Extract of ITAA1997 –
Division 50
Part 2‑15—Non‑assessable income
Division 50—Exempt entities
Table of Subdivisions
50‑A Various
exempt entities
50‑B Endorsing
charitable entities as exempt from income tax
Subdivision 50‑A—Various exempt entities
Table of sections
50‑1 Entities
whose ordinary income and statutory income is exempt
50‑5 Charity,
education, science and religion
50‑10 Community
service
50‑15 Employees
and employers
50‑20 Funds
contributing to other funds
50‑25 Government
50‑30 Health
50‑35 Mining
50‑40 Primary
and secondary resources, and tourism
50‑45 Sports,
culture, film and recreation
50‑50 Special
conditions for items 1.1 and 1.2
50‑52 Special
condition for items 1.1, 1.5, 1.5A, 1.5B and 4.1
50‑55 Special
conditions for items 1.3, 1.4, 6.1 and 6.2
50‑57 Special
condition for item 1.5
50‑60 Special
conditions for items 1.5A and 1.5B
50‑65 Special
conditions for item 1.6
50‑70 Special
conditions for items 1.7, 2.1, 9.1 and 9.2
50‑72 Special
condition for item 4.1
50‑75 Certain
distributions may be made overseas
50‑80 Testamentary
trusts may be treated as 2 trusts
50‑1
Entities whose ordinary income and statutory income is exempt
The total *ordinary income and *statutory income
of the entities covered by the following tables is exempt from income tax. In
some cases, the exemption is subject to special conditions.
Note 1: Ordinary and statutory income that is exempt
from income tax is called exempt income: see section 6‑20. The note
to subsection 6‑15(2) describes some of the other consequences of it
being exempt income.
Note 2: Even if you are an exempt entity, the
Commissioner can still require you to lodge an income tax return or information
under section 161 of the Income Tax Assessment Act 1936.
50‑5
Charity, education, science and religion
|
Charity, education, science and religion |
|
Item |
Exempt entity |
Special conditions |
|
1.1 |
charitable institution |
see sections 50‑50 and 50‑52 |
|
1.2 |
religious institution |
see section 50‑50 |
|
1.3 |
scientific institution |
see section 50‑55 |
|
1.4 |
public educational institution |
see section 50‑55 |
|
1.5 |
fund established for public charitable purposes by will
before 1 July 1997 |
see sections 50‑52 and 50‑57 |
|
1.5A |
trust covered by paragraph 50‑80(1)(c) |
see sections 50‑52 and 50‑60 |
|
1.5B |
fund established in Australia for public charitable
purposes by will or instrument of trust (and not covered by item 1.5 or
1.5A) |
see sections 50‑52 and 50‑60 |
|
1.6 |
fund established to enable scientific
research to be conducted by or in
conjunction with a public university or
public hospital |
see section 50‑65 |
|
1.7 |
society, association or club established for the
encouragement of science |
see section 50‑70 |
|
1.8 |
Global Carbon Capture and Storage Institute Ltd |
only amounts included in assessable income:
(a) on or after 1 July 2009; and
(b) before 1 July 2013 |
Note 1: Section 50‑52 has the effect that
certain charitable institutions, funds and trusts are exempt from income tax
only if they are endorsed under Subdivision 50‑B.
Note 2: Section 50‑80 may affect which
item a trust is covered by.
50‑10
Community service
|
Community service |
|
Item |
Exempt entity |
Special conditions |
|
2.1 |
society, association or club established for community
service purposes (except political or lobbying purposes) |
see section 50‑70 |
50‑15
Employees and employers
|
Employees and employers |
|
Item |
Exempt entity |
Special conditions |
|
3.1 |
(a) employee association; or
(b) employer association |
the association:
(a) is registered or recognised under the Fair Work
(Registered Organisations) Act 2009 or an *Australian law relating to the
settlement of industrial disputes; and
(b) is located in Australia, and incurs its expenditure and
pursues its objectives principally in Australia |
|
3.2 |
trade union |
located in Australia and incurring its expenditure and
pursuing its objectives principally in Australia |
50‑20
Funds contributing to other funds
|
Funds contributing to
other funds |
|
Item |
Exempt entity |
Special conditions |
|
4.1 |
fund established by will or instrument of trust solely
for a purpose referred to in paragraph (a) or (b) of the column headed
“Recipient” in item 2 of the table in section 30‑15 (and not
covered by item 1.5, 1.5A or 1.5B of the table in section 50‑5) |
see sections 50‑52 and 50‑72 |
50‑25
Government
|
Government |
|
Item |
Exempt entity |
Special conditions |
|
5.1 |
(a) a municipal corporation; or
(b) a *local governing body |
none |
|
5.2 |
a public authority constituted under an *Australian law |
none |
|
5.3 |
a *constitutionally protected fund |
none |
Note: The ordinary and statutory income of a State
or Territory body is exempt: see Division 1AB of Part III of the Income
Tax Assessment Act 1936.
