We have an obligation to the Australian community to ensure not-for-profit (NFP) organisations understand and participate in the tax and super systems, including their entitlement to tax concessions.
We support those who do the right thing. We're also committed to help organisations to meet their tax obligations and deter the small number of organisations that either:
- intentionally use tax concessions to avoid their tax and super obligations
- claim refunds or other payments they aren't entitled to.
If you are new to tax for NFP, visit Getting started.
What attracts our attention
We publish information on the behaviours, characteristics and tax issues of NFP organisations that attract our attention to:
- help you get things right
- be transparent in our dealings with you.
There are certain behaviours and activities that alert us to possible misuse of tax concessions in the tax and super systems.
Operating for purpose
Situations that attract our attention include:
- not applying income and assets solely for the purpose for which the organisation is established (private benefits to individuals or distributing assets to ineligible entities when winding up)
- not meeting eligibility requirements for tax concession and deductible gift recipient (DGR) endorsement
- failing to register, lodge on time, report correctly or pay debts for GST, fringe benefits tax (FBT), pay as you go (PAYG) withholding and super obligations.
Private ancillary funds
Private ancillary funds must comply with the Taxation Administration (Private Ancillary Fund) Guidelines 2019 and particular focus is applied to:
- minimum annual distributions
- undervaluing donations
- non-arm's length transactions
- borrowing assets.
Self-assessing income tax exempt not-for-profits
Situations that attract our attention include:
- incorrectly self-assessing income tax exempt status
- not meeting the requirements of an exempt category.
Refund of franking credits
We focus on:
- ineligible entities claiming refund of franking credits
- overclaiming refund of franking credits.
Taxable not-for-profit entities
We focus on the mutuality principal – incorrectly classifying member and non-member income and expenses which may result in an understatement of assessable income.
How we detect and deal with those who don’t do the right thing
We use various sources of information and we undertake a range of activities to detect and deal with organisations that do not meet their tax and super obligations.
We may also receive information about tax avoidance from the community and from other agencies (including agencies of states and territories). Refer to Making a tip off and if you have any concerns about organisation, see Report fraud, phoenix, tax evasion shadow economy activity, or unpaid super.
We have a range of options to assist you in meeting your organisation's tax and superannuation obligations. This includes providing advice and guidance and tailored support.
Where we have concerns about a particular issue or behaviour, we may:
- require your organisation to provide us with additional information
- undertake a review or audit.
In more serious instances, we also have the power to:
- revoke your entitlement to tax concessions
- raise tax liabilities, apply interest to unpaid liabilities and impose administrative penalties.
For more information, refer to:
Voluntary disclosure
We encourage you to undertake an annual review of your NFP organisation's status, or when there has been a significant change to your purpose or activities.
The information you provide in your tax return and activity statements must be true and correct. If you have made an honest mistake or you have omitted information, we encourage you to make a voluntary disclosure.
To make a voluntary disclosure about:
- your entitlement to tax concessions, DGR status or compliance with the ancillary fund guidelines phone us on 1300 130 248
- other tax types such as income tax, GST, PAYG and FBT see How to make a voluntary disclosure.
For more information, refer to:
- Self-governance checklist for not-for-profit organisations
- Not-for-profit self-review
- Voluntary disclosures