to Individual A. The Rulee issues invoices to the NDIS for the services provided to Individual A. The invoiced amounts are based on the authorised prices and rates that are approved by the NDIS for the type of services provided. This is the Rulee's sole source of income. The income received from the NDIS is used by the Rulee to pay its expenses, including remuneration for the support workers, costs assocaited with providing the support services to Individual A and insurances, administrative expenses, employment levies, etc. The Rulee generally generates an annual surplus from its operation, where the income received from the NDIS exceeds the outgoings associated with providing the services. The activities of the Rulee, including the management of staff, the provision of services and the administrative tasks are all managed Person B and Person C. However, Person B and Person C do not pay themselves a wage or any other form of remuneration for the services that they provided. This is despite the fact that Person B and Person C would generally perform approximately 40 hours of work a week (combined) in relation to the Rulee. The Rulee will only ever provide support services to Individual A The Rulee has not been established to carry on a commercail business or activity, but merely to provide the support services to Individaul A.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 50 | Income Tax Assessment Act 1997 section 50-1 | Income Tax Assessment Act 1997 section 50-10 | Income Tax Assessment Act 1997 section 50-47 | Income Tax Assessment Act 1997 section 50-70 | Income Tax Assessment Act 1997 subsection 50-70(1) | Income Tax Assessment Act 1997 subsection 50-70(2) | Income Tax Assessment Act 1936 subparagraph 23(g)(v) | Australian Charities and Not-for-profits Commission Act 2012 subsection 25-5(1)

Reasons for decision: Summary: The Rulee is not exempt from income tax under section 50-1 of the ITAA 1997 because it is not a society, association or club established for a community service purpose. It does not satisfy the requirements of any items in section 50-10 of the ITAA 1997. The Rulee's main purpose is to provide services to a single individual, rather than to benefit the community or a section of the community. | Detailed Reasoning - Detailed reasoning: Section 50-1 of the ITAA 1997 provides that the total ordinary income and statutory income of the entities covered by tables in sections 50-5 to 50-45 of the ITAA 1997 is exempt from income tax, subject to any special conditions. Item 2.1 in section 50-10 of the ITAA 1997 includes a society, association or club established for community service purposes (except political or lobbying purposes), provided it satisfies the special conditions in sections 50-70 and 50-47 of the ITAA 1997. To qualify for exemption, an entity must therefore: • be a society, association or club, • be established for community service purposes, and • satisfy all relevant special conditions. | Detailed Reasoning - Society, association, or club: The term 'society, association or club' is not defined in the ITAA 1997. The term is therefore construed according to the ordinary meaning of the words. In Douglas v Federal Commissioner of Taxation 97 ATC 4722 reference was made by the court to the definitions contained in the Concise Oxford Dictionary for each of these terms. Society, association, or club was accepted by the court as referring to a voluntary organisation having members associated together for a common or shared purpose (at 4726). In Pro-campo Ltd. v Commr of Land Tax (NSW) 81 ATC 4270 the court considered the meaning of 'society, club or association'. The court stated at 4279: In Theosophical Foundation Pty Ltd v Commr of Land Tax (NSW) [1966] 67 SR (NSW)...Sugerman JA stated at 82: A society, in the relevant sense, is a number of persons associated together by some common interest or purpose, united by a common vow, holding the same belief or opinion, following the same trade or profession, etc; an association'... The meaning of "society" as the Oxford English Dictionary definition shows can be the equivalent of "association" and I do not think that any relevant distinction in nature exists between the two. It merely seems to have happened that some organisations are called "associations", others are called "societies" but no meaningful difference can be detected between the two...Although clubs can in some respects and in some instances be seen to be distinguishable by reason of their purposes from societies or associations, they nevertheless fall squarely within the dictionary definition of "society" set out above. In short the three words are describing bodies made up of groups of persons who have come together to implement common purposes and objects... The meaning of society, association, or club as described above, emphasises a 'body of persons' and 'an organisation of people' with a 'common purpose'. | Detailed Reasoning - Established for Community Services: The Commissioner's view on the meaning of community services, as the term is used in section 50-10 of the ITAA 1997, is discussed in Taxation Determination TD 93/190 Income tax: what is the scope of the exemption from income tax provided by subparagraph 23(g)(v) of the Income Tax Assessment Act 1936? While subparagraph 23(g)(v) of the Income Tax Assessment Act 1936 (ITAA 1936) has been replaced by the equivalent section 50-10 of the ITAA 1997, the discussion in TD 93/190 is also relevant to the application of the newer provision. For the purposes of section 50-10 of the ITAA 1997 this term is to be given a wide interpretation, but altruistic purposes are an essential element of this interpretation. As noted in paragraph 3 of TD 93/190: Those words extend to a range of altruistic purposes that are not otherwise charitable, such as promoting, providing, or carrying out activities, facilities or projects for the benefit or welfare of the community or any members of the community who have a particular need by reason of youth, age, infirmity or disablement, poverty, or social or economic circumstances. As discussed in paragraphs 4 and 5 of TD 93/190 the provision does not extend to organisations that are established within the community but do not have altruistic purposes or are not of an altruistic nature. Common association as such is not considered altruistic, or the non-profit nature of any such association. Organisations that are established solely to advance the interests of their members are not motivated by an altruistic purpose and will not be established for community purposes. Only when the purposes of an association are altruistic can they be considered community service purposes. The Explanatory Memorandum to Taxation Laws Amendment Bill (No 