Withholding in business transactions - Tax basics for non-profit organisations

Make sure the supply is excluded from the ABN rule

Your organisation should not withhold if:

• the total payment to the supplier is $75 or less, excluding any GST
• the supplier is an individual under 18 years of age, is not your employee, and the payments you make to that person do not exceed $120 per week, or
• the supply is wholly input taxed under GST. This includes most financial supplies, supplies of residential rent, residential premises and some precious metals, and food supplies by school tuckshops and canteens that have chosen to be input taxed. Contact us if you’re not sure whether a supply is input taxed.

Also, your organisation should not withhold if it is satisfied that:

• the supply is made in the supplier’s private capacity, or as their hobby
• the payment is exempt income for the supplier (for example, the supplier is an income tax exempt charity)
• the payment is to a non-resident who is not carrying on an enterprise in Australia or through an agent in Australia, or
• the supplier is not an enterprise because they have no reasonable expectation of profit or gain.

If your organisation is unsure, ask the supplier to give your organisation a written statement that the supply is excluded for one of these reasons. You or your supplier can print Statement by a supplier (reason for not quoting an ABN to an enterprise) (NAT 3346), for this purpose.

Your organisation must keep this statement for five years.

For more information refer to taxation ruling TR 2002/9 Withholding from payments where recipient does not quote ABN. To obtain this publication, see More information.

Last Modified: Tuesday, 11 September 2007