• GST concessions

    A range of goods and services tax (GST) concessions are available to not-for-profit (NFP) organisations. You must be endorsed by us to access GST charity concessions.

    There are additional GST concessions that are available to:

    • ACNC registered charities that are endorsed to access GST charity concessions
    • gift deductible entities
    • government schools.

    For GST purposes:

    • an endorsed charity is a charity that is an ACNC registered charity, has an ABN and is endorsed by us as a charity
    • a gift deductible entity is an entity that can receive tax-deductible gifts or contributions.

    Check the notes to the table below carefully, as your organisation may need to meet requirements before it can access a concession.

    Available GST concessions

    GST concession

    Eligible entity

    Explanation of concession

    Not-for-profit organisations

    Gifts – a gift to n NFP organisation is not considered payment for a sale.

    NFP organisation

    see Gifts

    School tuck shops – an NFP organisation may sell food through a tuck shop or canteen at a primary or secondary school and treat the sales as input taxed.

    NFP organisation

    see School tuck shops

    GST registration threshold – the registration turnover threshold is higher for NFP organisations than for other organisations.

    NFP organisation

    GST registration threshold.

    GST groups – the requirement to satisfy the 90% ownership test is waived where the entity is an NFP organisation and all the other members of the GST group or proposed GST group are not-for-profit organisations and members of the same NFP association.

    NFP organisation

    see GST branches, groups and non-profit sub-entities.

    Charities, gift deductible entities and government schools

    Raffles and bingo – tickets to raffles and bingo sold by an eligible entity are GST-free provided the holding of the raffle or bingo event does not contravene a state or territory law.

    • Endorsed charity (1)
    • Gift deductible entity (2)
    • Government school
     

    see Raffles and bingo

    Fundraising events – an eligible entity may choose to treat all sales it makes in connection with certain fundraising events as input taxed.

    • Endorsed charity (1)
    • Gift deductible entity (2)
    • Government school
     

    see Fundraising events

    Non-commercial activities – where an eligible entity makes sales and the payment it receives in return for the things it sold is less than a certain amount, the sales are GST-free.

    • Endorsed charity (1)
    • Gift deductible entity (2)
    • Government school
     

    see Non-commercial activities

    Accounting on a cash basis – an eligible entity may choose to account on a cash basis regardless of its GST turnover.

    • Endorsed charity (1)
    • Gift deductible entity (3)
    • Government school
     

    see Accounting on a cash basis

    Reimbursement of volunteer expenses – an eligible entity can claim GST credits for reimbursements made to volunteers for expenses the volunteer incurs that are directly related to their activities as a volunteer of the entity.

    • Endorsed charity (1)
    • Gift deductible entity (2)
    • Government school
     

    see Reimbursement of volunteer expenses

    Gifts and GST credit adjustments – adjustments of GST credits are not required when an item acquired by a business is subsequently gifted to an eligible NFP entity.

    • Endorsed charity (1)
    • Gift deductible entity (4)
     

    see Gifts and GST credit adjustments

    Donated second-hand goods – sales of donated second-hand goods by an eligible entity are GST-free.

    • Endorsed charity (1)
    • Gift deductible entity (2)
    • Government school
     

    see Donated second-hand goods

    Non-profit sub-entities – an eligible entity may conduct some of its activities through a non-profit sub-entity, subject to certain exceptions.

    • Income tax exempt NFP organisation
    • Endorsed charity (1)
    • Gift deductible entity (5)
    • Government school
     

    see Non-profit sub-entities

    GST religious groups – some charities can be approved as a GST religious group. Transactions between members of the group are excluded from GST.

    Income tax exempt charity

    see GST religious groups

    Charitable retirement villages – an eligible not-for-profit entity may provide GST-free accommodation, accommodation-related services and meals to residents of such retirement villages.

    Endorsed charity (1)

    see Charitable retirement villages

    Notes to table

    Endorsement requirements for charities 

    1. If a charity wants to access this concession, it must be endorsed by us to access GST charity concessions.

    See also:

    Endorsement requirements for charities

    Gift deductible entities

    1. A gift deductible entity that operates a fund, authority or institution which can receive tax-deductible gifts or contributions can only apply this concession to the activities of the endorsed fund, authority or institution, and not to any other activities of the gift deductible entity.
    2. A gift deductible entity that operates a fund, authority or institution which can receive tax-deductible gifts or contributions is only entitled to account for GST on a cash basis if it meets one of the general eligibility criteria, either the:  
      1. entity's GST turnover does not exceed the cash accounting turnover threshold
      2. entity correctly accounts for income using the receipts method for income tax purposes.
       
