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Whether the income of the taxpayer is exempt from income tax under section 24AM of Division 1AB of the Income Tax Assessment Act 1936 (ITAA 1936).

The taxpayer is a State Territory Body (STB) in terms of section 24AO of the ITAA 1936.

The taxpayer is not an excluded STB in terms of section 24AT of the ITAA 1936.

The income of the taxpayer is exempt from income tax pursuant to section 24AM of the ITAA 1936.

The taxpayer was registered under the Corporations Law as a proprietary company limited by shares.

A Trustee Company was directed to acquire and hold as custodian trustee for the State in its own name the whole of the issued shares in the capital of the taxpayer.

Subdivision A of Division 1AB of the ITAA 1936 provides for certain STBs to be exempt from income tax in respect of income derived after 1 July 1994- refer key principles set out in section 24AK of the ITAA 1936.

The income of an STB will be exempt from income tax if it is not an excluded STB or a State Government Insurance Office (SGIO) - refer sections 24AM, 24AN and 24AT.

There are five ways in which body can be an STB. The first way is set out in section 24AO in the following terms:

A body is an "STB" if: (a) it is a company limited solely by shares; and (b) all of the shares in it are beneficially owned by one or more government entities.

A "government entity" includes a State - refer section 24AT of the ITAA 1936.

The taxpayer was registered under the Corporations Law as a proprietary company limited by shares. A Trustee Company was directed to acquire and hold as custodian trustee for the State in its own name the whole of the issued shares in the capital of the taxpayer.

The taxpayer is an STB in terms of section 24AO of the ITAA 1936, it is not an excluded STB in terms of section 24AT of the ITAA 1936 nor an SGIO. Therefore, the income of the taxpayer is exempt from income tax pursuant to section 24AM of the ITAA 1936.