A not-for-profit (NFP) organisation is an entity that is operating for its purpose and not for the profit or gain (either direct or indirect) of its individual members. NFP organisations fall within two broad categories: • charities, and • other NFP organisations that are not charities, for example: most sporting and recreational clubs, community service organisations, professional and business associations, and social organisations. Charities must register with the Australian Charities and Not-for-profits Commission (ACNC) before they can be endorsed by ATO for tax concessions or apply for certain categories of deductible gift recipient (DGR) status. Other NFP organisations that are not charities may be able to self-assess whether they are income tax exempt or taxable and whether they will have access to other tax concessions. They will need to be endorsed by ATO to obtain DGR status. Legal Structures The legal structure you choose should meet your organisation's needs now and into the future. The organisation's legal structure will affect many things, such as: • its legal identity (whether it can be sued) • its governance structure (who makes what types of decisions) • who is liable for its debts and its specific responsibilities • what its reporting or other compliance obligations are. Legal structures commonly used by NFP organisations include unincorporated associations, incorporated associations, companies, cooperatives, Indigenous corporations, and trusts. Different legal structures have different reporting requirements and tax obligations. Tax Concessions Depending on the type of NFP organisation, different tax concessions are available and the process for accessing each concession varies. Charities: must be endorsed by ATO to access charity tax concessions. Other NFP organisations: can generally self-assess – that is, work out for themselves – whether they are entitled to tax concessions.The tax concessions NFPs may be entitled to access include: • income tax exemption • fringe benefits tax (FBT) exemption or rebate • goods and services tax (GST) concessions • deductible gift recipient (DGR) endorsement • refund of franking credits. To access various concessions and comply with your organisation's tax obligations, your organisation may need to register for an Australian business number (ABN), GST, FBT, pay as you go (PAYG) withholding, fuel tax credits or other taxes. Deductible Gift Recipients (DGR) When you receive donations to support your organization, your supporters can claim a tax deduction if you have been endorsed by ATO as a deductible gift recipient (DGR). All organizations, including charities, must be endorsed by ATO as a DGR if they want their donors to be able to claim a tax deduction. Registration process To register your NFP organization follow these steps: 1. Determine / understand your legal structure. 2. Determine if you are an NFP. 3. Register your organization with the Australian Government to obtain an Australian Business Number (ABN). At the same time, you can also register for Goods and Services Tax (GST), Fringe Benefit Tax (FBT), Pay As You Go (PAYG) withholding if your organization requires it.
This article is for informational purposes only and does not form part of our advice. This article is based on Australia Taxation Office guideline. Please contact our team if you need any assistance. Claire Chang, 0497 131 419, email@example.com, WeChat: clairechang26 Michelle Cui, 0433 539 870, firstname.lastname@example.org, WeChat: michellejc
Land tax grouping is different in different states, this article is based on Victorian state situation. Under the Land Tax Act 2005 of Victoria, corporations are related corporations in certain circumstances. Where two or more corporations are related, they may be treated as a land tax group. If corporations are grouped, the land holdings of each corporation in the group are combined and assessed as if they were a single land holding owned by a single corporation (i.e. land tax is calculated on the total taxable value of all land owned by members of a group as if it were a single piece of land held by a single company). Members of a land tax group are jointly and individually liable for the land tax payable by the group. As such, State Revenue Office can recover the land tax payable by the land tax group from any member of that group.
Land Tax Grouping
Foreign resident capital gains withholding (FRCGW) applies to vendors disposing of certain taxable property under contracts entered into from 1 July 2016. The FRCGW tax rate is 12.5% which applies to real property disposals where the contract price is $750,000 or more. While the objective of the rules is to assist in the collection of foreign residents' CGT liabilities, the withholding tax will apply regardless of whether the vendor's gain on the sale of the asset is subject to tax under the CGT regime or as ordinary income. However, the withholding obligation applies to both Australian resident and foreign resident purchasers. Australian resident vendors can avoid the requirement of the purchaser to withhold the 12.5% by providing one of the following to the purchaser prior to settlement: • for Australian real property, a clearance certificate obtained from us o Australian resident vendors selling real property will need to obtain a clearance certificate from us prior to settlement, to ensure they don't incur the 12.5% non-final withholding • for other asset types, a vendor declaration o the vendor may provide the purchaser with a vendor’s declaration to specify withholding isn't required on the acquisition of the asset. Foreign resident vendors may apply for a variation of the withholding rate or make a declaration that a membership interest is not an indirect Australian real property interest and therefore not subject to withholding. Purchasers must pay the amount withheld at settlement to the Commissioner of Taxation.Capital Gains Withholding Tax Link