    3. If a donor makes a gift to a gift deductible entity that operates a fund, authority or institution which can receive tax-deductible gifts or contributions, the donor will not have to make an adjustment to their GST credit if the gift is made for the principal purpose of the endorsed fund, authority or institution.

    Only a gift deductible entity that is a not-for-profit body can choose to treat separately identifiable branches as non-profit sub-entities.

    Non-profit sub-entities

    1. Most GST concessions in the table also apply to a non-profit sub-entity of an eligible entity listed under each concession. The only exceptions to this are:

    For those GST concessions which require a choice be made, the non-profit sub-entity of an eligible entity can choose to access the concession even if the parent entity has chosen not to apply the concession to its own activities.

    Gifts

    A gift made to an NFP organisation is not considered payment for a sale and is not subject to GST. The value of a gift is also excluded when calculating the NFP organisation's GST turnover.

    For a payment to be considered a gift it must be made voluntarily and the payer cannot receive a material benefit in return:

    • A payment is not voluntary when there is an obligation to make the payment or the NFP organisation is contractually obliged to use the payment in a specific way.
    • A benefit is not a material benefit if it is an item of insubstantial value that cannot be put to a use or is not marketable, such as a pin or a ribbon. An item of greater value, such as a ticket to a dinner, or an item that has a use or function, such as a pen or a book, is a material benefit.

    The GST treatment of transactions discussed in this section may vary if an organisation chooses to apply other GST concessions available to it.

    Example 1 – Gift not subject to GST
    Chamith purchases a magazine at the local newsagency and notices a box of badges placed next to the cash register. The sign on the box explains that a not-for-profit organisation is seeking public support to fund medical research. Chamith places $2 into the box and takes a badge as recognition for his gift. Chamith made the payment voluntarily. The badge is not suitable as a piece of jewellery nor can it serve any useful purpose. The badge does not give Chamith any material benefit.

    Chamith's payment is a gift. The gift made to the NFP organisation is not consideration for a sale and it is not subject to GST.

    Example 2 – Consideration for a sale
    Matt pays $2 to a not-for-profit organisation and in return for his payment receives a chocolate bar. As the chocolate bar can be eaten as a sweet it has a use or function and therefore provides Matt with a material benefit in return for his payment.

    Matt's payment is not a gift. The payment received by the not-for-profit organisation is consideration for a sale. If the organisation is registered for GST, or is required to be registered, the price of the chocolate includes GST and the organisation needs to remit the GST to us.

    End of example

    If an NFP organisation is registered for GST, or is required to be registered, GST is payable on the full amount of a ticket price to a dinner or similar function conducted by the NFP organisation, even though part of the ticket price may be intended to be a gift to the organisation. When a person attends the dinner they are receiving a material benefit (the dinner) in exchange for the purchase price of the ticket. No part of the payment is a gift when the full purchase price must be paid in order to receive the dinner. This is so even when the ticket price is much more than the value of the meal.

    Example 1 – Fundraising event tickets
    Mel attends a '$1,000 a plate' dinner for an NFP organisation. The value of the meal is $150. Mel has received a material benefit.

    The purchase of the ticket is not a gift. The money received by the NFP organisation for the ticket is consideration for a sale. If the organisation is registered for GST, or is required to be registered, the price of the ticket includes GST and the organisation needs to remit the GST to us. This is the case, even though part of the ticket price is intended to be a gift.

    Example 2 – Purchase at charity auction
    Tracey buys a clock at a charity auction. The clock has a market value of $500, but Tracey pays $1,000.

    The amount paid to the charity cannot be split between the market value of the clock and a 'gift'. The money received by the charity for the clock is consideration for a sale. If the charity is registered for GST, or is required to be registered, the price of the clock includes GST and the charity needs to remit the GST to us.

