Miscellaneous Taxation Ruling

MT 2013

Bank account debits tax : state housing authorities

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FOI status:

PREAMBLE

Consideration has been given to whether State housing authorities satisfy the two tests for exemption in sub-paragraph (a)(vii) of the "excluded debit" definition in sub-section 3(1) of the Bank Account Debits Tax Administration Act. The first test is that the authorities must not carry on as their sole or principal function an activity in the nature of a business. The second test provides that a debit is not an "excluded debit" if it results from a transaction entered into by the authority in connection with an activity (other than an activity that forms a minor or insignificant part of the authority's functions) in the nature of a business (whether or not for profit).

FACTS

2. State housing authorities engage in a wide range of activities including the construction, purchase, rental and sale of houses and industrial facilities. The authorities also carry out a welfare function by providing rental accommodation for disadvantaged persons and families on low income. However, housing is also made available to others who are not necessarily pensioners or low income earners, for example, persons temporarily transferred to country areas such as construction and mining employees, teachers and public servants.

RULING

3. The overall function of State housing authorities is the construction, sale and rental of properties. Notwithstanding that part of the overall function of the authorities may be carried out in the context of welfare housing, the overall function involves an activity in the nature of a business. The first test for exemption is therefore not satisfied.

4. Because State housing authorities carry out activities in the nature of a business it follows that debits made to bank accounts maintained by the authorities are not "excluded debits" for purposes of the bank account debits tax. Their bank accounts are not considered to be eligible for issue of certificates of exemption from the tax.

COMMISSIONER OF TAXATION
23 December 1985

References

ATO references:
NO 84/2602-3
BO APPE/LMD/SAHT (Adel)

Subject References:
BANK ACCOUNT DEBITS TAX
STATE HOUSING AUTHORITIES

Legislative References:
BANK ACCOUNT DEBITS TAX ADMINISTRATION ACT 1982; SUB-PARAGRAPH 3(1)(a)(vii).