When we say:
- sales, we mean the GST term supplies
- GST credits, we mean the GST term input taxed credits
- payment, we mean the GST term consideration.
On 29 June 2011, the Tax Laws Amendment (2010 Measures No.5) Act 2011 was enacted. Schedule 5 to this Act amends the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) to allow non-profit sub-entities to access the same goods and services tax (GST) concessions available to their parent entity.
If you operate a non-profit organisation, you may choose to split some or all of your separately identifiable activities into independent units. These independent units are treated as separate entities for GST purposes and are referred to as non-profit sub-entities.
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These changes apply from 1 July 2011.
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Previously the law did not specify that non-profit sub-entities could access the same GST concessions as their parent entity. This amendment provides clarity by including in the GST law provisions that will allow non-profit sub-entities to access the same GST concessions available to their parent entity.
This measure provides a range of concessions to non-profit sub-entities. The concessions available to a non-profit sub-entity will vary depending on the concessions available to their parent entity. For example, the following types of organisations are entitled to treat separately identifiable activities as non-profit sub-entities:
- endorsed charitable institutions
- endorsed trustees of charitable funds
- gift-deductible entities and government schools
- non-profit bodies that are exempt from income tax under specific provisions of the income tax law.
However, the GST concessions available across these entity types, and therefore to the non-profit sub-entities that they choose to create, may vary.
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A non-profit sub-entity is a separate entity for GST purposes only. Other obligations like PAYG, FBT and income tax are not affected by this arrangement.
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One benefit of splitting separately identifiable activities into separate units for GST purposes is that the non-profit sub-entity will only need to register for GST if the GST turnover of that non-profit sub-entity exceeds the registration threshold for non-profit bodies ($150,000).
This amendment specifies that a non-profit sub-entity can access the same GST concessions as their parent entity (other than the ability to create further non-profit sub-entities). Depending upon the entity type of the parent entity, these concessions include:
- gifts to non-profit bodies not being treated as payment
- GST-free raffles and bingo
- input taxed fundraising events
- accounting on a cash basis
- GST credits for reimbursement of volunteer expenses
- GST-free sales of donated second hand goods and GST-free sales for nominal payment
- input taxed sales of food by school tuckshops and canteens
- GST-free supplies associated with the operation of a retirement village
- providers of gifts do not need to make adjustments for their gifts.
A non-profit sub-entity can choose to access a GST concession even if the parent entity has chosen not to apply the concession to its own activities.
For more information, refer to:
Last Modified: Friday, 1 July 2011