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  • GST concessions

    Goods and services tax (GST) concessions are available to not-for-profit (NFP) organisations.

    Additional GST concessions are available to:

    • Australian Charities and Not-for-profits Commission (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 registered with the ACNC and endorsed for GST concessions by the ATO
    • a gift deductible entity is an entity that can receive tax-deductible gifts or contributions.

    See also:

    Available GST concessions

    Some concessions only apply to certain types of NFP organisations.

    Concessions available for NFP organisations

    GST concession

    Eligible entity

    Gifts – a gift is not considered payment for a sale if there are no conditions attached to that gift.

    All NFP organisations

    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.

    All NFP organisations

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

    All NFP organisations

    GST groups – the requirement to satisfy the 90% ownership test is waived if both:

    • the entity is an NFP organisation
    • all the other members of the GST group or proposed GST group are not-for-profit organisations and members of the same NFP association.
     

    All NFP organisations

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

    Endorsed charity

    Gift deductible entity

    Government school

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

    Endorsed charity

    Gift deductible entity

    Government school

    Non-commercial activities – when 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

    Gift deductible entity

    Government school

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

    Endorsed charity

    Gift deductible entity

    Government school

    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

    Gift deductible entity

    Government school

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

    Endorsed charity

    Gift deductible entity

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

    Endorsed charity

    Gift deductible entity

    Government school

    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

    Gift deductible entity

    Government school

    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

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

    Endorsed charity

    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 donor 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
      • is a material benefit if it is 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.
       

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

    Example: 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.

    End of example

     

    Example: 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: 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.

    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 remit GST on its sales and cannot 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. Additionally, 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.

    The non-profit GST registration turnover threshold applies to all non-profit sub-entities regardless of whether their parent entity is a non-profit entity or not.

    See also:

    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 or government school are GST-free provided they do not contravene state or territory law.

    Fundraising events

    A registered charity, gift deductible entity 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 remit 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
    • 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, it is 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

    If you write to us, we will grant approval only if the:

    • event is held for the purpose of fundraising
    • organisation is not in the business of conducting such events
    • proceeds from the event are for the direct benefit of the organisation's 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: 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.

    End of example

     

    Example: 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.

    End of example

     

    Example: 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.

    However, the sale of lottery tickets may 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.

    An endorsed 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 events 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 activity statement.

    Non-commercial activities

    The term 'non-commercial activities' refers to sales made for a payment that is less than a specified amount.

    Non-commercial activities of endorsed charities, gift deductible entities or government schools may be GST-free dependent on certain threshold tests called nominal consideration threshold tests. Commercial activities of these entities are taxable.

    Nominal consideration threshold tests

    Supplies may be GST-free when they meet one of the following threshold tests:

    • Accommodation supplies can be GST-free when the consideration for the supply is either less than 75% of the
      • GST-inclusive market value of the supply
      • cost to the supplier of providing that accommodation.
       
    • Non-accommodation supplies can be GST-free when the consideration for the supply is either less than
      • 50% of the GST-inclusive market value
      • 75% of the consideration the supplier provided or was liable to provide for acquiring the thing supplied.
       

    If you are a residential college or university that has used the Residential Colleges GST Tool, see Supplies for residential colleges.

    Determining the status of your supplies

    You can use the market value or cost method under the nominal consideration threshold tests to determine if your supplies are GST-free.

    If you determine a supply is GST-free, you:

    • don't pay GST on that supply
    • can claim a credit for the GST paid on that supply.

    You need to consider how you will determine the GST status of your supplies. There are two methods to determine if your supplies are GST-free under the threshold tests for nominal consideration:

    See also:

    Market value

    Market value can be used for all types of supplies. When determining the market value of your supplies, apply the following.

    Same supply

    Look at other organisations that provide the same types of supplies. These should be comparable in size, quality and location. Items should be like-for-like so , for example, don't compare a bedroom with an ensuite to a dormitory room with shared facilities.

    Similar supply

    If you can't identify the same supply, you should use a similar supply and identify the differences and pricing when doing your valuation. For example, if you supply a dormitory with shared facilities and there are no other dormitories in the market of the same quality, location and number of beds you would get a valuation of the similar supply and the value of the differences to calculate the market value.

    Other approved methodology

    If you can't identify a same supply or similar supply, you can ask us for an alternative method for valuation by Applying for a private binding ruling.

    Example: Using the market value threshold test

    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 nominal 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

    See also:

    Cost

    This only applies to accommodation supplies. When working out the cost of providing something, you should include both:

    • all direct costs incurred – for example, materials and direct labour
    • a reasonable apportionment of indirect costs incurred – for example marketing, administration, office expenses, electricity, phone and insurance.

    Example: Using the cost method threshold test

    Homes for People provides accommodation to people in crisis.

    The cost of providing the accommodation is $200 per week. They supply it for $145 per week. The cost includes:

    • direct costs, including the cost of the room, bed, linen and maintenance
    • indirect costs, including apportionment of administration, electricity, phone and insurance.

    As the nominal consideration received is less than 75% of the cost to provide accommodation, the supply of it is GST-free.

    End of example

    What you can't include

    You can't include things where there aren't any real costs, such as:

    • depreciation of assets
    • volunteer labour
    • donations
    • free rent.

    Apportion supplies

    When supplying a mixture of taxable, input taxed and GST-free supplies, you need to determine which purchases relate to each type of supply, so you can claim the right amounts of credits.

    See also:

    Keep records

    Remember to keep accurate records, including:

    • how you calculated your valuations
    • what you considered in the valuation process.

    See also:

    Selecting a valuer

    You can source your own valuations or choose a suitably qualified and experienced certified practicing valuer.

    Here are some tips, if you decide to engage a valuer:

    • Ensure the valuer is qualified and registered or licenced in your state or territory.
    • Check if they have professional indemnity insurance and there are no unusual or restrictive conditions that could void the policy.
    • Ask if they have conducted similar valuations and request a sample.
    • Review the company profile information (such as number of valuers and experience, background of directors and company, quality assurance processes and valuation systems used).

    Do a company searchExternal Link to confirm the company is registered and check the directors aren't former directors of liquidated property valuation firms.

    Supplies for residential colleges

    Residential colleges and universities may offer a mix of supplies such as accommodation, meals and tertiary residential college courses to students, and non-students, who may also provide other services such as student tutoring. This means services can be a mix of GST taxable, input taxed and GST-free. You need to consider how you will determine the GST status of your supplies under the nominal consideration threshold tests.

    The Residential Colleges GST Tool has been available from 2009. The tool will be will be retired when it expires on 31 December 2021. The tool:

    • can only be used for student accommodation supplies that are supplied before 31 December 2021
    • isn't intended to be used for setting prices.

    From 1 January 2022, you need to consider how you will determine the GST status of your supplies under the nominal consideration threshold tests.

    A copy of the residential colleges GST tool and the instructions can be requested by sending an email to GSTmail@ato.gov.au up to 31 December 2021.

    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.

    An endorsed 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 that can receive tax-deductible gifts or contributions).

    See also:

    Reimbursing volunteer expenses

    If an endorsed charity, gift deductible entity 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 if 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:

    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 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 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 that GST-free treatment applies to includes:

    • the supply of accommodation in the retirement village
    • 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
    • meals and beverages.
    Last modified: 30 Jul 2021QC 16990