Private ruling: Income tax exemption and FBT exemption
Date of advice: 9 April 2026
Published: 29 June 2026
Ruling period: From 1 July 20xx to 30 June 20zz | Question 2 | Is the taxpayer entitled to a rebate under subsection 65J(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | Answer 2 | No | This ruling applies for the following period: | From XXXX to XXXX

Ruling: Q1: Is the income of the taxpayer exempt from income tax pursuant to section 24AM of the Income Tax Assessment Act 1936 (ITAA 1936) by virtue of the taxpayer being a State/Territory body? | A1: Yes

Relevant facts and circumstances: The taxpayer is an Australian Proprietary Company limited by shares. Its shares are owned by a government entity. The taxpayer is not listed in the Income Tax (Excluded STBs) Regulations 1997. The taxpayer's purpose is set out in its constitution.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 24AM | Income Tax Assessment Act 1936 section 24AN | Income Tax Assessment Act 1936 section 24AO | Income Tax Assessment Act 1936 section 24AT | Fringe Benefits Tax Assessment Act 1986 subsection 65J(1) | Fringe Benefits Tax Assessment Act 1986 subsection 65J(5)

Reasons for decision: Detailed Reasoning - Detailed reasoning: Section 24AM of the ITAA 1936 provides that the income of a State/Territory body (an STB ) is exempt from income tax unless section 24AN applies to the STB. An entity can be an STB in one of five ways described in sections 24AO to 24AS of the ITAA 1936. Based on the facts and circumstances, the relevant way for the Company to be an STB is the first way in section 24AO of the ITAA 1936. Section 24AN of the ITAA 1936 provides that certain STBs are excluded from being income tax exempt under Division 1AB. | Detailed Reasoning - STB - Section 24AO: Under section 24AO a body is an STB if: (a) it is a company limited solely by shares; and (b) all of the shares in it are beneficially owned by one or more government entities. A company limited solely by shares The taxpayer is established under the Corporations Law as a proprietary company limited solely by shares. All of the shares are beneficially owned by one of more government entities Under section 24AT of the ITAA a government entity is defined as: (a) a State; or (b) a Territory; or (c) another STB that is not an excluded STB. The term "State" is not defined in the ITAA 1936. However, section 2B of the Acts Interpretation Act 1901 provides that in any Act that "State" means a State of the Commonwealth. In the circumstances, it is considered that the shares are beneficially owned by a government entity. | Detailed Reasoning - Section 24AN: Section 24AN provides that certain STBs are not exempt from income tax under Division 1AB. The section states that: Income derived by an STB is not exempt from income tax under this Division if, at the time that it is derived, the STB is an excluded STB. Section 24AT of the ITAA 1936 defines the meaning of 'excluded STB' for this Division as an entity that: (a) at a particular time, is prescribed as an excluded STB in relation to that time; or (b) is a municipal corporation or other local governing body (within the meaning of section 50-25 of the Income Tax Assessment Act 1997 ); or (c) is a public educational institution to which any of paragraphs 50-55(a) to (c) of the Income Tax Assessment Act 1997 applies; or (d) is a public hospital to which any of paragraphs 50-55(a) to (c) of the Income Tax Assessment Act 1997 ) applies; or (e) is a superannuation fund. The taxpayer has not been prescribed as an excluded STB in the Income Tax (Excluded STBs) Regulations 1997 . Furthermore, the taxpayer is not a municipal corporation or other local governing body, a public educational institution, a public hospital, or a superannuation fund. As such, the taxpayer is not an excluded STB under section 24AT. Accordingly, as the taxpayer is an STB under section 24AO and is not an excluded STB under section 24AT, the income of the taxpayer is exempt from income tax pursuant to section 24AM. | Detailed Reasoning - Detailed reasoning: Certain not-for-profit entities can receive fringe benefit rebates. To qualify as a rebatable employer for fringe benefit tax purposes the not-for-profit entity must meet the criteria in subsection 65J(1) of the Fringe Benefits Tax Assessment Act 1986 ( FBTAA), which states: An employer is a rebatable employer for a year of tax if the employer: (a) is exempt from income tax at any time during