    End of example

    When a payment is made in addition to the purchase price of a ticket to a dinner or some other item and is truly voluntary, with no material benefit passing to the donor or their associate, the payment is a gift and is not subject to GST. This may occur if a NFP organisation charges an entrance fee to attend a dinner or function and separately seeks gifts at the event.

    Example – Ticket purchase and donation

    Troy attends a fundraising trivia night in aid of a not-for-profit organisation and pays $20 for admission. Later in the evening he donates $10 to the organisation.

    The $20 cost of admission is not a gift. However, the $10 donation is a gift. The $20 paid for admission to the trivia night is consideration for a sale. If the not-for-profit organisation is registered for GST, or is required to be registered, the price of the ticket includes GST and the organisation needs to remit the GST to the ATO.

    End of example

    School tuck shops

    If an NFP organisation (for example, a parents and citizens association) operates a school tuck shop on the grounds of a primary or secondary school, it can choose to treat all sales of food through the tuck shop as input taxed.

    If an organisation chooses to treat all sales of food through a school tuck shop as input taxed, they:

    • must keep records containing details about its choice (for example, in accounts or meeting minutes)
    • do not need to notify us of their choice.

    This means that the organisation does not charge GST on its sales, and does not claim GST credits for its purchases.

    As input taxed sales are not included when calculating the GST turnover for GST registration purposes, choosing to treat all sales of food as input taxed may mean that the organisation does not have to register for GST.

    If the organisation is registered for GST, treating all sales of food as input taxed makes managing GST easier. Without this concession, some sales of food would be GST-free and others taxable. For example, the sale of fresh fruit is GST-free and the sale of a meat pie is taxable.

    Once the organisation chooses to treat all sales of food as input taxed, it cannot revoke that choice for 12 months. The organisation cannot make another choice to treat all sales of food as input taxed within 12 months after the previous choice was revoked.

    GST registration threshold

    The GST registration threshold for an NFP organisation is $150,000. This means your NFP organisation is not required to be registered for GST unless the GST turnover of your organisation is $150,000 or more.

    You may still choose to register your organisation for GST if its GST turnover is less than $150,000. The decision to voluntarily register for GST is one that should be based on the administrative needs of your organisation. Some organisations may choose not to register for GST because they consider the GST reporting requirements to be a greater burden than the benefit they would receive, for example, access to GST credits.

    All non-profit sub-entities are entitled to the $150,000 GST registration turnover threshold regardless of whether their parent entity is a non-profit entity or not.

    See also:

    Non-profit sub-entities

    Raffles and bingo

    A raffle is a game of chance where the prizes are either goods or cash, or a combination of the two.

    The sale of tickets in a raffle and the acceptance of a person's participation in a game of bingo by a registered charity, gift deductible entity (see note 2) or government school are GST-free provided they do not contravene state or territory law.

    Fundraising events

    A registered charity, gift deductible entity (see note 2) or government school may choose to treat certain fundraising events as input taxed.

    If an organisation chooses to treat a fundraising event as an input taxed fundraising event, it will have to treat all sales it makes in connection with the event as input taxed. The choice must be made before any sales take place.

    The organisation will not be entitled to claim GST credits for any purchases for the event and it will not be required to charge GST on the sales it makes. The organisation will not be entitled to claim GST credits regardless of whether the supply would have been GST-free had it not made the election.

    Proceeds from input taxed fundraising events do not form part of an organisation's GST turnover. Therefore, if an organisation chooses to treat all sales in connection with certain fundraising events as input taxed, it does not need to register for GST provided its GST turnover is less than $150,000.

    Example – Annual turnover

    XYZ Charity has total annual sales of $150,000, which includes $80,000 from sales made at five input-taxed fundraising dinners. As input-taxed sales are not included in annual turnover for GST purposes, XYZ Charity has an annual turnover below $150,000 for GST purposes and therefore does not need to register for GST.

    End of example

    A sale will be input taxed if all of the following criteria are met:

    • the organisation conducting the event is a charity, gift deductible entity or government school
    • the sale is made in connection with the fundraising event
    • the organisation chooses to treat all sales in connection with the fundraising event as input taxed before any transactions take place
    • the event is referred to in the organisation's records as an event that is treated as input taxed.

