The exposure draft standardises the definition of ‘not-for-profit’ across the federal tax legislation and legislation relating to regulations by the Australian Charities and Not-For-Profits Commission.
In the exposure draft, a ‘not-for-profit’ entity is defined as an entity that:
- Is not carried on for the profit or gain of its owners or members, neither while it is operating nor upon winding up
- Under an Australian law, foreign law or the entity’s governing rules, is prohibited from distributing, and does not distribute, its profits or assets to its owners or members (whether in money, property or other benefits), neither while it is operating nor upon winding up (unless the distribution is made to another not-for-profit entity with a similar purpose or is genuine compensation for services provided to, or reasonable expenses incurred on behalf of, the entity).