Whether a non-profit organisation has to pay income tax on proceeds it receives (receipts) from its fundraising activities will depend on whether or not the organisation is exempt from income tax. If the organisation is not exempt from income tax, the nature of the receipt is also a determining factor.
The following organisations must be endorsed by the ATO to be exempt from income tax:
- non-charitable funds that distribute money, property or benefits solely to deductible gift recipients that are income tax exempt.
Other organisations can self-assess whether they are exempt from income tax.
Being exempt from income tax means that an organisation is not assessed on its receipts and it does not need to lodge an income tax return (unless specifically asked to).
For organisations that are not exempt from income tax, fundraising expenses will be tax deductible to the extent they are incurred in deriving assessable income.
However, there are some deductions that do not have to be incurred in deriving assessable income – for example, superannuation contributions for employees.
For more information, refer to the Non-profit organisations and income tax chapter of Fundraising (NAT 13095).
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