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Mutuality and taxable income for not-for-profits

Explains mutuality and helps not-for-profit clubs, societies and associations calculate taxable income. (NAT 73436).

Last updated 3 December 2018

This guide has been prepared for not-for-profit (NFP) clubs, societies and associations that are taxable – that is, NFP organisations that are not exempt from income tax.

It helps these organisations to:

  • work out if they need to lodge an annual income tax return
  • calculate their taxable income, including how to treat mutual dealings with their members.

What's new

This guide applies from 1 July 2015 and replaces Mutuality and taxable income (NAT 73436-06.2010) which was released in June 2010. It has been updated to include the law change to the tax rates for not-for-profit companies which occurred since the last edition of the guide.

See also:

Below is a list of rulings that are referred to throughout this guide:

  • GSTR 2002/3 Goods and services tax: prizes
  • TR 97/11 Income tax: am I carrying on a business of primary production?
  • TR 2004/5 Income tax: taxation treatment of volume rebates paid to a retailer association

Which not-for-profit (NFP) member-based organisations are covered by this guide and which ones are not.

How to work out if your organisation needs to lodge a tax return and its tax rate.

How to identify whether a person is a member how it affects your revenue and expenditure for income tax purposes.

To calculate taxable income, an organisation needs to classify revenue as non-assessable, assessable or apportionable.

To calculate taxable income, an organisation needs to classify expenses as non-deductible, deductible or apportionable.

The methods you can use to apportion income and expenses.

An overview of the other issues you need to consider such as CGT, GST and FBT.