GST concessions - Tax basics for non-profit organisations
GST concessions - Tax basics for non-profit organisations
There are a range of goods and services tax (GST) concessions that are available to non-profit organisations. There are additional GST concessions that are available to:
- registered charities that are endorsed to access GST charity concessions
- gift deductible entities
- government schools.
For GST purposes, a gift deductible entity is an entity that can receive tax-deductible gifts or contributions.
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It is important to check the notes to table 3, as your organisation may need to meet certain requirements before it can access a concession.
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Table 3: Available GST concessions
GST concession
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Eligible entity
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Explanation of concession
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Non-profit organisations
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Gifts - a gift to a non-profit organisation is not considered payment for a sale.
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Non-profit organisation
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See Gifts.
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School tuck shops - a non-profit organisation may sell food through a tuck shop or canteen at a primary or secondary school and treat the sales as input taxed.
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Non-profit organisation
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See School tuck shops.
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GST registration threshold - the registration turnover threshold is higher for non-profit organisations than for other organisations.
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Non-profit organisation
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GST registration threshold.
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GST groups - the requirement to satisfy the 90% ownership test is waived where the entity is a non-profit organisation and all the other members of the GST group or proposed GST group are non-profit organisations and members of the same non-profit association.
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Non-profit organisation
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See GST branches, groups and non-profit sub-entities.
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Charities, gift deductible entities and government schools
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Raffles and bingo - tickets to raffles and bingo sold by an eligible entity are GST-free provided the holding of the raffle or bingo event does not contravene a state or territory law.
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- Registered charity (1)
- Gift deductible entity (2)
- Government school
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See Raffles and bingo.
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Fundraising events - an eligible entity may choose to treat all sales it makes in connection with certain fundraising events as input taxed.
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- Registered charity (1)
- Gift deductible entity (2)
- Government school
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See Fundraising events.
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Non-commercial activities - where an eligible entity makes sales and the payment it receives in return for the things it sold is less than a certain amount, the sales are GST-free.
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- Registered charity (1)
- Gift deductible entity (2)
- Government school
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See Non-commercial activities.
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Accounting on a cash basis - an eligible entity may choose to account on a cash basis regardless of its GST turnover.
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- Registered charity (1)
- Gift deductible entity (3)
- Government school
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See Accounting on a cash basis.
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Reimbursement of volunteer expenses - an eligible entity can claim GST credits for reimbursements made to volunteers for expenses the volunteer incurs that are directly related to their activities as a volunteer of the entity.
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- Registered charity (1)
- Gift deductible entity (2)
- Government school
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See Reimbursement of volunteer expenses.
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Gifts and GST credit adjustments - adjustments of GST credits are not required when an item acquired by a business is subsequently gifted to an eligible non-profit entity.
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- Registered charity (1)
- Gift deductible entity (4)
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See Gifts and GST credit adjustments.
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Donated second-hand goods - sales of donated second-hand goods by an eligible entity are GST-free.
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- Registered charity (1)
- Gift deductible entity (2)
- Government school
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See Donated second-hand goods.
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Non-profit sub-entities - an eligible entity may conduct some of its activities through a non-profit sub-entity, subject to certain exceptions.
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- Income tax exempt non-profit organisation
- Registered charity (1)
- Gift deductible entity (5)
- Government school
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See Non-profit sub-entities.
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GST religious groups - some charities can be approved as a GST religious group. Transactions between members of the group are excluded from GST.
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Income tax exempt charity
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See GST religious groups.
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Charitable retirement villages - an eligible non-profit entity may provide GST-free accommodation, accommodation-related services and meals to residents of such retirement villages.
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Registered charity (1)
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See Charitable retirement villages.
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Notes to table 3
Endorsement requirements for charities
- If a charity wants to access this concession, it must be endorsed by us to access GST charity concessions.
Where an organisation qualifies for a GST concession as both a charity and another type of entity, for example a gift deductible entity, it may access the concession only if the organisation is endorsed to access the GST charity concessions.
Gift deductible entities
- A gift deductible entity that operates a fund, authority or institution which can receive tax-deductible gifts or contributions can only apply this concession to the activities of the endorsed fund, authority or institution, and not to any other activities of the gift deductible entity.
- A gift deductible entity that operates a fund, authority or institution which can receive tax-deductible gifts or contributions is only entitled to account for GST on a cash basis if it meets one of the general eligibility criteria, either:
- the entity's GST turnover does not exceed the cash accounting turnover threshold
- the entity correctly accounts for income using the receipts method for income tax purposes.
- If a donor makes a gift to a gift deductible entity that operates a fund, authority or institution which can receive tax-deductible gifts or contributions, the donor will not have to make an adjustment to their GST credit if the gift is made for the principal purpose of the endorsed fund, authority or institution.
- Only a gift deductible entity that is a non-profit body is able to choose to treat separately identifiable branches as non-profit sub-entity.
Gifts
A gift made to a non-profit organisation is not considered payment for a sale and is not subject to GST. The value of a gift is also excluded when calculating the non-profit organisation's GST turnover.
For a payment to be considered a gift it must be made voluntarily and the payer cannot receive a material benefit in return:
- A payment is not voluntary when there is an obligation to make the payment or the non-profit organisation is contractually obliged to use the payment in a specific way.
- A benefit is not a material benefit if it is an item of insubstantial value that cannot be put to a use or is not marketable, such as a pin or a ribbon. An item of greater value, such as a ticket to a dinner, or an item that has a use or function, such as a pen or a book, is a material benefit.
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For more information, refer to Fundraising (NAT 13095).
