GST concessions for non-profit organisations - Tax basics for non-profit organisations
Note: This document forms part of our publication Tax basics for non-profit organisations. To view the full publication, click here. The information in this document has been updated for changes that have occurred since the publication was released in June 2007.
Introduction
There are a range of GST concessions that are available to non-profit organisations.
GST concession
Explanation of concession
Gifts – a gift to a non-profit organisation is not consideration for a supply.
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.
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.
A gift made to a non-profit organisation is not consideration 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.
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.
There are certain conditions that must be met in order to apply this concession. For more information refer to Non-profit organisations and fundraising(NAT 13095).
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 ought to 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.
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