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Australia Charities & Not-for-Profit Tax Guide

Australian charities and not-for-profit (NFP) taxation. The guide covers: the income tax exemption for the charities — the 'charities' that are 'registered with the ACNC' (the 'Australian Charities and Not-for-profits Commission') and that meet the 'income tax exemption conditions' under the 'Division 50 of the ITAA 1997' are 'exempt from the income tax'; the 'tax-exempt entities' include: (i) the 'charitable institution' (the 'charity' registered with the 'ACNC'), (ii) the 'public benevolent institution (PBI)', (iii) the 'health promotion charity', (iv) the 'religious institution', (v) the 'educational institution', (vi) the 'scientific institution', (vii) the 'community service organisation'; the 'ancillary fund' (the 'public ancillary fund' and the 'private ancillary fund') is also 'tax-exempt'; the 'tax-exempt entity' must 'apply the income for the charitable purposes' and must NOT 'distribute the income to the members' (the 'no distribution to the members' rule); the DGR status — the 'deductible gift recipient (the 'DGR') status' is the 'status that allows the donors to claim the 'tax deduction' for the 'donations' to the 'DGR entity'; the 'DGR status' is 'endorsed' by the 'ATO' (the 'ATO endorsement for the DGR'); the 'DGR entities' include: (i) the 'public benevolent institution', (ii) the 'health promotion charity', (iii) the 'school' and the 'university' (the 'educational institution'), (iv) the 'hospital', (v) the 'public museum' and the 'public library', (vi) the 'public art gallery', (vii) the 'zoo' and the 'botanic garden', (viii) the 'research organisation', (ix) the 'environmental organisation' (the 'environmental DGR'), (x) the 'cultural organisation', (xi) the 'community service organisation'; the 'donor' can claim the 'tax deduction' (the 'gift deduction') under the 'Division 30 of the ITAA 1997' for the 'donation of $2 or more' to the 'DGR entity'; the FBT rebate for the charities and the PBIs — the 'charities' and the 'public benevolent institutions' may be eligible for the 'FBT rebate' (the 'fringe benefits tax rebate'); the 'FBT rebate' is the 'rebate' of 47% of the 'FBT payable' (the 'FBT rate'); the 'FBT rebate' is available to the 'charities', the 'PBIs', and the 'health promotion charities' that are 'registered with the ACNC'; the 'capped FBT rebate amount' is $30,000 per 'employer' per 'FBT year' (the 'FBT rebate cap'); the GST concessions for the NFPs — the 'NFP entities' may be eligible for the 'GST concessions': (i) the 'GST-free supplies' — the 'religious supplies' (the 'religious services' and the 'religious goods'), the 'supplies of the accommodation by the charitable institution' (the 'NFP accommodation'), the 'supplies of the education', and the 'supplies of the health'; (ii) the 'GST exemption for the supplies below $150,000' (the 'NFP GST exemption' for the 'small NFPs' with the 'turnover below $150,000'); the 'NFPs' with the 'GST turnover' below the 'GST registration threshold' of $150,000 (the 'higher NFP GST threshold' — the 'special $150,000 threshold for the NFPs' instead of the 'standard $75,000 threshold') are NOT required to register for the 'GST'.

Income Tax Exemption for Charities

  • ACNC registration: The 'charity' must be 'registered with the ACNC' to claim the 'income tax exemption'. The 'charitable purpose' includes the 'relief of the poverty', the 'advancement of the education', the 'advancement of the religion', and the 'other charitable purposes'.
  • Division 50 exemption: The 'tax-exempt entities' under the 'Division 50 of the ITAA 1997' are 'exempt from the income tax'. The 'entity' must not 'distribute the income to the members or the beneficiaries'.
  • FBT rebate: The 'charities' and the 'PBIs' receive the 'FBT rebate' of 47% of the 'FBT payable', capped at $30,000 per 'employer'.

For the FBT rules and the exemptions, see our Fringe Benefits Tax Guide →.

DGR Status & Donations

  • DGR endorsement: The 'DGR status' is endorsed by the 'ATO'. The 'DGR entity' can receive the 'tax-deductible donations' — the 'donor' claims the 'deduction' under the 'Division 30'.
  • Donation deduction: The 'donation' of '$2 or more' to the 'DGR entity' is 'deductible'. The 'total donation deductions' are claimed in the 'tax return' under the 'gifts or donations' label.
  • Private ancillary fund: The 'private ancillary fund (PAF)' is the 'family charitable foundation' — the 'PAF' is the 'DGR entity' and the 'donor' can claim the 'deduction' for the 'contribution to the PAF'.

For the personal tax deductions and the tax offsets, see our Personal Tax Guide →.

GST Concessions for NFPs

  • Higher GST threshold — $150,000: The 'NFPs' have the 'higher GST registration threshold' of $150,000 (the 'standard threshold is $75,000'). The 'NFPs with the turnover below $150,000' are NOT required to register for the 'GST'.
  • GST-free supplies: The 'religious supplies', the 'charitable accommodation', the 'education supplies', and the 'health supplies' are 'GST-free' for the 'NFPs'.

For the GST registration and the BAS lodgement, see our GST Guide →.