• ### Case study 1: Alizarin Society

#### Facts

The Alizarin Society is a not-for-profit company with the following revenue and expenses for the year ended 30 June. It is not registered for GST and not required to be registered.

Revenue

\$

Expenses

\$

Membership subscriptions

\$3,000

Postage (see note 2)

\$100

Term deposit interest

\$800

Photocopying (see note 2)

\$100

Christmas dinner (see note 1)

\$5,000

Christmas dinner (see note 1)

\$4,000

Lamington sale to public

\$2,500

Cost of lamingtons

\$1,800

Term deposit charges

\$50

Total

\$11,300

\$6,050

Note 1 The Christmas dinner was attended by 70 members and 30 non-members who paid \$50 each. It cost \$40 per person to cater for the dinner.

Note 2 From an examination of the society's records, 10% of its communication during the year was with non-members.

#### Steps for calculating taxable income

##### Step 1: Classify revenue

Revenue

Non-assessable

Assessable

Apportionable

Total

Membership subscriptions

\$3,000

-

-

\$3,000

Term deposit interest

-

\$800

-

\$800

Sale of lamingtons

-

\$2,500

-

\$2,500

Christmas dinner

-

-

\$5,000

\$5,000

Total

\$3,000

\$3,300

\$5,000

\$11,300

##### Step 2: Classify expenses

Expenses

Non-deductible

Deductible

Apportionable

Total

Postage

-

-

\$100

\$100

Photocopying

-

-

\$100

\$100

Christmas dinner

-

-

\$4,000

\$4,000

Cost of lamingtons

-

\$1,800

-

\$1,800

Term deposit charges

-

\$50

-

\$50

Total

-

\$1,850

\$4,200

\$6,050

##### Step 3: Separate the apportionable items

Revenue

Non-assessable

Assessable

Total

Christmas dinner (see note 3)

\$3,500

\$1,500

\$5,000

Note 3 Revenue from the Christmas dinner is apportioned on the basis that it was attended by 70 members and 30 non-members who paid \$50 each.

Expenses

Non-deductible

Deductible

Total

Christmas dinner (see note 4)

\$2,800

\$1,200

\$4,000

Postage (see note 5)

\$90

\$10

\$100

Photocopying (see note 5)

\$90

\$10

\$100

Total

\$2,980

\$1,220

\$4,200

Note 4 Expenses for the Christmas dinner are apportioned on the basis that it was attended by 70 members and 30 non-members and it cost \$40 per person to cater for the dinner.

Note 5 Expenses for postage and photocopying are apportioned on the basis that 10% of Alizarin Society's communication during the year was with non-members.

##### Step 4: Calculate the taxable income
 Assessable income (\$3,300 + \$1,500) \$4,800 Less: deductible expenses (\$1,850 + \$1,220) \$3,070 Taxable income \$1,730

As its taxable income is more than the taxable threshold, the Alizarin Society will need to lodge a company tax return. For information on how to complete the company tax return, see Guide to company tax return for not-for-profit organisations.