Issue
Whether an income tax exempt trust employer that operates a cemetery/crematorium under the Cemeteries Act (Vic) is a rebatable employer pursuant to the provisions of paragraph 65J(1)(j) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).
Decision
No. The relevant employer is not a rebatable employer pursuant to the provisions of paragraph 65J(1)(j) of the FBTAA.
Facts
The employer is an income tax exempt trust that operates a cemetery/crematorium. It is constituted under the Cemeteries (Incorporation of Trust) Regulations 1995 (Vic) and is shown in the schedule accompanying the Regulations as being responsible for a number of different facilities. The trust cannot distribute any profits generated to any third party; profits are simply retained and reinvested back into the facilities necessary to provide a satisfactory level of care and understanding to the community at large. The trust provides services at no charge to those persons deemed "poor" as prescribed under the Cemeteries Act 1958 (Vic) .
Reasons for Decision
The trust applied for recognition as a rebatable employer on the basis that it is a non-profit association established for community service purposes. In order to qualify as a rebatable employer, the trust must meet the additional tests contained in subsection 65J(5) of the FBTAA. Whilst the trust meets the community service requirement in paragraph 65J(1)(j), it does not meet the test in subparagraph 65J(5)(b)(ii). The Cemeteries Act 1958 (Vic) clearly stipulates that the employer must be an incorporated body whereby the company is limited by guarantee. It is also apparent that the interests and rights of the members in or in relation to the employer are beneficially owned by the State Government.
The trust fails the extended definition of a non-profit association and is not entitled to be classified as a rebatable employer due to its close links with government.
This view is consistent with Taxation Determination TD 95/56 which states that a body which is formed and controlled by government and performs functions on behalf of government is not an 'association' for the purposes of paragraph 65J(1)(j) of the FBTAA.