Income tax: Queensland Rural Fire Brigades - exempt entities; Public Authorities

This Ruling sets out the Commissioner's opinion on the way in which the relevant provisions identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates.

The relevant provisions dealt with in this Ruling are: • Section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997), and • Section 50-25 of the ITAA 1997.

The class of entities to which this Ruling applies are the Rural Fire Brigades in Queensland that are registered by the Commissioner of Queensland Fire and Emergency Services under section 79 of the Fire and Emergency Services Act 1990 (QLD) (FESA 1990).

The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 7 to 9 of this Ruling.

If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: • this Ruling has no binding effect on the Commissioner because the scheme entered into is not the scheme on which the Commissioner has ruled; and • this Ruling may be withdrawn or modified.

This Ruling applies from 1 July 2015 to 30 June 2025. The Ruling continues to apply after 30 June 2025 to all entities within the specified class who entered into the specified scheme during the term of the Ruling. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10).

The following description of the scheme is based on information provided by the applicant.

Queensland Rural Fire Brigades are governed by the provisions of the FESA 1990.

The key provisions of the FESA 1990 are: 79 Formation of rural fire brigade (1) Any group of persons may apply to the commissioner for registration as a rural fire brigade. (2) The commissioner may grant or refuse an application and, in the case of the granting of an application, must assign a registration number to the rural fire brigade. (3) The commissioner may at any time cancel the registration of a rural fire brigade. 80 Rural fire brigade may make rules (1) A rural fire brigade may make rules, not inconsistent with this Act, for the purpose of regulating its proceedings and the conduct of its operations including the acquisition, vesting and disposal of its property and funds. (2) A rule has no effect unless approved by the commissioner. (3) The commissioner may at any time direct a rural fire brigade to amend, revoke or make rules in the manner and for the purpose specified in the direction. 81 Officers of rural fire brigade (1) A rural fire brigade must elect a first officer to be in charge of the brigade. (2) A rural fire brigade may also elect such other officers as it considers necessary. (3) Any election must be conducted in accordance with the commissioner's directions and has no effect unless approved by the commissioner. (4) A person holds office for the period specified by the commissioner. (5) The commissioner may dismiss a person from any office held with a rural fire brigade or may disqualify a person from holding any office. 82 Functions of a rural fire brigade (1) The functions of a rural fire brigade are fire fighting and fire prevention and such other functions as the commissioner may direct. (2) The commissioner must notify a rural fire brigade of the area for which and the circumstances in which the brigade is in charge of fire fighting and fire prevention. (3) In this section: fire prevention includes taking measures in readiness for fire so as to reduce potential danger to persons, property or the environment. 83 Powers of first officer (1) Where, pursuant to notification given under section 82(2), a rural fire brigade is in charge of operations for controlling and extinguishing a fire, the first officer of the brigade has, for that purpose: (a) the powers of an authorised fire officer, subject to any limitation imposed by the commissioner; and (b) the control and direction of any person (including any fire officer) whose services are available at the fire. (2) Any power exercisable by the first officer of a rural fire brigade may be exercised by any person acting at the direction of the first officer. (3) Any person exercising a power or discharging a function under this section must comply with any code of practice and with any direction of the commissioner. (4) In this section: first officer includes, where the first officer of a rural fire brigade is unavailable to act, the next senior officer of the brigade who is available. (5) Where a rural fire brigade is assisting in operations for controlling or extinguishing a fire, the person who pursuant to this Act or any direction given by the commissioner is in charge of those operations has the control and direction of the members of the rural fire brigade. 53 Powers of authorised officer in dangerous situations (1) An authorised fire officer may take any reasonable measure: (a) to protect persons, property or the environment from danger or potential danger caused by a fire or a hazardous materials emergency; or (b) to protect persons trapped in any premises or otherwise endangered. (2) Without limiting the measures that may be taken for a purpose described in subsection (1), an authorised fire officer may for that purpose do any of the following: (a) enter any premises; (b) open any receptacle, using such force as is reasonably necessary; (c) bring any apparatus or equipment onto premises; (d) destroy, damage, remove or otherwise deal with any vegetation or any other material or substance, flammable or not flammable; (e) destroy (wholly or in part) or damage any premises or receptacle; (f) shore up any building; (g) close any road or access, whether public or private; (h) shut off the supply of water from any main, pipe or other source to obtain a greater pressure or supply or take water from any source whether natural or artificial; (i) cause to be shut off or disconnected the supply of gas, electricity or any other source of energy to any premises or area; (j) require any person who, in the opinion of the authorised fire officer, is: (i) the occupier of premises, being the site of or near to the site of the danger; or (ii) in charge of anything that is the source of the danger or likely (in the opinion of the officer) to increase the danger; to take any reasonable measure for the purpose of assisting the officer to deal with the danger or answer any question or provide any information for that purpose; (k) require any person not to enter or remain within a specified area around the site of the danger; (l) remove from any place a person who fails to comply with an order given pursuant to paragraph (k) and use such force as is reasonably necessary for that purpose; (m) if unable to identify the person entitled to possession of property found at or near the site of the danger, take possession of the property and retain it for safe custody. (3) The owner of any building shored up pursuant to an exercise of the power conferred by subsection (2)(f) must pay to the commissioner upon demand all reasonable expenses thereby incurred and those expenses may be recovered in a court of competent jurisdiction as a debt due to the State. (4) A local government, other authority or a person supplying water or any source of energy is not liable for any interruption of supply caused by the exercise of the power conferred by subsection (2)(h) or (i). 55 Powers of authorised fire officer for preventative or investigative purposes (1) At any time an authorised fire officer may enter any premises or open (using such force as is reasonably necessary) any receptacle for any of the following purposes: (a) to prevent, or reduce the likelihood of, the occurrence of a fire or a hazardous materials emergency; (b) to investigate whether or not fire safety measures and fire prevention measures, including the implementation of a fire safety management plan as required under part 9A, have been taken or are being maintained; (c) to ascertain the cause of a fire or hazardous materials emergency; (d) to ascertain whether any provision of this Act or any notice, notification, order (written or verbal) or permit given under this Act has been or is being complied with; (e) to ascertain whether a power conferred by this Act upon an authorised officer should be exercised, or to exercise a power under this Act. (2) The power of entry conferred by subsection (1) must not be exercised in respect of: (a) a building that is a dwelling or such part of a building as is a dwelling; or (b) a vehicle or vessel used as a dwelling; or (c) a tent or other structure used as a dwelling; unless the occupier has given approval to enter or unless entry is made during or in the aftermath of a fire or hazardous materials emergency occurring at the dwelling, for the purpose of ascertaining its cause. (2A) However, subsection (2)(a) does not apply to a budget accommodation building if the entry is made to investigate whether the owner of the building is implementing a fire safety management plan. (3) An authorised fire officer who enters premises under this section may: (a) for subsection (1)(a)-burn, remove or otherwise deal with any vegetation or other material or substance whether flammable or inflammable at the premises; or (b) for subsection (1) generally: (i) search any part of the premises; or (ii) inspect, measure, test, photograph or film any part of the premises or anything at the premises; or (iii) take a thing, or a sample of or from a thing, at the premises for analysis or testing; or (iv) copy a document at the premises; or (v) make inquiries or conduct surveys and tests; or (vi) take into or onto the premises any persons, equipment and materials the authorised fire officer reasonably requires for exercising a power under this part.

