Certain organisations may choose to have some (or all) of their separately identifiable branches or units treated as separate entities for GST purposes. The separate units are called non-profit sub-entities.
Organisations eligible for this concession are:
charitable institutions
charitable funds
gift deductible entities
government schools, and
other non-profit organisations.
To be able to use this option the main organisation must be registered for GST and continue to remain registered.
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.
A unit will be considered to be independent if it:
maintains an independent system of accounting, and
can be separately identified from the main organisation by its location or by its activities.
For example, a unit could comprise of a separately located branch of an organisation or a fundraising activity such as a fete, lamington drive or fundraising dinner. If you choose to treat a unit of your organisation as a non-profit sub-entity, you must make a note in your records, such as your accounts or the minutes of a meeting, that the unit is to be treated as a separate entity for GST purposes.
A unit cannot be a non-profit sub-entity if its activities are related to the main purpose of the organisation. For example, an organisation cannot treat its membership activities as the activities of a non-profit sub-entity.
Where the unit’s GST turnover is less than $150,000, the unit can choose whether or not it registers for GST. Where the unit has a turnover of $150,000 or more, it is required to register separately for GST and will have the same rights and obligations as other GST-registered entities. The GST obligations of the unit will be imposed on the people responsible for the management of the unit.
Once the organisation makes a choice to treat a unit as a non-profit sub-entity, it cannot revoke that choice for 12 months. The organisation cannot make a further choice to treat the unit as a non-profit sub-entity within 12 months after the previous choice was revoked.
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