50‑30
Health
|
Health |
|
Item |
Exempt entity |
Special conditions |
|
6.1 |
public hospital |
see section 50‑55 |
|
6.2 |
hospital carried on by a society or association |
not carried on for the profit or gain of its individual
members, see also section 50‑55 |
|
6.3 |
private health insurer within the meaning of the Private
Health Insurance Act 2007 |
not carried on for the profit or gain of its individual
members |
50‑35
Mining
|
Mining |
|
Item |
Exempt entity |
Special conditions |
|
7.1 |
the Phosphate Mining Company of Christmas Island Limited
(incorporated in the Australian Capital Territory) |
none |
|
7.2 |
the British Phosphate Commissioners Banaba Contingency
Fund (established on 1 June 1981) |
none |
50‑40
Primary and secondary resources, and tourism
|
Primary and secondary resources, and tourism |
|
Item |
Exempt entity |
Special conditions |
|
8.1 |
a society or association established for the purpose of
promoting the development of:
(a) aviation; or
(b) tourism |
not carried on for the profit or gain of its individual
members |
|
8.2 |
a society or association established for the purpose of
promoting the development of any of the following Australian resources:
(a) agricultural resources;
(b) horticultural resources;
(c) industrial resources;
(d) manufacturing resources;
(e) pastoral resources;
(f) viticultural resources;
(g) aquacultural resources;
(h) fishing resources |
not carried on for the profit or gain of its individual
members |
|
8.3 |
a society or association established for the purpose of
promoting the development of Australian information and communications
technology resources |
not carried on for the profit or gain of its individual
members |
50‑45
Sports, culture, film and recreation
|
Sports, culture, film and recreation |
|
Item |
Exempt entity |
Special conditions |
|
9.1 |
a society, association or club established for the
encouragement of:
(a) animal racing; or
(b) art; or
(c) a game or sport; or
(d) literature; or
(e) music |
see section 50‑70 |
|
9.2 |
a society, association or club established for musical
purposes |
see section 50‑70 |
|
9.3 |
the Australian Film Finance Corporation Pty Limited
(incorporated under the Companies Act 1981 on 12 July 1988) |
none |
|
9.4 |
the Commonwealth Games Federation |
only income *derived on or after 1 January 2000 and before 1 July 2007 |
50‑50
Special conditions for items 1.1 and 1.2
An entity
covered by item 1.1 or 1.2 is not exempt from income tax unless the
entity:
(a) has
a physical presence in Australia and, to that extent, incurs its expenditure
and pursues its objectives principally in Australia; or
(b) is an institution that meets the
description and requirements in item 1 of the table in section 30‑15;
or
(c) is a prescribed institution which
is located outside Australia and is exempt from income tax in the country in
which it is resident; or
(d) is
a prescribed institution that has a physical presence in Australia but which incurs its expenditure and pursues its objectives principally outside Australia.
Note 1: Certain
distributions may be disregarded: see section 50‑75.
Note 2: The entity must also meet other conditions to
be exempt from income tax: see section 50‑52.
50‑52
Special condition for items 1.1, 1.5, 1.5A, 1.5B and 4.1
(1) An entity covered by item 1.1, 1.5,
1.5A, 1.5B or 4.1 is not exempt from income tax unless the entity is endorsed
as exempt from income tax under Subdivision 50‑B.
Note: The entity will not be exempt from income tax
unless it also meets other conditions: see section 50‑50 (for an
entity covered by item 1.1), 50‑57 (for an entity covered by item 1.5),
50‑60 (for an entity covered by item 1.5A or 1.5B) or section 50‑72
(for an entity covered by item 4.1).
(3) This section has effect despite all the
other sections of this Subdivision.
