Tax Obligations and Concessions
Accessing tax concessions and rebates, and making sure your Not For Profit meets its obligations for tax, including GST, income tax, fringe benefits and other employer requirements.
Tax obligations for Not For Profits may cover goods and services tax (GST), income tax, PAYG and other employer obligations, land tax or stamp duty, however as a Not For Profit you may be able to access rebates and exemptions on some taxes. Your organisation might also want to offer income tax deductibility on the gifts and contributions you receive from donors.
If your Not For Profit organisation has a GST turnover of $150,000 or more then it must register for GST. If your GST turnover is less than $150,000 registration is optional.
If your organisation is registered for GST, then you:
– include GST in the price of any taxable sales you make, and must pay the GST you collect to the ATO,
– can claim GST credits for any GST included in the price of business purchases, and
– must complete activity statements to report your organisations’ taxable sales and claim GST credits.
If your organisation is not registered for GST, then you do not include GST in the price of any sales you make and you cannot claim credits for the GST included in business purchases.
Information about all employer obligations and considerations can be found on the Obligations to workers page of the ATO website. Some of the common obligations your organisation may need to consider are: pay as you go (PAYG) withholding, superannuation and frindge benefits tax.
If your organisation has employees, you will need to withhold amounts from their pay and send the withheld amounts to the ATO at regular intervals. This process is called PAYG withholding, and no organisations are exempt.
As an employer you must provide a minimum level of super contributions for your eligible employees. Most employees are covered by superannuation guarantee legislation, and no organisations are exempt.
Fringe benefits taxA fringe benefit is a payment to an employee that is in a different form to salary or wages, such as meals, entertainment or personal use of the company car. If your organisation provides fringe benefits to its employees your organisation may need to pay fringe benefits tax (FBT).
Not For Profits that are not eligible for income tax exemption may need to lodge income tax returns and pay income tax, however they may be eligible for reduced tax rates and not all amounts of money or property your organisation receives will be assessable income.
Tax concessions, rebates and exemptions
Not For Profits may be able to access concessions, rebates or exemptions on a range of taxes. These include income tax, FBT, GST, land tax and stamp duty.
The options available to your NFP will depend on the type of non-profit organisation according to the Australian Tax Office (ATO) definitions. Some concessions only apply to certain types of organisations.
Income tax exemption
Registered charities must be endorsed by the ATO to access the income tax exemption (as well as other charity tax concessions). Registered charities that are endorsed by the ATO are known as tax concession charities.
Many other Not For Profit organisations (that are not charities) can self-assess if they are eligible for the income tax exemption. If your NFP meets the criteria for one of the exempt categories then you do not need to pay income tax or lodge income tax returns – unless specifically asked to do so by the ATO. You do not need to seek confirmation of this exemption from the ATO.
There are a range of goods and services tax (GST) concessions that are available to non-profit organisations. Additional GST concessions may be available to registered charities and gift deductible
Only public and non-profit hospitals, public ambulance services, public benevolent institutions (PBIs) and health promotion charities (HPCs) are eligible for an exemption from paying FBT – up to a maximum amount per employee per year.
Note: PBIs and HPCs must be endorsed by the ATO and registered with the Australian Charities and Not-for-profits Commission (ACNC) to access the FBT exemption.
If your Not For Profit is not eligible for the FBT exemption, you may still be eligible for an FBT rebate. Many Not For Profit organisations can self-assess their entitlement, and the FBT Rebate page on the ATO website provides a list of organisations that qualify.
Note: Charities that are institutions, including religious institutions, must be endorsed by the ATO and registered with the ACNC to access the FBT rebate.
Land Tax exemption
Land which is used by a charitable institution, exclusively for charitable purposes, is generally exempt from Land Tax, however commercial ventures or leases to third parties may be taxable.
Duty (also known as stamp duty) is charged on a range of transactions, including transfers of land, certain leasing arrangements, declarations of trust and transfers of motor vehicles. Some exemptions are available for charitable organisations under the Duties Act 2000 (Vic).
Fuel tax credits
Fuel tax credits provide your organisation with a credit for the fuel tax (excise or customs duty) included in the price of fuel.
Not For Profit organisations operating emergency vehicles or vessels may be able to receive fuel tax credits even if they are not registered for GST.
All other Not For Profits may be eligible for fuel tax credits, but must also be registered for GST.
Tax deductible gifts
To be able to offer an income tax deduction to your donors for the gifts or contributions they provide to your organisation, you need to be endorsed by the ATO as a Deductible Gift Recipient (DGR). To be entitled for DGR endorsement your organisation must meet a number of requirements and apply to the ATO.
Withholding in business transactions
Any business or organisation carrying on an enterprise should quote their ABN when supplying goods or services. If a supplier does not quote their ABN, the general rule is that the payer must withhold 49 per cent from the payment and send the withheld amount to the ATO. Some payments are excluded from this rule.