    If your organisation chooses to treat a fundraising event as input taxed you:

    • must keep records containing details of its choice (for example, in accounts or meeting minutes)
    • do not need to notify us of this choice.

    The following fundraising events may be treated as input taxed:

    • a fete, ball, gala show, dinner, performance or similar event – a similar event may include a charity auction, a cake stall, wine tasting or fashion parade
    • an event where all goods are sold for $20 or less, but
      • the event cannot involve the sale of alcohol or tobacco
      • the selling of the goods must not be a normal part of the supplier's business, for example, a charity holds an annual flower day where it sells flowers for $2 each and the charity is not in the business of selling flowers
       
    • an event that has been approved by us as a fundraising event. If a fundraising event is not one of the types listed above (for example, a golf day, car rally or an art show), the organisation can write to us and ask for approval to treat the event as an input taxed fundraising event. We will grant approval only if:
      • the event is held for the purpose of fundraising
      • the organisation is not in the business of conducting such events, and
      • the proceeds from the event are for the direct benefit of the organisation's charitable or NFP purposes.
       

    The sale of alcohol and tobacco at a fete, ball, gala show, dinner, performance or similar event will not prevent the event from being treated as an input taxed fundraising event.

    Example 1 – Input taxed event
    The Homes for Homeless Teens charity is organising a fundraising dinner. It chooses to treat the dinner as an input taxed fundraising event. The dinner will be held at a prominent function centre. A well-known television personality will make cocktails during the evening.

    Although the charity is selling alcohol, these sales are part of the activities of the fundraising dinner and are input taxed sales.

    Example 2 – Input taxed event
    The Assisting with Education charity is organising a fundraising ball. It chooses to treat the ball as an input taxed fundraising event. A car dealership has donated a car as a prize for a raffle. The raffle tickets will only be sold at the fundraising ball, and the raffle will be drawn on the night.

    The sale of the raffle tickets is part of the fundraising dinner. The proceeds from the sale of the raffle tickets are treated as input taxed sales.

    Example 3 – Lottery tickets
    At the fundraising dinner held by The Homes for Homeless Teens charity, the charity intends to sell tickets for its home lottery at the door and draw the winning ticket at the dinner. The home lottery has been conducted throughout the year, and tickets have been sold throughout the year.

    The home lottery is a separate event from the dinner. As such, the lottery tickets sold at the door are not treated as input taxed sales.

    The sale of lottery tickets may, however, be GST-free. See Raffles and bingo

    End of example

    An organisation cannot choose to treat an event as input taxed unless the event is held for the purpose of fundraising. For example, if an organisation holds a dinner for its next AGM, the dinner is not being held for the purpose of fundraising and therefore the sale of tickets to the dinner and other sales it makes cannot be treated as input taxed.

    A charity, gift deductible entity or government school can conduct a particular fundraising event up to 15 times in a financial year and choose to treat each event as input taxed.

    If an organisation holds more than 15 of the same type of event in a financial year, none of the events can be treated as input taxed fundraising events. For example, if an organisation holds 16 fundraising dinners in a financial year, none of the dinners can be treated as input taxed and the organisation must account for GST for each of the earlier 15 dinners by revising the related BAS. However, the organisation may be able to exclude the sales it makes at the sixteenth and subsequent dinners by forming a non-profit sub-entity for these dinners.

    See also:

    GST and fundraising dinners or similar functions

    Non-commercial activities

    The commercial activities of a registered charity, gift deductible entity (see note 2) or government school are taxable but the non-commercial activities of these organisations can be GST-free.

    This means that, if it is registered for GST, the registered charity, gift deductible entity or government school does not pay GST on the payment it receives for its non-commercial sales, and it can claim GST credits for the GST included in the price of purchases it uses to make these sales.

    The term 'non-commercial activities' refers to sales made when the payment received for the sale is less than a specified amount. The sale is GST-free if the amount charged is either of the following:

    • less than 50% of the GST-inclusive market value
    • less than 75% of the amount the registered charity, gift deductible entity or government school paid to purchase the item that is subsequently sold.

    When the sale is a supply of accommodation by a registered charity, gift deductible entity or government school, the sale is GST-free if the amount charged is either of the following:

    • less than 75% of the GST-inclusive market value of the accommodation
    • less than 75% of the cost of providing the accommodation.