Note: This means that an entity covered both by an
item other than 1.1, 1.5, 1.5A, 1.5B or 4.1 and by one of those items is not
exempt from income tax unless the entity is endorsed under Subdivision 50‑B
as exempt from income tax and the entity meets the requirements of whichever of
sections 50‑50, 50‑57, 50‑60 and 50‑72 is
relevant.
50‑55
Special conditions for items 1.3, 1.4, 6.1 and 6.2
An entity covered by item 1.3, 1.4,
6.1 or 6.2 is not exempt from income tax unless the entity:
(a) has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives
principally in Australia; or
(b) is an institution that meets the
description and requirements in item 1 of the table in section 30‑15;
or
(c) is a prescribed institution which
is located outside Australia and is exempt from income tax in the country in
which it is resident.
Note: Certain distributions may be disregarded: see
section 50‑75.
50‑57
Special condition for item 1.5
A fund covered by item 1.5 is not
exempt from income tax unless the fund is applied for the purpose for which it
was established.
Note: The fund must also meet another condition to
be exempt from income tax: see section 50‑52.
50‑60
Special conditions for items 1.5A and 1.5B
A fund covered by item 1.5A or 1.5B
is not exempt from income tax unless the fund is applied for the purposes for
which it was established and:
(a) incurs, and has at all times since
1 July 1997 incurred, its expenditure principally in Australia and
pursues, and has at all times since 1 July 1997 pursued, its charitable
purposes solely in Australia; or
(b) is a fund which is referred to in
a table in Subdivision 30‑B or in item 2 of the table in
section 30‑15; or
(c) distributes solely, and has at all
times since 1 July 1997 distributed solely, to either or both of the
following:
(i) a charitable fund,
foundation or institution which, to the best of the trustee’s knowledge, is
located in Australia and incurs its expenditure principally in Australia and pursues its charitable purposes solely in Australia;
(ii) a charitable fund,
foundation or institution that, to the best of the trustee’s knowledge, meets
the description and requirements in item 1 or 2 of the table in section 30‑15.
Note 1: Certain distributions may be disregarded: see
section 50‑75.
Note 2: The fund must also meet other conditions to be
exempt from income tax: see section 50‑52.
50‑65
Special conditions for item 1.6
A fund
covered by item 1.6 is not exempt from tax unless the fund is applied for
the purposes for which it was established and is:
(a) a
fund that is located in, and which incurs its expenditure principally in,
Australia and that is established for the purpose of enabling scientific
research to be conducted principally in Australia by or in conjunction with a
public university or public hospital; or
(b) a
scientific research fund that meets the description and requirements in item 1
or 2 of the table in section 30‑15.
Note: Certain distributions may be disregarded: see
section 50‑75.
50‑70
Special conditions for items 1.7, 2.1, 9.1 and 9.2
An entity covered by item 1.7, 2.1,
9.1 or 9.2 is not exempt from tax unless the entity is a society, association
or club that is not carried on for the purpose of profit or gain of its
individual members and that:
(a) has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives
principally in Australia; or
(b) is a society, association or club
that meets the description and requirements in item 1 of the table in
section 30‑15; or
(c) is a prescribed society, association
or club which is located outside Australia and is exempt from income tax in the
country in which it is resident.
Note: Certain distributions may be disregarded: see
section 50‑75.
50‑72
Special condition for item 4.1
(1) A fund covered by item 4.1 is not
exempt from income tax unless the fund:
(a) is applied for the purposes for
which it is established; and
(b) distributes solely, and has at all
times since the time mentioned in subsection (2) distributed solely, to a
fund, authority or institution that:
(i) meets the description
and requirements in item 1 of the table in section 30‑15; and
(ii) is an *exempt entity.
(2) The time is the start of the income year
after the income year in which the Tax Laws Amendment (2005 Measures No. 3)
Act 2005 receives the Royal Assent.
50‑75
Certain distributions may be made overseas
(1) In determining for the purposes of this
Subdivision whether an institution, fund or other body incurs its expenditure
or pursues its objectives principally in Australia, distributions of any amount
received by the institution, fund or other body as a gift (whether of money or
other property) or by way of government grant are to be disregarded.
(2) In determining for the purposes of this
Subdivision whether an institution, fund or other body incurs its expenditure
or pursues its objectives principally in Australia, distributions of any amount
from a fund that is referred to in a table in Subdivision 30‑B and
operated by the institution, fund or other body are to be disregarded.
