You should use this guide if you are a financial officer, tax professional or other person involved in the administration of a taxable non-profit organisation.
For this guide to apply to your organisation, your organisation must be:
- non-profit
- taxable.
For examples of the types of organisations covered by this guide, see the Industry codes table.
Non-profit
The basic premise of a non-profit organisation is that it is not operating for the profit or gain of its individual members, whether these gains are direct or indirect. This applies both while the organisation is operating and when it winds up.
Any profit made by the organisation goes back into the operation of the organisation to carry out its purposes and is not distributed to any of its members.
The ATO accepts an organisation as non-profit where its constituent or governing documents prevent it from distributing profits or assets for the benefit of particular people, both while it is operating and when it winds up. These documents should contain acceptable clauses showing the organisation's non-profit character. The organisation's actions must be consistent with this requirement.
Taxable
Non-profit organisations can be either exempt or taxable.
Many non-profit organisations are taxable and may need to lodge tax returns and pay income tax.
If your non-profit organisation is not exempt from income tax, it is taxable. Only certain types of non-profit organisations are exempt from income tax.
Organisations not covered
This guide does not cover:
- partnerships
- strata title bodies corporate
- friendly societies
- life assurance companies
- life insurance companies
- mutual insurance companies
- credit unions.