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Help Sheet

Tax for community groups.

As a not-for-profit leader, there are two things about tax you have to take a particular interest in; what tax is due, and what taxes you can get concessions on. Don't count on a quick answer to either.  Tax law is the most complex kind of law there is, closely followed by the law related to charities.  

Almost all kinds of not-for-profit organisations - whether simple not-for-profit, community service organisation, charity, public benevolent institution (PBI), religious institution, or deductible gift recipient (DGR) - is entitled to some tax concession, even if not the big-ticket items, and correspondingly all not-for-profit treasurers should check with their accountants to make sure that they're getting every concession they're entitled to. Because one thing the tax office doesn't do is ring you up and ask if you're aware that you're missing out on something that you look as if you ought to get.  That's not the business they're in.

To get the most simplified view of the situation possible, go to the Australian Tax Office (ATO) site, go to the line marked "For Non-Profit Organisations" and jump to http://www.ato.gov.au/non-profit, and read all the entries slowly and carefully.

The really tough bit comes  early on, when you have to know what kind of an organisation you are.  Just as a starter, look at this table. Which are you?


Not-for-profit organisation Community service organisation Charity Public benevolent institution (PBI) Religious institution Deductible gift recipient (DGR)
Income tax exemption
Yes
Yes

Yes

Receives deductible gifts


Yes
Yes
Refund of imputation credits

Yes


Yes
Fringe benefits tax (FBT) rebate
Yes
Yes

Yes

FBT exemption

Yes



GST non-profit concessions Yes





GST charity/gift-deductible entity concessions

Yes


Yes
GST religious organisation concessions



Yes


Different kinds of groups have different labels, different registration procedures, and different tax regimes, and it's important to know (a) what kind of groups you currently are and (b) what other kind of groups you might be  if you  took the trouble to apply.

Registering your organisation
You will have to become familiar with a whole alphabet of acronyms.  Apart from ATO, DGR and PBI, you may need to register for ABN, GST, FBT or PAYG in order to access various concessions and comply with your organisation's tax obligations.

Goods and services tax
Your non-profit organisation may need (or may want) to register for GST.  If you're looking for advice on these points, have a look at the SGT helpheets at  http://www.ourcommunity.com.au/management/view_help_sheet_list.do?categoryid=384.

Employees and other workers
If your organisation has employees, you need to know about the PAYG withholding system. Some tax issues may also have an impact on your organisation in relation to your volunteers.

Tax deductible gifts and fundraising
If your organisation wants to receive tax deductible gifts, you will need to familiarise yourself with the ATO information on this topic. Downloading or order the ATO's GiftPack here. This will help you ferret out the details of what concessions you're eligible for.

Record keeping, administration and payment
You will need to know the types of records your organisation should keep and what information to give financial institutions about your organisation's bank accounts and other investments, and then you will have to incorporate these procedures into your own bookkeeping.

State government taxes
Unfortunately, Commonwealth taxes aren't the only things you have to worry about.   Stamp duty, payroll tax, land tax, financial institutions duty, debits tax and public fund raising are governed by individual state and territory governments. Each of these must be pursued separately with different agencies.

After you've looked over the basics, probe deeper.   It's a highly technical field, and you would be well advised to have all these headings given a once-over by a lawyer who specialises in the area.  

Furthermore, the government has announced a number of changes to tax law in this area that have not yet come into effect, and you will wish to consult the latest updates at http://www.ato.gov.au/nonprofit/content.asp?doc=/content/36088.htm.  You may also wish to lead the public debate further by expressing to the government your groups' views on what tax deductions you think community groups should get.  

You can't avoid death or taxes, which doesn't mean that you don't try to get as little as possible of both in your immediate circle.  Good luck.

Our Community Pty Ltd   www.ourcommunity.com.au   ABN 24 094 608 705
National Headquarters: 51 Stanley St, West Melbourne Victoria 3003 Australia
(PO Box 354 North Melbourne 3051 Victoria)
Telephone (03) 9320 6800   Email service@ourcommunity.com.au