It is important for NFP organisations to be aware of the concessions available to them.
Tax concessions available include income tax exemptions, fringe benefits tax (FBT) exemptions or rebates, goods and services tax (GST) concessions and being granted deductible gift recipient (DGR) status.
Charities, being a specific type of NFP organisation, must be registered with the Australian Charities and Not-for-profits Commission (ACNC) and endorsed by the Australian Taxation Office (ATO) to access charity tax concessions.
So what are the concessions?
Income tax exemption: Qualifying organisations are exempt from income tax and in most cases will not be required to lodge an income tax return.
Fringe benefits tax exemptions: If your organisation is exempt from fringe benefits tax, benefits it provides to its employees are exempt from FBT subject to an amount cap. Should the value of benefits provided to an employee exceed the threshold, your organisation may need to pay FBT on the excess. Volunteers are not classified as employees for FBT purposes, so benefits provided to them do not attract FBT.
Fringe benefits tax rebate: If your organisation qualifies for a FBT rebate you are entitled to have your FBT liability reduced by a rebate equal to a percentage of the gross FBT payable, subject to a threshold. The rebate will not apply to fringe benefits provided in excess of the FBT concession cap.
GST concessions: All NFP organisations are subject to a registration threshold of $150,000 ($75,000 for normal enterprises). This means your organisation is not required to be registered unless your turnover is $150,000 or more. For smaller organisations it may still be worthwhile registering for GST, depending on the nature of the supplies you make and the cost of compliance.
Deductible Gift Recipient (DGR) status: DGR’s are entitled to receive income tax-deductible gifts and tax deductible contributions. NFP organisations need to be endorsed as a DGR by the ATO.
The tax concessions applicable to the NFP sector can be quite complex so it is recommended that you seek advice from the ATO or a tax advisor.
State and territory governments also have tax concessions for NFP entities that may be applicable depending on the state or territory your organisation operates in.