Guide · tax
Are native title benefits taxable?
Generally not. A native title benefit is non-assessable non-exempt income where it is received by an Indigenous person or an Indigenous holding entity, which includes most CATSI corporations. But what a corporation earns on that money is a different question, and the answer there is usually yes.
The provision, in both languages
What the Act says
“To the extent that a *native title benefit* would otherwise be included in your assessable income, it is not assessable income and is not *exempt income* if you are an *Indigenous person* or an *Indigenous holding entity*.”
“Neither subsection (1) nor (2) applies to an amount, or benefit, to the extent that it is for the purposes of meeting the provider’s administrative costs; or is remuneration or consideration for the provision of goods or services.”
What that means
Three things, in order of how often they are misunderstood:
- The benefit comes in tax free.
- That covers amounts arising directly or indirectly from it, so passing it through a trust does not break the treatment.
- It does not cover payment for work, goods or services, or the provider’s admin costs. Those are ordinary income to whoever receives them.
Checked against Income Tax Assessment Act 1997, s 59-50, .
Who the treatment applies to
An Indigenous holding entity includes prescribed bodies corporate and registered native title bodies corporate, Indigenous land councils, corporations registered under the CATSI Act, and trusts with Indigenous beneficiaries.
If your corporation is registered under the CATSI Act, it is very likely in that group. The laws were passed on 28 June 2013 and reach back to benefits received from 1 July 2008.
Checked against ATO — Receiving native title benefits, .
The distinction that costs corporations money
This is where boards are most often surprised.
Not taxed
The native title benefit itself, when received by an Indigenous person or Indigenous holding entity.
Taxed
Income earned from investing that benefit: interest, distributions, returns from a future fund. Also other grants and funding, and payments for goods or services.
A corporation can receive a large native title benefit entirely tax free, put it in an interest-bearing account or a long-term fund, and have an assessable income problem the following year that nobody planned for. The money arriving tax free says nothing about what it earns once it is there.
This is also why the accounting matters as much as the tax. If native title money, investment returns on it, grant funding and trading income all sit in one undifferentiated pool, working out what is assessable becomes an archaeology exercise at year end. Separating them from the start is the whole job. See accounting for PBCs and native title corporations.
Structure changes the question
Many native title groups hold and manage benefits through a trust, or seed a long-term fund intended to support future generations. Many PBCs also register as charities with the ACNC, because receiving, holding or managing benefits relating to native title or traditional Indigenous land rights can satisfy the public benefit purpose requirement.
Each of those choices changes what is taxable, who reports what, and to whom. We are not going to tell you on a web page which is right for your group: the amounts are significant, the structures differ, and the decision belongs to the common law holders and their advisers. If your corporation is registered as a charity, note that it also reports through ORIC rather than twice.
What this page is not
This is general information about how a provision works. It is not advice about your corporation’s position, and native title benefits are an area where the amounts are large enough that the difference matters.
Get advice before treating a receipt as non-assessable, before investing benefits, and before changing how benefits are held. We can help with the accounting and the tax. The native title questions themselves belong with native title lawyers and your representative body.
Frequently asked questions
Are native title benefits taxable?
Generally no. Under section 59-50 of the Income Tax Assessment Act 1997, a native title benefit is not assessable income and is not exempt income — non-assessable non-exempt, or NANE — where it is received by an Indigenous person or an Indigenous holding entity. The same applies to amounts arising directly or indirectly from a native title benefit.
What is an Indigenous holding entity?
It includes prescribed bodies corporate and registered native title bodies corporate, Indigenous land councils, corporations registered under the CATSI Act, and trusts with Indigenous beneficiaries. Most corporations reading this page will be one.
Is the interest we earn on native title money also tax free?
No, and this is the single most important distinction on this page. The benefit itself is NANE. Income earned from investing it is not — that is ordinary assessable income. A corporation holding native title money in an interest-bearing account or a future fund has taxable income even though the underlying money arrived tax free.
What is excluded from the treatment?
The provision does not apply to an amount or benefit to the extent that it is for meeting the provider’s administrative costs, or is remuneration or consideration for the provision of goods or services. So a payment for work done is not a native title benefit, whatever it is attached to.
From when does this apply?
The laws were passed on 28 June 2013 and apply to native title benefits received from 1 July 2008.
Should our PBC register as a charity?
Many do, and receiving, holding or managing benefits relating to native title or traditional Indigenous land rights can satisfy the public benefit purpose requirement. Whether it is right for a particular corporation depends on what else it does and how it is structured, which is a question for advice rather than a website.