    Example – GST-free sales

    The Children in Need charity sells banana and carrot cakes at a fete for $3.00 each. Similar cakes would sell at a cake shop for $6.50 each.

    As the consideration received for each cake is less than 50% of the GST-inclusive market value, the sale of the cakes is GST-free.

    End of example

    Accounting on a cash basis

    Organisations that account for GST use either a cash or non-cash (accruals) method of accounting.

    Organisations may choose to account for GST on a cash basis if their GST turnover does not exceed the cash accounting turnover threshold.

    A registered charity, gift deductible entity or government school is entitled to use the cash basis of accounting regardless of turnover (except where the gift deductible entity operates a fund, authority or institution which can receive tax-deductible gifts or contributions – see note 3).

    See also:

    Choosing an accounting method

    Reimbursing volunteer expenses

    Where a registered charity, gift deductible entity (see note 2) or government school reimburses an individual person for an expense they have incurred that is directly related to their activities as a volunteer of that organisation, the organisation can claim a GST credit for the GST included in the price of the item purchased if the organisation is registered for GST.

    A payment is a reimbursement where the recipient is compensated exactly (meaning precisely, not approximately), whether wholly or partly, for an expense already incurred although not necessarily disbursed.

    To enable the charity, gift deductible entity or government school to claim the GST credit, the volunteer must provide the organisation with the tax invoice for the purchase they have made.

    Example – GST credits

    Sam is a volunteer for a small charitable organisation. He works as a computer programmer and is knowledgeable about different accounting software applications. Sam purchases a software program that would be suitable to record the charity's financial and membership records. The committee reimburses Sam for the expense of purchasing the software program.

    Sam gives the charity the tax invoice relating to the purchase. The charity can claim a GST credit for the GST included in the price of the software package.

    End of example

    See also:

    Claiming GST credits on reimbursements to volunteers

    Gifts and GST credit adjustments

    Generally, an organisation can claim GST credits on purchases made for its business activities. However, if the organisation has claimed a GST credit and does not use that purchase as part of its business activities, it must repay the GST credit previously claimed.

    If an organisation donates to an endorsed charity or gift deductible entity (see note 4) a purchase for which it has previously claimed a GST credit, it is not required to repay to us the GST credit previously claimed in respect of that purchase.

    Example – Donation of trading stock

    An organisation that sells desktop computers donates two computers from its trading stock to the Assisting with Education charity. The organisation has previously claimed GST credits for the computers.

    Although the computers are no longer trading stock, the organisation is not required to repay to the ATO the GST credits it has claimed in relation to the computers.

    End of example

    Donated second-hand goods

    A sale of donated second-hand goods by an endorsed charity, gift deductible entity or government school is generally GST-free provided there is no change in the original character of the goods.

    Example – Donated clothing

    A charity receives donations of damaged second-hand clothes. If the donated clothing is cleaned and/or repaired prior to sale it will be GST-free. If the second-hand clothes are cut up and sold as rags, the sale of the rags will not be GST-free as they are no longer the same as the goods that were donated, but have been manufactured by the charity into a new product, that is, rags.

    End of example

    Goods donated by a business that were trading stock of the business are not second-hand goods and therefore cannot be sold GST-free.

    Example – Trading stock

    The Learning Independence charity holds a fundraising fete where it sells items donated by individuals and local businesses. The Gifts and Novelties local business donates some floor-damaged novelty cups to the charity for sale at the fete. The sale of the donated floor-damaged goods is not GST-free because the novelty cups were trading stock of the business.

    End of example

    Charitable retirement villages

    Certain supplies made by a registered charity that operates a retirement village may be GST-free. Those supplies must be made by the charity to a resident of the retirement village. Accordingly, supplies made by the charity to visitors or staff of the retirement village would not qualify for GST-free treatment unless they are non-commercial activities of the charity.

    The range of supplies to a resident of a charitable retirement village, which GST-free treatment applies to, includes the supply of accommodation in the retirement village, and services related to the supply of accommodation and meals. This would include, for example, the supply of accommodation in an independent living unit or serviced apartment, property maintenance fees, gardening services and meals and beverages.

    Last modified: 20 Jul 2015QC 16990