Grants and sponsorship - Tax basics for non-profit organisations

Note: This document forms part of our publication Tax basics for non-profit organisations.

Grant funding

Often organisations secure funding from government bodies, foundations and private purpose funds.

If your organisation is registered (or required to be registered) for GST, it may have to pay GST on the funding payment it receives if it makes a supply in return for that funding.

The organisation is not required to pay GST on a funding payment if it does not make a supply in return for the funding.

Sponsorship

Under a sponsorship arrangement, when an organisation undertakes a fundraising activity it often receives support in the form of money. In return, it may provide such things as advertising, signage or naming rights or some other type of benefit of value.

This means that the sponsor receives something of value in return for the sponsorship, so the sponsorship payment is not a gift. If the organisation is registered for GST, it has to pay GST on the sponsorship it receives.

For more information about grants funding and sponsorship, refer to Fundraising. For more information  about meeting your GST obligations, refer to GST tips for non-profit organisations .