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  • Encouraging not-for-profit participation in the tax system

    We have an obligation to ensure not-for-profit (NFP) organisations understand and participate in the tax and super systems, including their entitlement to tax concessions.

    We are supportive of those who do the right thing. We're also committed to detecting and dealing with the small number of organisations that either:

    • intentionally and dishonestly use tax concessions to avoid their tax and super obligations
    • try to claim refunds or other payments they aren't entitled to.

    If you are new to tax for NFP organisations, you may like to read Getting started.

    How we detect and deal with those who don’t do the right thing

    We use various sources of information and we undertake a range of compliance activities to detect and deal with organisations not meeting their tax and super obligations.

    We also receive information about tax avoidance from the community and from other agencies (including agencies of states and territories).

    See also:

    What attracts our attention

    There are certain behaviours and activities that alert us to possible abuse of the tax and super systems.

    Private ancillary funds

    • Late lodgment of annual return
    • Related party transactions
    • Non-compliance with the regulatory guidelines

    Charities and deductible gift recipients

    • Not applying income and assets solely for the purpose for which the organisation is established, for example private benefits to individuals
    • Making incorrect claims for franking credit refunds
    • Incorrectly advertising that donations to an organisation are tax deductible when the organisation is not endorsed as a deductible gift recipient

    Self-assessing income tax exempt not-for-profits

    • Incorrectly self–assessing income tax exempt status
    • Not meeting the requirements of an exempt category

    Fringe benefits tax (FBT)

    • Incorrectly claiming FBT rebates and exemptions that don’t meet the requirements of the law

    Taxable not-for-profit entities

    • Incorrectly classifying member and non-member income and expenses which may result in an understatement of assessable income

    The ATO has a range of powers for dealing with instances of non-compliance. These include:

    • providing advice, education and support
    • requiring your organisation to provide us with additional information
    • undertaking a review or audit
    • revoking your entitlement to tax concessions
    • raising tax liabilities, applying interest to unpaid liabilities and imposing administrative penalties.

    See also:

    Voluntary disclosure

    We encourage you to regularly review your organisation's status as a NFP and especially the information you provide in tax returns and activity statements. If you have made a mistake, or have left out something when giving us information about your tax affairs, you can make a voluntary disclosure.

    To make a voluntary disclosure about:

    • your entitlement to tax concessions, DGR status or compliance with the ancillary fund guidelines phone us on 1300 130 248
    • other tax types such as income tax, GST, PAYG and FBT see How to make a voluntary disclosure.

    See also:

      Last modified: 01 Jul 2019QC 51300