• Work out if you need to lodge a company tax return

    To work out whether your organisation needs to lodge a company tax return, you need to:

    Non-profit company or other taxable company

    For income tax purposes, taxable non-profit organisations are treated as either:

    • non-profit companies
    • other taxable companies.

    A non-profit organisation does not need to be incorporated to be treated as a company for income tax purposes.

    Non-profit companies and other taxable companies use the company tax return.

    Work it out

    Whether your organisation is a non-profit company or other taxable company – Mutuality and taxable income.

    End of work it out

    Taxable threshold for lodgment

    If your organisation is a non-profit company that is an Australian resident and its taxable income is over $416 for the 2013–14 income year, it will need to lodge a company tax return. If the taxable income is below the threshold, it is not required to lodge a tax return for that year. However, the ATO may notify a particular company that it is required to lodge a return.

    If your organisation is an ‘other taxable company’ and its taxable income is greater than $0 for the 2013–14 income year, it also needs to lodge a company tax return.

    Taxable income is rounded down to the nearest dollar.

    Calculate your organisation’s taxable income

    Taxable income is calculated as the difference between an organisation’s assessable income and allowable deductions.

    Taxable income

    =

    assessable income

    -

    allowable deductions

    The taxable income of a club, society or association is calculated in the same way as a company for income tax purposes.

    Mutuality principle

    One particular issue that affects many clubs, societies and associations is the taxation treatment of mutual dealings with members.

    As a result of the mutuality principle:

    • receipts derived from mutual dealings with members are not assessable income (these are called mutual receipts)
    • expenses incurred to get mutual receipts are not deductible.
    Attention

    Mutual receipts are not subject to income tax because they are not assessable income not because they are exempt income.

    End of attention

    Find out more

    Taxable income and mutuality

    End of find out more

    Four steps to calculate taxable income

    Because of the mutuality principle, revenue and expenses of an organisation fall within one of three categories for income tax purposes.

    Category

    Revenue

    Expenses

    1

    Non-assessable

    Non-deductible

    2

    Assessable

    Deductible

    3

    Apportionable

    Apportionable

    These categories are used in the following four steps to calculate an organisation’s taxable income:

    • Step 1: Classify revenue into non-assessable, assessable and apportionable.
    • Step 2: Classify expenses into non-deductible, deductible and apportionable.
    • Step 3: Separate the apportionable items by appropriate methods.
    • Step 4: Calculate the taxable income.
      Last modified: 20 Jul 2015QC 40743