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School tuck shops
If a non-profit organisation (for example, a parents and citizens association) operates a school tuck shop on the grounds of a primary or secondary school, it can choose to treat all sales of food through the tuck shop as input taxed.
This means that the organisation does not charge GST on its sales, and does not claim GST credits for its purchases.
As input taxed sales are not included when calculating the GST turnover for GST registration purposes, choosing to treat all sales of food as input taxed may mean that the organisation does not have to register for GST.
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There are certain conditions that must be met in order to apply this concession. For more information, refer to Fundraising (NAT 13095).
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GST registration threshold
The GST registration threshold for a non-profit organisation is $150,000. This means your non-profit organisation is not required to be registered for GST unless the GST turnover of your organisation is $150,000 or more.
You may still choose to register your organisation for GST if its GST turnover is less than $150,000. The decision to voluntarily register for GST is one that should be based on the administrative needs of your organisation. Some organisations may choose not to register for GST because they consider the GST reporting requirements to be a greater burden than the benefit they would receive, for example, access to GST credits.
All non-profit sub-entities are entitled to the $150,000 GST registration turnover threshold regardless of whether their parent entity is a non-profit body or not - refer to Non-profit sub-entities.
Raffles and bingo
A raffle is a game of chance where the prizes are either goods or cash, or a combination of the two.
The sale of tickets in a raffle and the acceptance of a person's participation in a game of bingo by a registered charity, gift deductible entity (see note 2) or government school are GST-free provided they do not contravene state or territory law.
Fundraising events
A registered charity, gift deductible entity (see note 2) or government school may choose to treat certain fundraising events as input taxed.
If an organisation chooses to treat a fundraising event as an input taxed fundraising event, it will have to treat all sales it makes in connection with the event as input taxed. The choice must be made before any sales take place.
The organisation will not be entitled to claim GST credits for any purchases for the event and it will not be required to charge GST on the sales it makes. The organisation will not be entitled to claim GST credits regardless of whether the supply would have been GST-free had it not made the election.
Proceeds from input taxed fundraising events do not form part of an organisation's GST turnover. Therefore, if an organisation chooses to treat all sales in connection with certain fundraising events as input taxed, it does not need to register for GST provided its GST turnover is less than $150,000.
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There are certain conditions that must be met in order to apply this concession. For more information, refer to Fundraising (NAT 13095).
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Non-commercial activities
The commercial activities of a registered charity, gift deductible entity (see note 2) or government school are taxable but the non-commercial activities of these organisations can be GST-free.
This means that, if it is registered for GST, the registered charity, gift deductible entity or government school does not pay GST on the payment it receives for its non-commercial sales, and it can claim GST credits for the GST included in the price of purchases it uses to make these sales.
The term 'non-commercial activities' refers to sales made when the payment received for the sale is less than a specified amount. The sale is GST-free if the amount charged is either of the following:
- less than 50% of the GST-inclusive market value
- less than 75% of the amount the registered charity, gift deductible entity or government school paid to purchase the item that is subsequently sold.
When the sale is a supply of accommodation by a registered charity, gift deductible entity or government school, the sale is GST-free if the amount charged is either of the following:
- less than 75% of the GST-inclusive market value of the accommodation
- less than 75% of the cost of providing the accommodation.
Accounting on a cash basis
Organisations that account for GST use either a cash or non-cash (accruals) method of accounting.
Organisations may choose to account for GST on a cash basis if their GST turnover does not exceed the cash accounting turnover threshold.
A registered charity, gift deductible entity or government school is entitled to use the cash basis of accounting regardless of turnover (except where the gift deductible entity operates a fund, authority or institution which can receive tax-deductible gifts or contributions - see note 3).
Reimbursement of volunteer expenses
Where a registered charity, gift deductible entity (see note 2) or government school reimburses an individual person for an expense they have incurred that is directly related to their activities as a volunteer of that organisation, the organisation can claim a GST credit for the GST included in the price of the item purchased if the organisation is registered for GST.
A payment is a reimbursement where the recipient is compensated exactly (meaning precisely, not approximately), whether wholly or partly, for an expense already incurred although not necessarily disbursed.
To enable the charity, gift deductible entity or government school to claim the GST credit, the volunteer must provide the organisation with the tax invoice for the purchase they have made.
Gifts and GST credit adjustments
Generally, an organisation can claim GST credits on purchases made for its business activities. However, if the organisation has claimed a GST credit and does not use that purchase as part of its business activities, it must repay the GST credit previously claimed.
If an organisation donates to a registered charity or gift deductible entity (see note 4) a purchase for which it has previously claimed a GST credit, it is not required to repay to us the GST credit previously claimed in respect of that purchase.
Donated second-hand goods
A sale of donated second-hand goods by a registered charity, gift deductible entity (see note 2) or government school is generally GST-free provided there is no change in the original character of the goods.
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There are certain conditions that must be met in order to apply this concession. For more information, refer to Fundraising (NAT 13095).
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Charitable retirement villages
Certain supplies made by a registered charity that operates a retirement village may be GST-free. Those supplies must be made by the charity to a resident of the retirement village. Accordingly, supplies made by the charity to visitors or staff of the retirement village would not qualify for GST-free treatment unless they are non-commercial activities of the charity.
The range of supplies to a resident of a charitable retirement village, which GST-free treatment applies to, includes the supply of accommodation in the retirement village, and services related to the supply of accommodation and meals. This would include, for example, the supply of accommodation in an independent living unit or serviced apartment, property maintenance fees, gardening services and meals and beverages.
Last Modified: Tuesday, 4 December 2012
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