Private ruling: FBT – Rebatable employer
Date of advice: 7 March 2019
Published: May 2019
Ruling period: FBT year ended 31 March 2020 | FBT year ended 31 March 2021 | FBT year ended 31 March 2022
Date scheme commenced: 1 April 2013

Ruling: Q1: Is the organisation a rebatable employer for the purposes of item 4 of the table in subsection 65J(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: Yes

Relevant facts and circumstances: The ATO has concluded in private rulings previously issued that the organisation is a society, club or association established for the encouragement of science which is covered by item 1.7 of the table in section 50-5 of the Income Tax Assessment Act 1997 (ITAA 1997) and is a rebatable employer. The organisation is also exempt from income tax pursuant to the provisions of section 20-1 of the ITAA 1997 on the basis that it falls under item 1.7 of the table in section 50-5 of the ITAA 1997. The organisation is a company limited by guarantee and registered under the corporations Act 2001. It also has a written constitution. The organisation is a society, association or club as it carries out activities in pursuit of its objectives contained in its constitution. The members of the organisation include both government and non-government entities. The organisation is established for the encouragement of science.

Relevant legislative provisions: Section 50-5 of the Income Tax Assessment Act 1997 | Section 65J of the Fringe Benefits Tax Assessment Act 1986

Reasons for decision: Detailed Reasoning - Background: Previous favourable private rulings on whether the organisation is a rebatable employer for the purpose of section 65J(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) have issued. In all the private rulings issued, the material facts remained the same in relation to the entity’s constitution and activities. | Detailed Reasoning - Subsection 65J(1) of the FBTAA: Under section 65J of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), certain employers (rebatable employers) are entitled to a rebate of fringe benefits tax. Subsection 65J(1) of the FBTAA lists employers that are rebatable employers. Changes to subsection 65J(1) of the FBTAA commenced on 30 June 2013 and was effective from 1 April 2013. From the 2014 FBT year, an employer is a rebatable employer under subsection 65J(1) of the FBTAA if it: · is exempt from income tax at any time during the FBT year, and · satisfies any special condition. In the amended subsection 65(1) of the FBTAA the equivalent provision for the encouragement of science is contained in item 4 of the table in paragraph 65J(1)(b) of the FBTAA which states: Type of employer Special condition a society, association or club: See subsection (5) of this section. (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 This effect of the amended definition in subsection 65J(1) of the FBTAA is to improve readability and limit the rebate to employer’s who are also eligible for income tax exemption under relevant provisions within Division 50 If the Income Tax Assessment Act 1997 (ITAA 1997); in this case item 1.7 in the table of section 50-5. The organisation submitted that although subsection 65J(1) of the FBTAA has changed over time it remains the type of entity which is still a rebatable employer and the reasons for the private ruling(s) past and present are still relevant to this current application. | Detailed Reasoning - Tax exempt entity: The Commissioner previously ruled the entity to be a tax exempt entity under item 1.7 in the table of section 50-5 of the ITAA 1997. The Commissioner agrees that item 1.7 in the table of section 50-5 of the ITAA 1997 applies to the entity at some point in the relevant FBT years in question, and as such item 4(b) of paragraph 65J(1)(b) is satisfied. | Detailed Reasoning - Society, Association or Club: The Commissioner previously issued Private rulings determining the organisation to be a rebatable employer under the old subsection 65J(1) of the FBTAA. In that private ruling (and earlier ones) we concluded that paragraph 65J(1)(g) applied to the entity. The Commissioner agrees that the entity, in the relevant FBT in question, was established for the encouragement of science based on there being no changes to the entity’s constitution, purpose or activities since the previous private rulings issued. | Detailed Reasoning - Special conditions: The organisation must also meet the conditions under column 2 of the table in sub-section 65J(1) which is the requirement under sub-section 65J(5). Subsection 65J(5) of the FBTAA 1986 provides that: …a society, association or club is not covered by table item number 4,5,8,9,10,11 or 12 in subsection(1) for a year of tax if it is: (a) an incorporated company where all the stock or shares in the capital of the company is or are beneficially owned by: (i) the Commonwealth, a State or a Territory; or (ii) an authority or institution of the Commonwealth, a State or Territory; or (b) an incorporated company where the company is limited by guarantee and the interests and rights of the members in or in relation to the company are beneficially owned by: (i) the Commonwealth, a State or a Territory; or (ii) an authority or institution of the Commonwealth, a State or Territory. The organisation satisfies subsection 65J(5) of the FBTAA as it is not beneficially owned by the government. We accept that an organisation is not being carried on for the purposes of profit or gain to individual members whereby under its constitution or by operation of law it is prevented from distributing its profits or assets among members while it is operating or on its winding up. As not all of the member organisations (who beneficially own the interests and rights in the company) are relevant government bodies, subparagraph 65J(5)(b)(ii) of the FBTAA is not satisfied. However as paragraph 65J(5)(a) of the FBTAA is satisfied the association is a 'non-profit association' for the purposes of section 65J of the FBTAA. In summary the organisation is an entity not-for-profit established for the encouragement of science, covered by item 4 of the table in subsection 65J(1) of the FBTAA and meets the special conditions also listed in that subsection. Therefore organisation meets the requirements of subsection 65J(1) and is a rebatable employer.