the year of tax under any of the provisions set out in the following table; and (b) satisfies the special conditions (if any) set out in the following table: Table 1: Rebatable employer | Detailed Reasoning - Column 2 - special conditions: 1 a registered charity covered by item 1.1 of the table in section 50-5 of the Income Tax Assessment Act 1997 The registered charity is not a rebatable employer for the year of tax if it: (a) is a registered public benevolent institution; or (b) is a registered health promotion charity; or (c) is an institution of the Commonwealth, a State or a Territory; or (d) has not been endorsed under subsection 123E(1); or (e) is not an institution. 2 a scientific institution covered by item 1.3 of the table in section 50-5 of the Income Tax Assessment Act 1997 The institution is not an institution of the Commonwealth, a State or a Territory unless it: (a) is an institution established by a law of the Commonwealth, a State or a Territory; and (b) is not conducted by or on behalf of the Commonwealth, a State or a Territory; and (c) is engaged solely in research into the causes, prevention or cure of diseases in humans. 3 a public educational institution covered by item 1.4 of the table in section 50-5 of the Income Tax Assessment Act 1997 The institution is not an institution established by a law of the Commonwealth, a State or a Territory unless it: (a) is not conducted by or on behalf of the Commonwealth, a State or a Territory; and (b) (b) is a preschool or school (other than a tertiary institution). 4 a society, association or club: (a) established for the encouragement of science; and (b) covered by item 1.7 of the table in section 50-5 of the Income Tax Assessment Act 1997 See subsection (5) of this section. 5 a society, association or club: (a) established for community service purposes (except political or lobbying purposes); and (b) covered by item 2.1 of the table in section 50-10 of the Income Tax Assessment Act 1997 See subsection (5) of this section. 6 an employer association or an employee association covered by item 3.1 of the table in section 50-15 of the Income Tax Assessment Act 1997 None. 7 a trade union covered by item 3.2 of the table in section 50-15 of the Income Tax Assessment Act 1997 None. 8 a society or association: (a) established for the purpose of promoting the development of: (i) aviation; or (ii) tourism; and (b) covered by item 8.1 of the table in section 50-40 of the Income Tax Assessment Act 1997 See subsection (5) of this section. 9 a society or association: (a) established for the purpose of promoting the development of any of the following Australian resources: (i) agricultural resources; (ii) horticultural resources; (iii) industrial resources; (iv) manufacturing resources; (v) pastoral resources; (vi) viticultural resources; (vii) aquacultural resources; (viii) fishing resources; and (b) covered by item 8.2 of the table in section 50-40 of the Income Tax Assessment Act 1997 See subsection (5) of this section. 10 a society or association: (a) established for the purpose of promoting the development of Australian information and communications technology resources; and (b) covered by item 8.3 of the table in section 50-40 of the Income Tax Assessment Act 1997 See subsection (5) of this section. 11 a society, association or club: (a) established for the encouragement of any of the following: (i) animal racing; (ii) art; (iii) a game or sport; (iv) literature; (v) music; and (b) covered by item 9.1 of the table in section 50-45 of the Income Tax Assessment Act 1997 See subsection (5) of this section. 12 a society, association or club: (a) established for musical purposes; and (b) covered by item 9.2 of the table in section 50-45 of the Income Tax Assessment Act 1997 See subsection (5) of this section. When determining if the taxpayer fits into any of the above employer types, consideration is given to the nature of the taxpayer and the taxpayer's purposes. The taxpayer is an Australian Proprietary Company limited by shares. All of the taxpayer's shares are owned by a government entity. The taxpayer's purposes are laid out in the taxpayer's Constitution. The taxpayer's purposes do not fit any of the items in the above table. Therefore, as the taxpayer's purposes do not fit the requirements for any of the items in the above table the taxpayer is not a rebatable employer for the purposes of 65J(1) and cannot claim a fringe benefit tax rebate.