(3) In
determining for the purposes of section 50‑60 whether a fund:
(a) incurs, and has at all times since
1 July 1997 incurred, its expenditure principally in Australia and
pursues, and has at all times since 1 July 1997, pursued its charitable purposes
solely in Australia; or
(b) distributes solely, and has at all
times since 1 July 1997 distributed solely, to a charitable fund,
foundation or institution described in subparagraph 50‑60(c)(i) or (ii);
distributions of any amount received by the fund as a gift
(whether of money or property) or by way of government grant are to be
disregarded.
50‑80
Testamentary trusts may be treated as 2 trusts
(1) If:
(a) a trust (the existing trust)
covered by item 1.5 was in existence immediately before 1 July 1997; and
(b) on or after 1 July 1997 one or more assets are given to the existing trust (other than in return for
valuable consideration) or become part of the trust property under a will;
then, for the purposes of this Subdivision and Subdivision 50‑B,
the existing trust is taken to be 2 separate trusts (the new trust
and the old trust) as follows:
(c) the new trust is taken to be a
trust created after the start of 1 July 1997 that consists of so much of
the trust property as consists of those assets together with any income *derived from those
assets; and
(d) the old trust is taken to be a
trust created before 1 July 1997 that consists of the remainder of the
trust property.
(2) Where an asset is received in
substitution for another asset, subsection (1) applies as if the
substituted asset were the other asset.
Subdivision 50‑B—Endorsing charitable entities as exempt from income tax
Guide to Subdivision 50‑B
50‑100
What this Subdivision is about
This Subdivision sets out rules about
endorsement of charitable institutions and trust funds for charitable purposes
as exempt from income tax. Such entities are only exempt from income tax if
they are endorsed.
Table of sections
Endorsing charitable entities as exempt from
income tax
50‑105 Endorsement by Commissioner
50‑110 Entitlement to endorsement
Endorsing charitable entities as
exempt from income tax
50‑105
Endorsement by Commissioner
The Commissioner must endorse an entity
as exempt from income tax if the entity:
(a) is entitled to be endorsed as
exempt from income tax; and
(b) has applied for that endorsement
in accordance with Division 426 in Schedule 1 to the Taxation
Administration Act 1953.
Note: For procedural rules relating to endorsement,
see Division 426 in Schedule 1 to the Taxation Administration Act
1953.
50‑110
Entitlement to endorsement
General rule
(1) An entity is entitled to be endorsed as
exempt from income tax if the entity meets all the relevant requirements of
this section.
Which entities are entitled to be endorsed?
(2) To be entitled, the entity must be an
entity covered by item 1.1, 1.5, 1.5A or 1.5B of the table in section 50‑5
or item 4.1 of the table in section 50‑20.
Requirement for ABN
(3) To be entitled, the entity must have an *ABN.
(4) However, for a trust:
(a) covered by item 1.5 of the
table in section 50‑5 because the trust is covered by paragraph 50‑80(1)(d);
or
(b) covered by item 1.5A of the
table in section 50‑5 (because the trust is covered by paragraph 50‑80(1)(c));
to be entitled, the existing trust mentioned in paragraph
50‑80(1)(a) must have an *ABN.
Requirement to meet special conditions
(5) To be entitled:
(a) the entity must meet the relevant
conditions referred to in the column headed “Special conditions” of whichever
of items 1.1, 1.5, 1.5A and 1.5B of the table in section 50‑5
and item 4.1 of the table in section 50‑20 covers the entity;
or
(b) both of the following conditions
must be met:
(i) the entity must not
have carried on any activities as a charitable institution (if the entity is covered
by item 1.1 of the table in section 50‑5) or for public
charitable purposes (if the entity is covered by item 1.5, 1.5A or 1.5B of
that table);
(ii) there must be
reasonable grounds for believing that the entity will meet the relevant
conditions referred to in the column headed “Special conditions” of whichever
of items 1.1, 1.5, 1.5A or 1.5B of the table in section 50‑5
covers the entity; or
(c) if the entity is covered by item 4.1
of the table in section 50‑20 and has not made any distributions—there
must be reasonable grounds for believing that the entity will satisfy section 50‑72.
(6) To avoid doubt, the condition set out in
section 50‑52 (requiring the entity to be endorsed under this
Subdivision) is not a relevant condition for the purposes of subsection (5
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