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The ATO has published a Decision Impact Statement in relation to the Full Federal Court's decision in Co-Operative Bulk Handling Ltd v FCT [2010] FCAFC 155; 2010 ATC 20-231. The case concerned whether the taxpayer (CBH) was exempt from income tax under s 50-40 ITAA 1997 as being established for the purpose of promoting the development of Australian agricultural resources, and not carried on for the profit or gain of its individual members.

A majority of the Full Court (Mansfield, McKerracher JJ, Siopis J dissenting) confirmed the decision of Gilmour J that CBH was entitled to endorsement as an income tax exempt association under Item 8.2(a) of s 50-40 ITAA 1997

The Statement states that the Commissioner accepts that the statutory expression requiring the entity to be established for the purpose of "promoting the development of agricultural resources of Australia" is a composite expression with a broader application than the component words. Thus the reference to "promoting the development of agricultural resources" in that context is not limited to promoting activities on the farm side of the farm gate. The expression requires a global review of the activities of the relevant entity to determine the principal or dominant purpose for which it is established.

The Statement concludes that while the Full Court's decision does not directly conflict with Taxation Ruling IT 2415, that ruling is written in very limited terms and the ruling will be updated to provide a broader range of advice, and to take account of relevant case law and legislative changes since it was issued.


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