Not For Profit Organisations & Charities
By providing the not for profit (non-profit) sector with specialised tax advice, tax accounting and fully compliant audit services LBW & Partners ensure that high profile charities, lesser known funds and philanthropic organisations each gain full access to all their applicable tax concessions.
Various types of not for profit organisations can be entitled to concessions on income tax, fringe benefits tax and GST. Not all non-profit tax concessions apply to all organisations, but various concessions apply to specific types of charities, tax exempt funds and other not for profit organisations.
To access most concessions, charities and income tax exempt funds require endorsement from the ATO. If however your non-profit organisation is taxable, you need to know how to report, pay and budget for its tax obligations.
It is critical that your organisation be appropriately classified, comply with federal, state and territory tax legislation, and imperative that you also ensure you gain access to all your eligible stamp duty and tax concessions.
Contact an LBW not for profit tax accountant today via e-mail, phone (+61 2) 9411 4866 today or complete the on-line enquiry right now. Receive professional guidance through the non-profit tax exemption access complexities, audit compliance and be liberated from the Government tests that have to be passed before you qualify.
With an experienced and reliable not for profit adviser contributing to your team's tax strategies and supporting your organisation's success, LBW & Partners uphold their commitment to sound corporate citizenship principles, whilst you can remain focused on your purpose, and fully realise your primary objective.
Whether your non-profit organisation has to pay income tax will depend on whether or not your organisation fits within a certain exempt category. LBW's specialists can review your organisation's structure and operations to determine your most appropriate exemption category from the following groups:
- Community service organisations
- Public benevolent institutions
- Cultural organisations
- Resource development organisations
- Health organisations
- Educational organisations
- Deductible gift recipients
- Employment organisations
- Sporting organisations
- Religious organisations
- Income tax exempt funds
- Scientific organisations
- Sporting organisations
It is possible for other non-profit organisations that are not charities or income tax exempt funds (ITEF) to self-assess their entitlement to income tax exemption. You may not need to be ATO-endorsed to be exempt from income tax, however, most will be required to complete additional tests and abide by supplementary rules before your organisation can be exempt. LBW can assist with your self assessment process, clarify whether your organisation meets all the requirements for income tax exemption, and undertake the required annual review to ensure your organisation remains within the tax office exemption criteria. With LBW managing your compliance with tax exemption rules:
LBW familiarity with the operations and tax effective non-profit structures empowers them to advise you of whether or not your non-profit needs to register for an Australian business number (ABN), goods and services tax (GST), fringe benefits tax (FBT) and pay as you go withholding tax (PAY). In addition, LBW can advise you on your potential eligibility to benefit from concessions for:
- Public and non-profit hospitals
- Public ambulance services
- Religious institutions
- Government schools
- Non-profit companies
- Live-in residential care workers
An LBW Partner will personally take on the role of your organisation's Business Adviser giving you direct access to a seasoned management and taxation accountant, and their specialised not for profit auditing services, professional support and consulting teams. You don't need to be located in Sydney or even NSW to benefit from a client focused accounting firm. LBW & Partners personalised accountancy practice extends across New South Wales, interstate and internationally to global organisations operating across Australia, wherever you are based. Some of the non-profit organisations we currently assist include:
- Camp Quality (Australia wide)
- People with Disability Aust Inc
- Council of the Ageing
- Hospitality Training Network
- Apex Foundation
- St Clares College Limited
- San Carlo Nursing Home & G V Homes
- Premium China Funds Management Pty Ltd
- 2 x Divisions of General Practice
(association of doctors)
- Cooperative Research Centres Association Inc
- NSW disability Discrimination Legal Centre Inc
- Premium Asia Property Funds Management Pty Ltd
If you are the new treasurer, an office bearer or employee involved in the administration of a club, charity, society or association, you can rely on LBW & Partners to provide you with the knowledge and support you must have to operate your non-profit organisation in compliance with Australian tax requirements.
You can also find updated information regarding the Not for Profit sector in our quarterly Not for Profit newsletter which can be found in the Publications & Downloads area of our website.
Many Australian non-profit organisations are taxable, therefore you may need to lodge annual returns and pay income tax. It is likely that you will also have to abide by special rules if you are to be eligible to access and benefit from the applicable concessions. Compliance with the relevant tax legislation is very important when defining your organisation's income tax and capital gains tax obligations that apply to taxable non-profit organisations and their PAYE instalments.
LBW can guide you through the tax legislation maze and introduce you to the special income tax rules for the consolidation of corporate groups, and advise if your organisation is eligible for a refund of franking credits if your organisation receives franked dividends. You will find taxation information at your fingertips on the LBW Tax Tips page.