The relevant commissioner for the purposes of FESA 1990 is the Commissioner of Queensland Fire and Emergency Services (FES Commissioner).

The FES Commissioner has established Business Rules for conducting the business of registered Rural Fire Brigades, and has set up Brigade Management Rules for the governance of Rural Fire Brigades.

All Rural Fire Brigades are required to follow the Business Rules, and adopt the Brigade Management Rules.

Queensland Rural Fire Brigades are exempt from income tax under section 50-1 of the ITAA 1997 on the basis that they are exempt entities under item 5.2 of the table in section 50-25 of the ITAA 1997; they are public authorities constituted under an Australian law.

Section 50-1 of the ITAA 1997 states that: The 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.

The table in section 50-25 provides the following: Government Item Exempt entity Special conditions 5.1 ... ... 5.2 a public authority constituted under an Australian law none 5.3 ... ...

The tax legislation does not define the term 'public authority' or the expression 'constituted under'. The High Court has considered the meaning of 'public authority' and 'constituted under' in the context of paragraph 23(d) of the Income Tax Assessment Act 1936; the precursor to item 5.2 of the table in section 50-25.

In The Incorporated Council of Law Reporting for the State of Queensland v. Federal Commissioner of Taxation (1924) 34 CLR 580 (Incorporated Council), Isaacs J, in the course of argument by counsel, made the following comments on the meaning of 'public authority': I can only understand their constitution as a public authority by the exercise of some statutory power authorizing them to act on behalf of the public of the State. (at 585)

The comments of Isaacs J were followed by Webb J in Renmark Hotel Inc v. Federal Commissioner of Taxation (1949) 79 CLR 10 (at 24) (Renmark Hotel). Also in Renmark Hotel, Latham CJ made the following comments in deciding that the hotel was not a 'public authority': ...the appellant company is not given any power or authority by law in the form of a State statute to do any acts in relation to the public which otherwise would be beyond its power or unauthorized... In my opinion, the appellant company does not perform any statutory duties or exercise any public functions. (at 23)

McTiernan J in the same case stated: It is necessary that an entity which claims to be a public authority for the purpose of this provision of the Income Tax Assessment Act should ... be given by statute powers or duties to be exercised for public objects. (at 23)

