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This fact sheet outlines the process your charity must follow to access income tax, fringe benefits tax (FBT) and GST charity tax concessions.
Endorsement to access charity tax concessions is the approval process your charity must follow if it is to access one or more of the following concessions:
- income tax exemption
- GST charity tax concessions
- FBT rebate, or
- FBT exemption.
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Organisations that are charities must be endorsed by us if they want to access charity tax concessions.
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A charity is an institution or fund established for altruistic purposes that the law regards as charitable. Charitable purposes are:
- the relief of poverty or sickness or the relief of the needs of the aged
- the advancement of religion
- the advancement of education
- the provision of child care services on a non-profit basis, and
- other purposes beneficial to the community.
Examples of charities include:
- religious institutions
- aged persons homes
- homeless hostels
- organisations relieving the special needs of people with disabilities
- non-profit child care centres, and
- societies that promote the fine arts.
There are some requirements you may have to meet before your charity can be endorsed to access one or more of the charity tax concessions.
To be endorsed to access charity tax concessions, your charity must have an ABN. This must be the ABN of the entity itself. An ABN held by a non-profit sub-entity is not sufficient.
If your organisation does not have an ABN, you can apply:
- electronically through the:
- Australian Business Register (ABR) at www.abr.gov.au
- Australian Government business website at www.business.gov.au where you can also attend to other government obligations
- on a paper form, by phoning us on 13 28 66, or
- through a tax agent, who will lodge an application using the electronic lodgment system.
To be endorsed as income tax exempt, your charity must meet certain tests. There are different requirements for:
- charitable funds, and
- charitable institutions.
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For more information about the tests that a charitable fund or charitable institution must meet to be entitled to endorsement as an income tax exempt charity, refer to Income tax guide for non-profit organisations (NAT 7967).
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To be endorsed to access GST and FBT charity tax concessions the entity must be a charity and have an ABN. No additional tests must be passed.
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Government institutions that are charitable institutions are ineligible for the FBT rebate, for example institutions such as public universities, public museums and public art galleries.
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Different concessions are available, depending on which of the following charity types best describes the charity:
- charitable fund
- charitable institution
- public benevolent institution, or
- health promotion charity.
Endorsement under the various laws provides charities with access to the concessions listed below.
Concession
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Explanation
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Eligible charity types
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Income tax exemption
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Exemption from paying income tax, removing the need to lodge income tax returns.
Condition for entitlement to refunds of franking credits on franked dividends.
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Charitable fund
Charitable institution
Public benevolent institution
Health promotion charity
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GST charity concessions
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There are a range of GST concessions for transactions involving endorsed charities that are registered for GST. These are:
- gifts and GST credit adjustments – adjustments for GST credits are not required where an item acquired by a business is then gifted to the charity.
- accounting on a cash basis – the charity may choose to account on a cash basis regardless of its annual turnover.
- non-commercial activities – where the charity 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.
- donated second-hand goods – sales of donated second hand goods by the charity are GST-free.
- raffles and bingo – tickets to raffles and bingo sold by the charity are GST-free provided the holding of the raffle or bingo event does not contravene a state or territory law.
- fundraising events – the charity may choose to treat all sales it makes for certain fundraising events as input taxed. The charity is not required to remit GST on sales made for the event. However, the charity is not entitled to claim GST credits for related purchases.
- non-profit sub-entities – the charity has the option of treating any of its separately identifiable branches as separate entities for GST purposes. Provided that the annual turnover of the non-profit sub-entity is less than $150,000, the sub-entity is not required to register for GST. An unregistered non-profit sub-entity does not remit GST on sales and does not claim GST credits for purchases.
- reimbursement of volunteer expenses – the charity 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 charity.
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Charitable fund
Charitable institution
Public benevolent institution
Health promotion charity
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FBT rebate
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Entitlement to a rebate equal to 48% of the gross FBT payable, subject to a capping threshold. The maximum grossed-up value of benefits that can be provided to anyone employed by the charity (without losing the concession) is $30,000. If the total grossed-up value of the fringe benefits provided to an individual employee is more than $30,000, a rebate cannot be claimed for the FBT liability on the excess amount.
