To apply for taxation concessions and comply with taxation obligations an association may need to register for an Australian Business Number (ABN). This can be used to:
To apply for an ABN visit the Australian Business Register’s website at www.abr.gov.au. Application forms can also be downloaded from the ATO website or submitted through a tax agent.
Goods and Services Tax (GST) is a broad-based tax of 10 per cent on the sale of most goods, services, real property or other things consumed in Australia.
GST is paid on each transaction in the supply chain. GST-registered businesses are liable to pay the GST on the goods and services they supply, which they generally aim to recover from the buyer. These businesses can also generally claim back the GST they pay on business purchases or supplies as input tax credits. The cost of GST flows along the supply chain and is finally included in the price paid by the end consumer. End consumers can't claim input tax credits.
Associations must register for GST if their annual turnover is $150,000 or more, but can choose to register if their annual turnover is lower. GST concessions are also available to not-for-profits who are registered charities with the ACNC, endorsed to receive GST concessions and organisations registered as deductible gift recipients.
More information on GST concessions and how to register for GST can be found on the ATO website.
Fringe Benefits Tax (FBT) is paid on any benefits that an employer provides to their employees outside their salary or their superannuation, such as the use of a work car or phone. If an association provides fringe benefits to its employees, the association may be liable to pay FBT. This is quite separate from income tax, and even if the association is exempt from income tax, it may still incur an FBT liability.
Benefits exceeding the total value of $2000 in an FBT year (which runs from April 1 to March 31) must be reported on an employee’s payment summary. Please note that reimbursing an unpaid volunteer for out-of-pocket expenses does not make them an employee. Generally, benefits provided to volunteers do not attract FBT.
The FBT concessions that will apply to some incorporated associations include an exemption from FBT and the FBT rebate.
Registered charities and associations that are public benevolent institutions or health promotion charities may be eligible for an exemption from FBT. Remember, an association must be endorsed by the ATO as a tax concession charity in order to access the FBT exemption or the FBT rebate.
More information on FBT and how to register may be found on the ATO website.
As well as applying for the tax concessions listed above, charities can apply for DGR status when registering with the ACNC.
All DGRs should review whether they are required to register with the ACNC by following the guidance provided by the ATO. For a short summary, you can also read the ACNC factsheet.
A public benevolent institution (PBI) is a not-for-profit institution set up for the relief of poverty, sickness, suffering, distress, misfortune, disability or helplessness. Some charities will be classified as PBIs. For PBI status, the emphasis is on the provision of a service directly to those people requiring 'benevolent relief' in order to meet their particular needs for example hostels for homeless people, disability support, crisis care and emergency relief services.
Not-for-profit associations that do not provide direct benevolent relief will not be assessed as public benevolent institutions, despite their good deeds.
More detailed information about PBIs in available on the ACNC website.