Fringe benefits tax: can a body which is formed by government, is controlled by government and performs functions on behalf of government be an 'association' for the purposes of section 65J of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
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1. No. A body cannot be an 'association' where it is formed by government, is controlled by government and performs functions on behalf of government.
2. Subsection 65J(1) of the FBTAA lists the categories of organisations which are rebatable employers. In paragraphs 65J(1)(f) to 65J(1)(l), 'association' is one of the terms used to describe the types of rebatable organisations. The Shorter Oxford English Dictionary defines the term 'association' to be 'a body of persons associated for a common purpose; the organisation formed to effect their purpose'. The Macquarie Dictionary defines 'association' as being 'an organisation of people with a common purpose and having a formal structure'. Olsson J, in Quinton v. South Australian Psychological Board (1985) 38 SASR 523, also stated that the term 'association' has come to be regarded as attaching to a body of persons associated for a common purpose.
3. A body which is formed by government, is controlled by government and performs functions on behalf of government is clearly not formed to effect the purposes of the members of that body but is formed to effect the purposes of government. Combined with the fact that the members do not create the body (or have the power to dissolve it) and that the members do not have ultimate control over the functions of the body, such a body cannot be said to be an association.
4. Bodies which are formed by government, are controlled by government and perform functions on behalf of government would include:
- most bodies formed by the Federal, State or Territory Governments;
- most statutory authorities (including those set up to market, regulate or promote agricultural or other products);
- local government councils.
The Agriculture Authority was created under the State Agriculture Act and is authorised by statute to buy and export Australian agricultural produce for sale overseas. The Agriculture Authority is controlled, on a day to day basis, by 6 non-government persons who were appointed by the relevant State Minister. While the Minister is not generally involved with the day to day running of the Authority, the State Agriculture Act gives him the ultimate authority over the Board. The Authority is formed by government, is controlled by government and performs functions on behalf of government and, as such, is not an association for the purposes of section 65J of the FBTAA.
A group of farmers, concerned about their individual capacity to sell their produce for a reasonable price at market, form a co-operative. Notwithstanding that the State Government may regulate their activities as a co-operative and may, in some cases, give the co-operative funding, it is clear that the co-operative is not a body which is formed by government for government purposes and thus the co-operative is an association for the purposes of section 65J of the FBTAA.
Commissioner of Taxation
1 November 1995
Previously issued as Draft TD 95/D7
NO NAT 93/8117-1; NAT 95/4826-2; FBT Cell 30/116
ISSN 1038 - 8982
fringe benefits tax
FBTAA 65J(1)(f) to ;
- Quinton v. South Australian Psychological Board
(1985) 38 SASR 523