In Western Australia Turf Club v. Federal Commissioner of Taxation (1978) 139 CLR 288 (WA Turf), Stephen J provided the following observations on the meaning of 'public authority' (Barwick CJ and Jacobs J agreeing): The Club has ever since been involved in this exercise of powers and functions not possessed by the ordinary citizen and which have been conferred by statute and are essentially of a public nature. Were these powers and functions vested in some State authority created for that purpose and having no other function it would, I think, clearly enough be a public authority for the purposes of section 23(d) of the Act. However, to confer a public function and powers exercisable in the public interest upon a body which has previously carried on, and will continue to carry on distinct activities not in themselves characteristic of a public authority may not suffice to confer upon its revenue the immunity which s. 23(d) affords. (at 294-295)

And at 297: In the case of s. 23(d), the possession of some statutory duties or powers is not, I think, enough to attract the income of a body the exemption from income tax which the paragraph confers unless, upon examination of all characteristics, the body can be seen in general to conform to the common understanding of a public authority. In such an examination, in view of the indefinite nature of the term 'public authority', it will perhaps be profitable... to adopt an 'essentially negative method', looking for features clearly alien to the concept of what is a public authority and judging to what degree those features are pervasive and important. It will also be relevant to bear in mind the present statutory context...

In Renmark Hotel, Rich J, at first instance, gave the following commentary of the meaning of 'constituted': The word 'constituted' is not the same as 'incorporated'. For the purposes of s.23 (d) it is conceivable that an unincorporated body might be constituted under a State Act so as to satisfy the exemption. On the other hand, mere incorporation under an Act does not constitute the body. The word 'constituted' immediately follows 'public authority'. It means constituted as a public authority. (at 19)

In WA Turf, Barwick CJ, after accepting that an unincorporated body may be constituted as a public authority under a statute, without having derived its existence from a statutory source, stated that: ... it must indeed be a rare that an unincorporated body becomes a public authority by reason of statutory powers or functions given to it. Rich J's remark that such a result was 'conceivable' rather suggests the rarity of the occasion. (at 290)

Also in WA Turf, Stephen J (Jacobs J agreeing) made the following comments on the meaning of 'constituted under': It is clear ... that an entity need not from its origin have possessed those qualities which at the relevant date make it a public authority; it may acquire the necessary attributes subsequently and if it does so as a result of legislation it will thereupon have become a public authority. (at 293)

A Rural Fire Brigade is not established by the FESA 1990. Rather, any group of persons can apply to the FES Commissioner to be registered as a Rural Fire Brigade (section 79 of FESA 1990). On registration a Rural Fire Brigade is given an area in which the brigade is in charge of fire fighting and fire prevention (subsection 82(2) of FESA 1990). A Rural Fire Brigade must elect a First Officer to be in charge of the brigade (section 81 of FESA 1990). The First Officer is given the powers of an Authorised Officer in carrying out the functions under subsection 82(2), and may direct and control any person whose services are available (subsection 83(1) of FESA 1990). The powers exercisable by the First Officer may be exercised by any person acting at the direction of the First Officer (subsection 83(2) of FESA 1990).

The powers of an Authorised Officer in dangerous situations (ie. fire or hazardous materials emergency), include (section 53 of FESA 1990): • Enter any premises. • Open any receptacle, using such force as is reasonably necessary. • Destroy (wholly or in part) or damage any premises or receptacle. • Require any person not to enter or remain within a specified area around the site of the danger.

The powers of an Authorised Officer for preventative or investigative purposes include (subsection 55(1) of FESA 1990): • Enter any premises or open any receptacle to prevent, or reduce the likelihood of, the occurrence of a fire or a hazardous materials emergency. • Enter any premises to ascertain the cause of a fire or a hazardous materials emergency.

Subsection 55(2) of the FESA 1990 provides that the powers of entry in section 55(1) cannot be exercised by an Authorised Officer wanting to access a dwelling, unless the occupier of the dwelling has given approval to enter.

Under FESA 1990, a Rural Fire Brigade is vested with powers and functions of a public nature not ordinarily possessed by citizens. The functions vested under FESA 1990 are the only functions of each Brigade. A Brigade can make rules relating to the conduct of its operations, but any such rules must be approved by the FES Commissioner to have effect. The structure of the FESA 1990 makes it impossible for a registered Rural Fire Brigade to undertake activities outside the scope of fire fighting and fire prevention. The Brigades are constituted as public authorities.

As such, a registered Rural Fire Brigade is a public authority for the purposes of section 50-25 of the ITAA 1997, and its income will be exempt from income tax pursuant to section 50-1 of the ITAA 1997.

The following is a detailed contents list for this Ruling: Paragraph What this Ruling is about 1 Relevant provision(s) 2 Class of entities 3 Qualifications 4 Date of effect 6 Scheme 7 Ruling 13 Section 50-1 of the ITAA 1997: Queensland Rural Fire Brigades are exempt from income tax 13 Appendix 1 - Explanation 14 Queensland Rural Fire Brigades are exempt from income tax under section 50-1 of the ITAA 1997 14 Public Authority 17 Constituted under 22 Appendix 2 - Detailed contents list 31