2) 1990, the legislation introducing subparagraph 23(g)(v) into the ITAA 1936, provides further information on when an organisation's purposes can be considered community services: When purposes are directed to the benefit or welfare of members of the community in particular need, that need must arise by reason of youth, age, infirmity or disablement, poverty or social or economic circumstances. These causes of need are intended to be read broadly. Infirmity or disablement, for example, could be intellectual or physical, and could be congenital or the product of disease or of injury. Similarly, social or economic circumstances could include such varied matters are sex, living in a remote area, or inability to speak English. As noted in paragraph 6 of TD 93/190 organisations established for 'political or lobbying purposes' are excluded from exemption from income tax under this provision. The Explanatory Memorandum to Taxation Laws Amendment Bill (No.2) 1990 explains what is meant by the term 'political or lobbying purposes: Political or lobbying purposes include standing candidates for election, campaigning for changes to the law or to government policy, and the like. Community service organisations may engage in political or lobbying activities, provided these are no more than merely incidental to other purposes beneficial to the community. But a body will be unable to claim exemption from income tax under this subparagraph if its only undertakings for the benefit of the community are political or lobbying ones. Paragraph 7 of TD 93/190 states that 'the purposes for which an organisation is established are demonstrated by its current operations and activities, which may show different purposes to those suggested by a cursory reading of its constitution'. In a discussion on determining the purpose of an organisation Taxation Ruling TR 2011/4 Income tax and fringe benefits tax: charities make a distinction between main or predominant purposes, incidental or ancillary purposes, and independent purposes in the context of determining charitable purposes. The Commissioner's view on how these terms are to be understood is set out in paragraphs 27, 28, and 29 of TR 2011/4: 27. A purpose is the 'main or predominant or dominant' purpose of an institution if any other purpose the institution has is no more than incidental or ancillary to that purpose. 28. A purpose is incidental or ancillary to a charitable purpose if tends to assist, or naturally goes with, the achievement of the charitable purpose. It does not mean a purpose that is minor in quantitative terms. 29. A purpose is independent rather than incidental or ancillary if it is an end in itself, or of substance in its own right or is not intended to further a charitable purpose. While these explanations are given in the context of determining charitable purposes they are based in case law and applicable to determining the purpose of an organisation under any section of Division 50 of the ITAA 1997. Further guidance on determining the purpose of an organisation when the stated objects serve more than one purpose can be found in case law. In considering this issue in Royal Australasian College of Surgeons v Federal Commissioner of Taxation 68 CLR 436Latham CJ observed that: ... the question-difficult or easy to answer-must always be-what is the true nature and the objects and activities of the particular society? If these objects and activities are of a mixed character then the question must be decided according to the prevalent or main character. On reviewing previous case law on the question, the court in this case adopted an approach that examined not only constitutional objects, but also the manner in which an organisation fulfills its objects, the sources of its income and how that income was used. In this case the High Court found that while membership of the College conferred benefits on members it was doing more than promoting their professional interests and was actively engaged in the promotion of science. Factors in this decision included the value to the practice of surgery of activities including the dissemination of professional information and the intended establishment of a school to meet the need for the further professional development of practitioners and research into surgical practice Application to your circumstances The Rulee's dominant purpose is to provide support services exclusively to an Individual. The Rulee's activities are directed solely to the Individual's personal care and support. There are no broader class of beneficiaries and no public or community facing activities. The Rulee does not provide services to a section of the community more generally and does not have a membership base or community participation as it only operates for the benefit of a single individual. Accordingly, its purpose is private rather than altruistic in the relevant sense. Further, the Rulee is not a society, association or club, and is not established for a community service purpose. Therefore, it is not exempt under section 50-1 of the ITAA 1997. As this requirement is not satisfied, it is unnecessary to consider the special conditions in sections 50-47 and 50-70 of the ITAA 1997 in detail. | Detailed Reasoning - Question 2: Is the NDIS income that the Rulee receives exempt from income tax under section 52-180 of the ITAA 1997? | Summary: The NDIS income received by the Rulee is not exempt under section 50-180 of the ITAA 1997 because the Rulee receives the payment in its own capacity as a service provider, not as an eligible recipient under that provision. | Detailed Reasoning - Detailed reasoning: Section 52-180 of the ITAA 1997 provides an exemption for certain payments made under the NDIS, but only where the statutory conditions are satisfied. Broadly, the provision applies to payments made: • to an NDIS participant, or • to another entity in prescribed circumstances (for example, as an agent or nominee of the participant). | Detailed Reasoning - Application to your circumstances: The Rulee is a separate legal entity that provides services to Individual A and invoices the NDIS for those services. The payments it receives are consideration for services rendered, rather than payments made to it in its capacity as the participant or on behalf of the participant in a statutory sense. Accordingly, the NDIS payments are ordinary income derived from the provision of services and do not fall within the scope of the exemption in section 52-180 of the ITAA 1997.

Question 1: Is the Rulee exempt from income tax under section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as a society, association or club established for community service purposes under item 2.1 in section 50-10 of the ITAA 1997?