Goods and services tax (GST)
Non-profit organisations have access to a range of GST concessions, there are a number of different ways to structure your organisation for GST purposes, LBW expertise can assist you in selecting the most appropriate to achieve all eligible GST concessions. Australian non-profit organisations must register for Goods and Services Tax if your GST turnover is one hundred and fifty thousand dollars (AUS $150,000) or more, you may also choose to register if your GST turnover is lower than this amount.
Your organisation can only claim the ten percent (10%) credit for the GST included in the price of goods and services it buys in carrying on its activities, when registered for GST. Your not for profit must also include a 10% GST charge on most, or all, of its sales. Charities must be endorsed by the Tax Office in order to access GST charity concessions, and if you receive grants or sponsorship income, you may need to pay GST on the amounts received.
Fundraising & Donations
When planning your essential fundraising you must be aware of and take into account any state, territory and local government regulations in addition to the GST aspects associated with your activities. To receive income tax deductible gifts and contributions your organisation must be a Tax Office endorsed deductible gift recipient (DGR). A few DGRs are listed by name within the tax law, but most must make an application to the Australian Tax Office to be endorsed as a DGR.
Contributions made by individuals at DGR events like fetes, balls, gala shows, dinners and charity auctions and other fundraising activities may be tax deductible. There are also rules about the types and values of eligible deductible gifts, and how much donors' can claim. There are provisions for third party organisations and businesses to collect gifts on behalf of a DGR through workplace giving arrangements. However, your donors' can only claim an income tax deduction in their annual tax returns for gifts given in support of your fundraising activities when you are a DGR.
Employees, volunteers and other workers
Understanding where you stand and how your organisation's relationship and payment processes are defined makes a quantifiable difference to your ability to attract and retain the dedicated employees, volunteers and other workers your organisation definitely needs to prosper and continue the work it was created to perform.
You can be assured that your employment, volunteer relationships and work records are set up to stay within rules that are affect by other (non tax) Federal, state and territory legislation, when you work in partnership with your LBW not for profit expert. There are differing guidelines and rules that apply as a result of how your organisation determines whether its workers are employees, independent contractors or volunteers.
If your organisation has employees, it will need to register for PAYG withholding, if you are not already registered, then withhold amounts from salaries and wages before paying it to the ATO. You are also required to make the obligatory contributions to each employees' superannuation fund. You must also withhold from payments to workers your organisation provides to third party clients, under a labour hire arrangement.
If your organisation is providing its employees with any non monitory benefits they are very likely to be subject to fringe benefits tax (FBT). Most non-government income tax exempt organisations will qualify for a rebate (subject to capping) if they have paid FBT, and particular fringe benefits are exempt from FBT all together.
You should always consider the facts and circumstances of each individual when determining their volunteer, status. A genuine volunteer does not work under any contractual obligation for remuneration, and can not be an employee or an independent contractor. Treatment of transactions between non-profit organisations and volunteers may affect the tax treatment of transactions between the individual and the organisation. As a general rule volunteers do not have to pay tax on payments or benefits they receive in their capacity as volunteers. As a non-profit organisation you are not liable for PAYG withholding or FBT on payments you make, or benefits the organisation provides to its volunteer personnel.
Your genuine volunteers can be paid in cash, given non-cash benefits or a combination of both. These payments are generally described as reimbursements, allowances or honoraria,. An honorarium may be paid in money or as property. How a payment is described does not determine its treatment for tax purposes. Whether a payment is assessable income in the hands of a volunteer depends on the nature of the payment and the recipient's circumstances.
Not for profit auditing
All you need to know - click here
It is the nature of not for profits to always try to do the right thing. LBW & Partners are constantly developing helpful and practical ways to improve your organisation's performance, and make it less expensive for your administrators to comply.
Make contact via e-mail, phone (+61 2) 9411 4866 today or complete an on-line enquiry right now to secure an obligation-free consultation so an LBW partner can review your organisation's needs and give you the accounting, and tax advice that only an Australian Chartered Accountant is qualified to provide.
LBW & Partners is a top Sydney business consulting, financial planning, auditing and chartered accountancy firm providing corporate business strategy, personal accounting services and tax planning advice to not for profit organisations. LBW's qualified accounting services cover all aspects of your Australian business' taxation including capital gains, payroll tax plus tax effective asset management and compliant audits. Unlike most accounting firms, LBW also extends personal tax minimisation, wealth creation and self managed superannuation advice in addition to all your organisational and management accounting needs.
LBW & Partners, Sydney Australia
Personal chartered & business accounting services. Financial advisors & superannuation planning.
Ph: (+ 61 2) 9411 4866 Email: firstname.lastname@example.org