Private ruling: Income Tax Exemption
Published: June 2013
Ruling period: 1 July 2012 to 30 June 2013 | 1 July 2013 to 30 June 2014 | 1 July 2014 to 30 June 2015 | 1 July 2015 to 30 June 2016
Date scheme commenced: 1 July 2012

Ruling: Q1: Is the entity a scientific institution under Item 1.3 of section 50-5 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes | Q2: Is the entity a society or association established for the purposes of promoting the development of agricultural resources under item 8.2(a) of section 50-40 of the ITAA 1997? | A2: No, the entity is considered to be a scientific institution.

Relevant facts and circumstances: The entity is a company and is governed by a Constitution. The primary aim of the entity is scientific. The entity has scientific objects and an appropriate non profit and winding up clause.

Relevant legislative provisions: Income Tax Assessment Act Section 50-5, | Income Tax Assessment Act Section 50-40 and | Income Tax Assessment Act Section 50-55. ATO View Documents | Income tax guide for non-profit organisations (NAT 7967)

Reasons for decision: Detailed Reasoning - Scientific Institution: A scientific institution as described in item 1.3 of the table in section 50-5 of the Income Tax Assessment Act 1997 (ITAA 1997), that satisfies the special condition detailed in section 50-55 of the ITAA 1997, will be exempt from income tax. | Detailed Reasoning - Institution: Whether a particular entity is an institution is indicated by a range of factors including activities, size, permanence and recognition. The entity is a company. The entity is governed by a Constitution and has a Board of Directors. The entity currently has two members and must hold an annual general meeting. The entity will lead the establishment and operation of a centre for science, technology and innovation. The entity is an institution. | Detailed Reasoning - Non profit requirement: The ITAA 1997 does not expressly set out a non profit requirement in the terms of the scientific institution item. Notwithstanding this it is considered that the scheme of the Act requires that an entity must satisfy this requirement. The Constitution of the entity has an appropriate non profit and winding up clause. The Intellectual Property created by the entity will be made available to the public where it promotes its objects. The entity meets the non profit requirement. | Detailed Reasoning - Scientific Institution: For an institution to be a scientific institution it must be established for the encouragement of science. This can be determined by the organisation's main object and activity which must be the promotion of scientific objects i.e. its dominant purpose must be to advance science. Any other objects of the organisation can only be incidental to its main purpose of advancing science. The objects and primary aim of the entity state that it is established for the promotion or advancement of scientific knowledge. The entity will build a purpose built laboratory facilities. The activities and facilities of the entity are primarily scientific in nature. The entity is a scientific institution. | Detailed Reasoning - Special condition: The special condition in section 50-55 of the ITAA 1997 requires that the entity: · has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia, or · is a deductible gift recipient, or · is a prescribed institution located outside Australia, exempt from income tax in its country of residence. The entity is incorporated in Australia, incurs its expenditure and pursues its objects principally in Australia. The entity will satisfy the special condition. | Detailed Reasoning - Conclusion: The entity is a scientific institution described in Item 1.3 of section 50-5 of the ITAA 1997 and it will satisfy the special condition. The entity is exempt from income tax. | Detailed Reasoning - Question 2: As the entity is a scientific institution it is not necessary to consider if it is a society or association established for the purposes of promoting the development of agricultural resources under Item 8.2(a) of section 50-40 of the ITAA 1997.