How is my non-profit organisation treated if it is not exempt?
Non-profit organisations that are not exempt are taxable and are treated as companies.
For income tax purposes, taxable non-profit organisations are treated as either:
- non-profit companies
- other taxable companies.
Non-profit companies may have special rules for lodging income tax returns and special rates of tax.
Does my organisation have to lodge an income tax return?
Non-profit companies with a taxable income of $416 or less a year will not be required to lodge an income tax return because the income is below the taxable threshold. However, we may notify a particular company that it is required to lodge a return.
Non-profit companies with a taxable income of more than $416 a year must lodge an income tax return for that year.
Other taxable companies are taxed on every dollar of taxable income. They must lodge an income tax return each year.
Organisations will need to use the Company tax return (NAT 0656) to lodge a return.
How do you calculate taxable income?
Taxable income is calculated as the difference between the organisation's assessable income and deductions.
The taxable income of a club, society or association is calculated in the same way as for other companies. Aspects affecting clubs, societies and associations include:
- mutual dealings with members
- capital gains tax
- the effect of goods and services tax (GST).
Is my non-profit organisation subject to capital gains tax?
Capital gains tax (CGT) applies to non-profit organisations that are treated as companies for income tax purposes in the same way it applies to other companies that pay income tax.
CGT 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.
What are some of the particular capital gains tax issues that could affect my non-profit organisation?
Some of the issues include:
- the sale of assets used in carrying on your organisation's activities
- changes to the form of your organisation's incorporation
- the amalgamation of organisations
- the availability of CGT concessions such as the small business concessions.