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Charitable institution (other than an institution of the Commonwealth, a state or a territory)
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FBT exemption
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Exemption from paying FBT subject to a capping threshold. Benefits provided to employees are FBT exempt where the total grossed-up value of certain fringe benefits for each employee during the FBT year is $30,000 or less. If the total grossed-up value of the fringe benefits provided to an individual employee is more than $30,000, the employer will be liable for the FBT on the excess amount.
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Public benevolent institution
Health promotion charity
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To apply for endorsement you must complete an Application for endorsement as a tax concession charity or income tax exempt fund (NAT 10651).
Only charities with an ABN can seek endorsement to access charity tax concessions. If you indicate on the ABN registration form that your organisation wants to be endorsed as a tax concession charity, you will automatically be sent an endorsement application pack. You can apply for endorsement to access income tax, GST and FBT charity concessions using the form in the application pack.
If your charity already has an ABN, but did not indicate its charity status on the ABN application, you will need to obtain an application pack.
You can obtain the application pack by phoning us on 1300 130 248, or download the pack from our website.
The application form will ask you for the date from which your charity wants to be endorsed. This can be no earlier than the date that your organisation first became entitled to endorsement.
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The earliest possible date a charity can be endorsed for:
- income tax exemption is 1 July 2000, and
- GST and FBT charity tax concessions is 1 July 2005.
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Your charity will receive an endorsement notification that states the type of charity it is and the tax concessions it has been endorsed to access.
In addition, the ABR at www.abn.business.gov.au will display the following details for charities that have been endorsed to access charity tax concessions:
- the charity type
- the charity tax concessions the organisation has been endorsed to access, and
- the date of effect for each endorsement.
If your charity does not want this information publicly displayed, it will need to waive its entitlement to the related concessions.
Office bearer information is not disclosed on the ABR.
If your application for endorsement is refused, you can have the decision reviewed.
You will need to send us, in writing, reasons why your charity should be endorsed. If endorsement is refused after the review, we will advise you of further appeal rights.
If you believe we are taking too long to notify you about your charity’s endorsement, you can have your application treated as if it has been refused. The deemed refusal will trigger formal review rights.
The earliest you can notify us of your wish to have your charity’s application treated as if it had been refused is the later of:
- the end of the 60th day after you made the application, or
- the end of the 28th day after the last day on which you gave us information that we requested.
To treat your application as if it had been refused, we must receive written notice from you that you want it treated this way. Your application will be deemed to be refused on the day you give us notice.
If your charity is no longer entitled to endorsement, you must notify us.
We recommend you carry out a yearly self-review of your charity’s entitlement to endorsement. You should also carry out a review when there is a major change in your charity’s structure or operations.
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To help you carry out a self-review, refer to worksheets provided in the Income tax guide for non-profit organisations (NAT 7967).
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We may revoke your charity’s endorsement if it:
- is not entitled to endorsement, or
- has not provided information or a relevant document within the time specified by us.
We will provide written notice of the revocation. The revocation has effect from a date specified by us and the date may be retrospective.
If your charity is dissatisfied with the revocation of endorsement to access charity tax concessions, it can lodge an objection against the revocation. This must be done in writing, giving the grounds for the objection.
Endorsement is different to registration. Endorsement provides a charity with access to concessions.
For example, endorsement as an income tax exempt charity means that a charity is exempt from paying income tax, removing the need to lodge income tax returns. Endorsement for FBT exemption allows eligible charities to provide FBT-free benefits to their employees (subject to the capping thresholds) from 1 July 2005.
If a charity is registered for a tax, it is generally a payer of that tax. However, endorsement to access charity concessions can often reduce the amount payable. There will be situations where an entity is endorsed and registered for a tax. For example, a GST endorsed charity that exceeds the relevant registration turnover threshold must register for GST.
Endorsement to access charity tax concessions does not entitle your organisation to receive income tax deductible gifts. There is a separate endorsement process for deductible gift recipients.
For more information, refer to The endorsement process for deductible gift recipients (NAT 3193).
To obtain copies of our publications:
To speak to staff trained to deal with non-profit enquiries phone our information line on 1300 130 248.
If you do not speak English well and want to talk to a tax officer, phone the Translating and Interpreting Service on 13 14 50 for help with your call.
If you have a hearing or speech impairment and have access to appropriate TTY or modem equipment, phone 13 36 77. If you do not have access to TTY or modem equipment, phone the Speech to Speech Relay Service on 1300 555 727.
Last Modified: Friday, 29 February 2008
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