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Note: This document forms part of our publication Tax basics for non-profit organisations. To view the full publication, click here.
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Taxable non-profit organisations are generally treated as companies for income tax purposes, whether or not they are incorporated.
If your organisation is prohibited by the terms of its constituent documents from making any distributions – whether in money, property or otherwise – to its members, it is treated as a non-profit company. It will have the benefit of special rules for calculating taxable income, lodging income tax returns and special rates of income tax.
If you are not sure whether your organisation is non-profit, see Is your organisation non-profit?
If your organisation does not meet the non-profit requirement, it must lodge an income tax return each year, regardless of its taxable income. It will have the same rates of tax applied as other taxable companies.
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Refer to the Income tax guide for non-profit organisations (NAT 7967) for detailed information about concessions that may apply to taxable non-profit organisations, including:
- rules for calculating taxable income
- lodging income tax returns, and
- special rates of income tax.
To obtain this publication, see More information.
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Capital gains tax applies to non-profit clubs, societies and associations that are treated as companies for income tax purposes in the same way as it does for other companies that pay income tax.
Capital gains tax is the tax a person or organisation pays on any capital gain it makes and includes in its annual income tax return. There is no separate tax on capital gains – it is just a component of income tax. An organisation is taxed on its net capital gain at the company tax rate.
Some of the particular capital gains tax issues that can affect non-profit organisations include:
- the sale of assets used in carrying on its activities
- changes to the form of an organisation’s incorporation
- amalgamation of organisations, and
- availability of CGT concessions such as the small business concessions.
Pay as you go (PAYG) instalments is a system for paying amounts towards the expected tax liability on your business and investment income for the financial year.
Each year, after your organisation has lodged its annual tax return, the Tax Office works out what the total tax liability is and credits your PAYG instalments against this amount. We work out the actual tax liability when we assess your organisation’s annual income tax return. Then we credit the PAYG instalments for the year against your organisation’s assessment to determine whether it owes more tax or whether it is owed a refund.
If your organisation is required to pay PAYG instalments, we will write to you and notify you of an instalment rate. We calculate the instalment rate from information in your organisation’s latest income tax return.
PAYG instalments are generally paid quarterly, but some taxpayers can choose to pay an annual instalment.
Quarterly PAYG instalments are reported and paid on an activity statement or instalment notice. Annual instalments are reported and paid on an annual instalment notice.
Most taxpayers also have a choice of using either the instalment amount we have worked out for them or an amount based on their instalment rate multiplied by their current business and investment income.
If your organisation has to pay PAYG instalments, we will tell you which options are available to you and ask you to choose the option you want to use.
Last Modified: Wednesday, 6 June 2007
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