Cooperative Bulk Handling Ltd v Commissioner of Taxation [2010] FCA 508

Cooperative Bulk Handling Ltd v Commissioner of Taxation [2010] FCA 508

CBH satisfies both the positive criterion of being established for the purpose of promoting the development of Australian agricultural resources and the negative criterion of not being carried on for the profit or gain of its individual members for the purposes of s 50-1, s 50-40 Item 8.2 of the ITAA 1997. Its activities, constitution, and history demonstrate the dominant objective is the advancement of the grain industry overall, not the profit of members. Legislative and constitutional prohibitions effectively prevent profit or asset distribution to individual members. Accordingly, CBH is entitled to income tax exemption for the relevant years in question.

Parties
Applicant: Cooperative Bulk Handling Ltd; Respondent: Commissioner of Taxation
Jurisdiction
Australia
Judgment Date
25 May 2010
Procedural Posture
Appeal Under Part IVC of the Taxation Administration Act 1953 (cth) / Judgment Following Hearing of an Appeal Against an Objection Decision Regarding a Private Tax Ruling
Outcome
Appeal allowed.
Legal Topics
Income Tax Exemption, Private Tax Rulings, Interpretation of Income Tax Assessment Act 1997 (cth) S 50 40, Not for Profit Criteria, Development of Australian Agricultural Resources, Application of Profit/gain Test for Members
Taxation Law Income Tax Exemption Private Tax Rulings Interpretation of Income Tax Assessment Act 1997 (cth) S 50 40 Not for Profit Criteria Development of Australian Agricultural Resources Application of Profit/gain Test for Members

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Parties

Cooperative Bulk Handling Ltd

Applicant

Commissioner of Taxation

Respondent

Procedural Posture

Appeal Under Part IVC of the Taxation Administration Act 1953 (cth) / Judgment Following Hearing of an Appeal Against an Objection Decision Regarding a Private Tax Ruling

Legal Issues

  1. 1 Whether CBH is exempt from income tax under s 50-1 of the Income Tax Assessment Act 1997 (Cth) as an entity established for the purpose of promoting the development of Australian agricultural resources under s 50-40, Item 8.2, and is not carried on for the profit or gain of its individual members

Ratio Decidendi

CBH satisfies both the positive criterion of being established for the purpose of promoting the development of Australian agricultural resources and the negative criterion of not being carried on for the profit or gain of its individual members for the purposes of s 50-1, s 50-40 Item 8.2 of the ITAA 1997. Its activities, constitution, and history demonstrate the dominant objective is the advancement of the grain industry overall, not the profit of members. Legislative and constitutional prohibitions effectively prevent profit or asset distribution to individual members. Accordingly, CBH is entitled to income tax exemption for the relevant years in question.

Court Disposition

Appeal allowed.

Orders

  • The appeal be allowed.
  • The objection decision of the respondent, notice of which was issued on 25 November 2008, be set aside.