• Case study 1: Alizarin Society

    Facts

    The Alizarin Society is a non-profit company with the following revenue and expenses for the year ended 30 June. It is not registered for GST and not required to be registered.

    Revenue

    $

    Expenses

    $

    Membership subscriptions

    $3,000

    Postage (see note 2)

    $100

    Term deposit interest

    $800

    Photocopying (see note 2)

    $100

    Christmas dinner (see note 1)

    $5,000

    Christmas dinner (see note 1)

    $4,000

    Lamington sale to public

    $2,500

    Cost of lamingtons

    $1,800

     

     

    Term deposit charges

    $50

    Total

    $11,300

     

    $6,050

    Note 1 The Christmas dinner was attended by 70 members and 30 non-members who paid $50 each. It cost $40 per person to cater for the dinner.

    Note 2 From an examination of the society's records, 10% of its communication during the year was with non-members.

    Steps for calculating taxable income

    Step 1: Classify revenue

    Revenue

    Non-assessable

    Assessable

    Apportionable

    Total

    Membership subscriptions

    $3,000

    -

    -

    $3,000

    Term deposit interest

    -

    $800

    -

    $800

    Sale of lamingtons

    -

    $2,500

    -

    $2,500

    Christmas dinner

    -

    -

    $5,000

    $5,000

    Total

    $3,000

    $3,300

    $5,000

    $11,300

    Step 2: Classify expenses

    Expenses

    Non-deductible

    Deductible

    Apportionable

    Total

    Postage

    -

    -

    $100

    $100

    Photocopying

    -

    -

    $100

    $100

    Christmas dinner

    -

    -

    $4,000

    $4,000

    Cost of lamingtons

    -

    $1,800

    -

    $1,800

    Term deposit charges

    -

    $50

    -

    $50

    Total

    -

    $1,850

    $4,200

    $6,050

    Step 3: Separate the apportionable items

    Revenue

    Non-assessable

    Assessable

    Total

    Christmas dinner (see note 3)

    $3,500

    $1,500

    $5,000

    Note 3 Revenue from the Christmas dinner is apportioned on the basis that it was attended by 70 members and 30 non-members who paid $50 each.

    Expenses

    Non-deductible

    Deductible

    Total

    Christmas dinner (see note 4)

    $2,800

    $1,200

    $4,000

    Postage (see note 5)

    $90

    $10

    $100

    Photocopying (see note 5)

    $90

    $10

    $100

    Total

    $2,980

    $1,220

    $4,200

    Note 4 Expenses for the Christmas dinner are apportioned on the basis that it was attended by 70 members and 30 non-members and it cost $40 per person to cater for the dinner.

    Note 5 Expenses for postage and photocopying are apportioned on the basis that 10% of Alizarin Society's communication during the year was with non-members.

    Step 4: Calculate the taxable income

    Assessable income ($3,300 + $1,500)

    $4,800

    Less: deductible expenses ($1,850 + $1,220)

    $3,070

    Taxable income

    $1,730

    As its taxable income is more than the taxable threshold, the Alizarin Society will need to lodge a company tax return. For information on how to complete the company tax return, see Guide to company tax return for not-for-profit organisations.

      Last modified: 23 Jun 2016QC 23099