There are a number of tax matters to consider when you wind up (end) your not-for-profit (NFP) organisation. You may need to cancel your ABN and other registrations and there may be capital gains tax (CGT) consequences. Specific requirements also apply when endorsed deductible gift recipients are wound up.
You need to tell us if your organisation has wound up or stopped operating.
When your organisation is ending, activity statements must be lodged even if there is 'nil' to report, including:
- PAYG withholding reports
- repayment of refunds of GST credits
- payment of outstanding tax debts.
Penalties apply if you don't:
- lodge activity statements on time (in addition, the general interest charge accrues on any outstanding balance until the entire amount has been paid)
- notify the Registrar of changes to your circumstances within 28 days.
Remember to keep your records for at least five years after the end of the financial year in which you end your organisation.
If your organisation is no longer operating, tell us by phone: 1300 130 248 between 8:00am and 6:00pm, Monday to Friday
Before cancelling an ABN you need to ensure you have met all your lodgment, reporting and payment obligations to the government agencies you deal with.
You can cancel your ABN at abr.gov.auExternal Link
Cancelling your ABN will also cancel your:
- endorsement to access GST concessions
- FBT rebate and concessions
- income tax exemption and deductible gift recipient status.
You can cancel your GST registration, ABN and any other roles or registrations together or separately:
- by completing our cancellation form and posting it to us
- through Online services for business
- through your registered tax agent or BAS agent
You can obtain a copy of the Application to cancel registration (NAT 2955) through online ordering.
There may be capital gains tax (CGT) consequences if your organisation changes status or if organisations merge or wind-up.
CGT applies to NFP clubs, societies and associations that are:
- not exempt from income tax
- treated as companies for income tax purposes.
NFP clubs, societies and associations that are exempt from income tax are also exempt from CGT.
CGT issues affecting NFP organisations include:
- sale of assets used in carrying on its activities
- merger of organisations
- availability of CGT concessions, such as the small business concessions.
If your organisation changes status, CGT consequences or rollover eligibility may apply.
CGT consequences can also arise when organisations merge. For example, capital gains and losses may arise if two organisations merge to form a new organisation, or if one organisation is absorbed into another. The CGT consequences resulting from mergers may be different depending on which state or territory the organisations are incorporated in.
The winding-up of organisations can also result in capital gains and losses.
For more information on CGT for NFP organisations see 'Other Issues' by accessing:
Before winding up (ending) your charity, you should request voluntary revocation (cancellation) of your charity's registration with the Australian Charities and Not-for-profits Commission (ACNC). If your charity has already wound up, you still need to notify the ACNC.
Further information can be found at ACNC wind up my charityExternal Link
When endorsed deductible gift recipients (DGRs) are wound up, or if their endorsement is revoked, they must transfer all remaining gifts, deductible contributions and money received in relation to such gifts and contributions to a gift deductible fund, authority or institution. This requirement varies with the type of endorsement.
Organisations do not need to meet this requirement if they are established by an Act of the Commonwealth Parliament, and that Act, or another Act, does not provide for the winding up or termination of the entity.
Endorsement as a whole
The organisation must be required by a law, its constituent documents, or rules governing its activities, to transfer the following surplus assets to a gift deductible fund, authority or institution when it is wound up or its endorsement is revoked (whichever occurs first):
- gifts and deductible contributions made to the organisation for its principal purpose
- money received by the entity because of such gifts and contributions.
This requirement may be set out in a law, in an organisation's constituent documents or in separate rules governing an organisation's activities.
If the organisation is wound up or its endorsement as a deductible gift recipient is revoked (whichever occurs first), any surplus of the following assets shall be transferred to another organisation to which income tax deductible gifts can be made:
- gifts of money or property for the principal purpose of the organisation
- contributions made in relation to an eligible fundraising event held for the principal purpose of the organisation
- money received by the organisation because of such gifts and contributions.
The winding up requirement for surplus gifts and contributions will also be met where the organisation's winding up clause requires all surplus assets to be transferred to another DGR. In this case, the DGR must have a separate rule regarding distribution of surplus gifts and deductible contributions in the event of revocation of DGR endorsement.
While DGRs endorsed as a whole are not required to maintain a gift fund, all gifts and deductible contributions made for the principal purpose must be used for that purpose. All DGRs must maintain records that explain all transactions and other acts relevant to status as a DGR.
Further legal information and advice can be found by accessing Not-for-Profit LawExternal LinkIf you wind up your not-for-profit organisation, you may need to cancel your registration for one or more taxes and there may be capital gains tax consequences.