EXPLANATORY STATEMENT
Issued by authority of the Assistant Treasurer and Minister for Financial Services
Income Tax Assessment Act 1997
Income Tax Assessment (1997 Act) Amendment (Income Tax Exemption) Regulations 2026
Section 909-1 of the Income Tax Assessment Act 1997 (the Act) provides that the Governor‑General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
Division 50 of the Act provides that the ordinary and statutory income of certain entities is exempt from income tax, subject to certain conditions. Table item 9.1 of section 50‑45 of the Act provides that the income of certain entities in the sporting, cultural and recreational fields is exempt from income tax, subject to the special conditions in section 50-70 of the Act. Subsection 128B(3) of the Income Tax Assessment Act 1936 also provides for payment made by certain persons and entities that are exempt from income tax to not be subject to withholding tax.
The purpose of the Income Tax Assessment (1997 Act) Amendment (Income Tax Exemption) Regulations 2026 (Regulations) is to provide a time-limited income tax exemption for the Asian Football Confederation (AFC), the entity that was responsible for staging the AFC Women’s Asian Cup 2026 (the Cup) in Australia in March 2026.
To achieve this, the Regulations list the AFC as a prescribed entity in the Income Tax Assessment (1997 Act) Regulations 2021 (ITAR 2021) in accordance with the Act for the purposes of table item 9.1 of section 50‑45 and paragraph 50-70(1)(c) of the Act.
Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make an instrument of a legislative character (including rules, regulations or by‑laws) the power shall be construed as including a power to repeal, amend, or vary any such instrument.
The Act does not specify any conditions that need to be satisfied before the power to make the Regulations may be exercised.
Public consultation was not undertaken on the Regulations as it makes a single amendment to list an entity and has a minor or machinery nature. Consultation was undertaken with the Australian Taxation Office (ATO), as the relevant regulator, and the Commonwealth Office of Sport.
The Regulations are subject to disallowance and sunsetting.
The Regulations are a legislative instrument for the purposes of the Legislation Act 2003.
The income tax exemption applies to income derived by the AFC during the period commencing 1 July 2025 and ending 31 December 2028 (inclusive). This covers the intended period of activities to support the operation of and winding up of activities arising from the Cup. The retrospective application date is wholly beneficial to the AFC which is receiving the income tax exemption. The Regulations are not affected by subsection 12(2) of the Legislation Act 2003.
As a consequence of the income tax exemption, the existing tax law applies so that payments of interest, dividend, and royalties to non-residents are not subject to withholding tax from commencement of these amendments.
Details of the Regulations are set out in Attachment A.
A statement of Compatibility with Human Rights is at Attachment B.
ATTACHMENT A
Details of the Income Tax Assessment (1997 Act) Amendment (Income Tax Exemption) Regulations 2026
Section 1 – Name
This section provides that the name of the regulations is the Income Tax Assessment (1997 Act) Amendment (Income Tax Exemption) Regulations 2026 (Regulations).
Section 2 – Commencement
The instrument commences the day after the instrument is registered on the Federal Register of Legislation.
Section 3 – Authority
The Regulations are made under the Income Tax Assessment Act 1997 (the Act).
Section 4 – Schedules
This section provides that each instrument that is specified in the Schedules to this instrument are amended or repealed as set out in the applicable items in the Schedules, and any other item in the Schedules to this instrument has effect according to its terms.
Schedule 1 – Amendments
Item 1
Item 1 inserts new regulation 50-70.01 to exempt the Asian Football Confederation (AFC) from income tax.
Section 50-45 of the Act provides that a society, association or club established for the encouragement of a game or sport is exempt from income tax subject to special conditions outlined in section 50-70 of the Act.
Under paragraph 50-70(1)(c) of the Act, an entity is not exempt from income tax unless it satisfies certain conditions. In the case of the AFC, it must be a society, association or club which is located outside Australia and is exempt from income tax in the country in which it is a resident, and which has been prescribed in regulations. Additional requirements include compliance with all substantive requirements in its governing rules, and the entity must apply income and assets solely for the purpose for which it is established.
Part 2-15 of the Income Tax Assessment (1997 Act) Regulations 2021 lists entities that have been prescribed. The Regulations, through item 1, prescribe AFC for the purposes of paragraph 50-70(1)(c) of the Act. AFC has advised that it is a tax resident in Malaysia for the purposes of the Malaysia/Australia double tax agreement and is a tax‑exempt entity for Malaysian tax purposes. The Regulations provide support to the AFC staging an international sporting event in Australia. This is also consistent with past international sporting events hosted in Australia.
Paragraph 128B(3)(a) of the Income Tax Assessment Act 1936 provides an exemption from withholding tax in relation to dividend, interest and royalty income derived by non-residents that are exempt from income tax in Australia under section 50-45 of the Act and are also exempt from income tax in their countries of residence. The AFC is prescribed under the Regulations and accordingly has income tax exempt status under section 50-45 of the Act and therefore also has a withholding tax exemption under subsection 128B(3) of the Income Tax Assessment Act 1936.
Item 2
Regulation 1000-10.01 provides that the income tax exemption outlined in item 1 applies to income derived during the period commencing 1 July 2025 and ending 31 December 2028 (inclusive). This covers the intended period of activities to support the operation of and winding up of activities arising from the Cup.
The withholding tax exemption under the existing tax law applies to payments made from commencement of the regulations until the income tax exemption ends on 31 December 2028.
ATTACHMENT B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Income Tax Assessment (1997 Act) Amendment (Income Tax Exemption) Regulations 2026
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The purpose of the Income Tax Assessment (1997 Act) Amendment (Income Tax Exemption) Regulations 2026 (Regulations) is to provide a time-limited income tax exemption for the Asian Football Confederation (AFC). With an income tax exemption in place the existing operation of income tax law (subsection 128B(3) of the Income Tax Assessment Act 1936) also provides a withholding tax exemption. This supports the delivery of the 2026 Women’s Asian Cup.
Division 50 of the Act provides that the ordinary and statutory income of certain entities is exempt from income tax, subject to certain conditions. Section 50‑45 of the Act provides that certain entities in the sporting, cultural and recreational fields are exempt from income tax, subject to the special conditions listed in section 50-70 of the Act.
To provide the tax exemption, the Regulations list the AFC as a prescribed entity in the Income Tax Assessment (1997 Act) Regulations 2021 in accordance with the Act.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.