Taxation Determination TD 2008/2
Date of effect: 26 March 2008




Examples: Example 1: 4. The Parliament of Victoria passes an Act which incorporates University A. The Act also specifies the powers and purpose of the University. University A is a charitable institution for the purpose of paragraph 65J(1)(baa). 5. The incorporation of and setting the purpose or objects of University A by the Victorian Act constitutes or establishes University A for a charitable purpose . 6. Therefore, University A is an institution 'established by a law of the Commonwealth, a State or a Territory' under subsection 65J(3). | Example 2: 7. XYZ is a non-profit society that is incorporated under the Associations Incorporation Act 1981 (Vic). This Act merely provides for the incorporation of a body corporate and does not set out the powers or the purpose of XYZ. XYZ is a charitable institution for the purpose of paragraph 65J(1)(baa). Its powers and purpose are set out in its own constitution . 8. The incorporation by the Associations Incorporation Act 1981 (Vic) does not on its own constitute or establish XYZ for a charitable purpose . 9. Therefore, XYZ is not 'an institution established by a law of the Commonwealth, a State or a Territory' within subsection 65J(3). Date of effect 10. This Determination applies to FBT years commencing both before and after its date of issue. However, the Determination does not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). Commissioner of Taxation 26 March 2008 Explanation 11. Subsection 65J(1) lists the categories of organisations which are rebatable employers. Excluded from these categories are organisations that are also public benevolent institutions or health promotion charities. 12. Paragraph 65J(1)(baa) provides that a rebatable employer is a charitable institution that is endorsed under subsection 123E(1), other than an 'institution of the Commonwealth, a State or a Territory'. 13. Subsection 65J(3) provides that for the purposes of section 65J, 'an institution established by a law of the Commonwealth, a State or a Territory is taken to be an institution of the Commonwealth, the State or the Territory, as the case requires'. 14. An institution is an establishment, organisation or association, instituted for the promotion of some object, especially one of public or general utility. [4] 15. The ordinary meaning of the word 'establish', according to the Macquarie Dictionary [5] is 'to set up on a firm or permanent basis; institute; found: to establish a government, to establish a business, to establish a university' . 16. In In re East and West India Dock Company , [6] the Court considered whether a dock company was a company 'constituted by Act of Parliament for the purpose of making a railway'. Chitty J said at page 582: 17. In Renmark Hotel Inc v. FC of T , [7] the High Court considered whether the Renmark Hotel was a 'public authority constituted under any.....State Act'. Rich J said at page 19: 18. A charitable institution will not be 'established by a law of the Commonwealth, a State or a Territory' under subsection 65J(3) where the law only gives the institution artificial legal status as an incorporated body. 19. A charitable institution is an institution established and maintained for purposes that are charitable in the technical legal sense. [8] A charitable institution will be 'established by a law of the Commonwealth, a State or a Territory' where the law sets out the purposes or objects of the organisation which are charitable. Previously released in draft form as TD 2007/D10

Appendix: 11. Subsection 65J(1) lists the categories of organisations which are rebatable employers. Excluded from these categories are organisations that are also public benevolent institutions or health promotion charities. 12. Paragraph 65J(1)(baa) provides that a rebatable employer is a charitable institution that is endorsed under subsection 123E(1), other than an 'institution of the Commonwealth, a State or a Territory'. 13. Subsection 65J(3) provides that for the purposes of section 65J, 'an institution established by a law of the Commonwealth, a State or a Territory is taken to be an institution of the Commonwealth, the State or the Territory, as the case requires'. 14. An institution is an establishment, organisation or association, instituted for the promotion of some object, especially one of public or general utility. [4] 15. The ordinary meaning of the word 'establish', according to the Macquarie Dictionary [5] is 'to set up on a firm or permanent basis; institute; found: to establish a government, to establish a business, to establish a university' . 16. In In re East and West India Dock Company , [6] the Court considered whether a dock company was a company 'constituted by Act of Parliament for the purpose of making a railway'. Chitty J said at page 582: 17. In Renmark Hotel Inc v. FC of T , [7] the High Court considered whether the Renmark Hotel was a 'public authority constituted under any.....State Act'. Rich J said at page 19: 18. A charitable institution will not be 'established by a law of the Commonwealth, a State or a Territory' under subsection 65J(3) where the law only gives the institution artificial legal status as an incorporated body. 19. A charitable institution is an institution established and maintained for purposes that are charitable in the technical legal sense. [8] A charitable institution will be 'established by a law of the Commonwealth, a State or a Territory' where the law sets out the purposes or objects of the organisation which are charitable. Previously released in draft form as TD 2007/D10


1. No. The mere incorporation of a charitable institution under the Corporations Act 2001 or a law of a State or Territory which relates to the incorporation of Associations [1] does not mean that the institution is 'established by a law of the Commonwealth, a State or a Territory' under subsection 65J(3) of the Fringe Benefits Tax Assessment Act 1986 . [2] | 2. A charitable institution will only be 'established by a law of the Commonwealth, a State or a Territory' under subsection 65J(3) when the relevant law specifically constitutes or establishes the institution for purposes that are charitable. [3] | 3. The Corporations Act 2001 or a law of a State or Territory which is relevant to the incorporation of associations merely creates an artificial legal personality, however it does not of itself establish the charitable institution. | The term 'constituted' is not equivalent to 'incorporated', it is of wider import. It seems to be equivalent to 'established'. | The word 'constituted' is not the same as 'incorporated'. For the purposes of paragraph 23(d) it is conceivable that an unincorporated body might be constituted under a State Act so as to satisfy the exemption. On the other hand mere incorporation under an Act does not constitute the body. The word 'constituted' immediately follows 'public authority'. It means constituted as a public authority.


Related rulings: TR 2005/21 TR 2006/10
Legislative references: FBTAA 1986 65J FBTAA 1986 65J(1) FBTAA 1986 65J(1)(baa) FBTAA 1986 65J(3) FBTAA 1986 123E(1) TAA 1953 Corporations Act 2001 Associations Act 2003 (NT) Associations Incorporation Act 1964 (Tas) Associations Incorporation Act 1981 (Qld) Associations Incorporation Act 1981 (Vic) Associations Incorporation Act 1984 (NSW) Associations Incorporation Act 1985 (SA) Associations Incorporation Act 1987 (WA) Associations Incorporation Act 1991 (ACT)
Case references: In re East and West India Dock Company (1888) LR 38 Ch D 576
Subject references: charitable institution fringe benefits tax rebatable employer
Other references: Macquarie Dictionary [MultiMedia], version 5.0.0, 1/10/01