GST concessions in ATO
A range of goods and services tax (GST) concessions are available to
not-for-profit (NFP) organisations. You must be endorsed by us to access
GST charity concessions.
There are additional GST concessions that are available to:
- ACNC registered charities that are endorsed to access GST charity concessions
- gift deductible entities
- government schools.
For GST purposes:
- an endorsed charity is a charity that is an ACNC registered charity, has an ABN and is endorsed by us as a charity
- a gift deductible entity is an entity that can receive tax-deductible gifts or contributions.
Check the
notes to the table below carefully
, as your organisation may need to meet requirements before it can access a concession.
Available GST concessions
GST concession
|
Eligible entity
|
Explanation of concession
|
Not-for-profit organisations
|
Gifts – a gift to n NFP organisation is not considered payment for a sale.
|
NFP organisation
|
see Gifts
|
School tuck shops – an NFP organisation may sell
food through a tuck shop or canteen at a primary or secondary school
and treat the sales as input taxed.
|
NFP organisation
|
see School tuck shops
|
GST registration threshold – the registration turnover threshold is higher for NFP organisations than for other organisations.
|
NFP organisation
|
GST registration threshold.
|
GST groups – the requirement to satisfy the 90%
ownership test is waived where the entity is an NFP organisation and all
the other members of the GST group or proposed GST group are
not-for-profit organisations and members of the same NFP association.
|
NFP organisation
|
see GST branches, groups and non-profit sub-entities.
|
Charities, gift deductible entities and government schools
|
Raffles and bingo – tickets to raffles and bingo
sold by an eligible entity are GST-free provided the holding of the
raffle or bingo event does not contravene a state or territory law.
|
- Endorsed charity (1)
- Gift deductible entity (2)
- Government school
|
see Raffles and bingo
|
Fundraising events – an eligible entity may choose to treat all sales it makes in connection with certain fundraising events as input taxed.
|
- Endorsed charity (1)
- Gift deductible entity (2)
- Government school
|
see Fundraising events
|
Non-commercial activities – where an eligible
entity makes sales and the payment it receives in return for the things
it sold is less than a certain amount, the sales are GST-free.
|
- Endorsed charity (1)
- Gift deductible entity (2)
- Government school
|
see Non-commercial activities
|
Accounting on a cash basis – an eligible entity may choose to account on a cash basis regardless of its GST turnover.
|
- Endorsed charity (1)
- Gift deductible entity (3)
- Government school
|
see Accounting on a cash basis
|
Reimbursement of volunteer expenses – an
eligible entity can claim GST credits for reimbursements made to
volunteers for expenses the volunteer incurs that are directly related
to their activities as a volunteer of the entity.
|
- Endorsed charity (1)
- Gift deductible entity (2)
- Government school
|
see Reimbursement of volunteer expenses
|
Gifts and GST credit adjustments – adjustments
of GST credits are not required when an item acquired by a business is
subsequently gifted to an eligible NFP entity.
|
- Endorsed charity (1)
- Gift deductible entity (4)
|
see Gifts and GST credit adjustments
|
Donated second-hand goods – sales of donated second-hand goods by an eligible entity are GST-free.
|
- Endorsed charity (1)
- Gift deductible entity (2)
- Government school
|
see Donated second-hand goods
|
Non-profit sub-entities – an eligible entity may conduct some of its activities through a non-profit sub-entity, subject to certain exceptions.
|
- Income tax exempt NFP organisation
- Endorsed charity (1)
- Gift deductible entity (5)
- Government school
|
see Non-profit sub-entities
|
GST religious groups – some charities can be approved as a GST religious group. Transactions between members of the group are excluded from GST.
|
Income tax exempt charity
|
see GST religious groups
|
Charitable retirement villages – an eligible
not-for-profit entity may provide GST-free accommodation,
accommodation-related services and meals to residents of such retirement
villages.
|
Endorsed charity (1)
|
see Charitable retirement villages
|
Notes to table
Endorsement requirements for charities
- If a charity wants to access this concession, it must be endorsed by us to access GST charity concessions.
See also:
Endorsement requirements for charities
Gift deductible entities
- A gift deductible entity that operates a fund, authority or
institution which can receive tax-deductible gifts or contributions can
only apply this concession to the activities of the endorsed fund,
authority or institution, and not to any other activities of the gift
deductible entity.
- A gift deductible entity that operates a fund, authority or
institution which can receive tax-deductible gifts or contributions is
only entitled to account for GST on a cash basis if it meets one of the
general eligibility criteria, either the:
- entity's GST turnover does not exceed the cash accounting turnover threshold
- entity correctly accounts for income using the receipts method for income tax purposes.
- If a donor makes a gift to a gift deductible entity that operates a
fund, authority or institution which can receive tax-deductible gifts or
contributions, the donor will not have to make an adjustment to their
GST credit if the gift is made for the principal purpose of the endorsed
fund, authority or institution.
Only a gift deductible entity that is a not-for-profit body can
choose to treat separately identifiable branches as non-profit
sub-entities.
Non-profit sub-entities
- Most GST concessions in the table also apply to a non-profit
sub-entity of an eligible entity listed under each concession. The only
exceptions to this are:
For those GST concessions which require a choice be made, the
non-profit sub-entity of an eligible entity can choose to access the
concession even if the parent entity has chosen not to apply the
concession to its own activities.
Gifts
A gift made to an NFP organisation is not considered payment for a
sale and is not subject to GST. The value of a gift is also excluded
when calculating the NFP organisation's GST turnover.
For a payment to be considered a gift it must be made voluntarily and the payer cannot receive a material benefit in return:
- A payment is not voluntary when there is an obligation to make the
payment or the NFP organisation is contractually obliged to use the
payment in a specific way.
- A benefit is not a material benefit if it is an item of
insubstantial value that cannot be put to a use or is not marketable,
such as a pin or a ribbon. An item of greater value, such as a ticket to
a dinner, or an item that has a use or function, such as a pen or a
book, is a material benefit.
The GST treatment of transactions discussed in this section may vary
if an organisation chooses to apply other GST concessions available to
it.
Example 1 – Gift not subject to GST
Chamith
purchases a magazine at the local newsagency and notices a box of
badges placed next to the cash register. The sign on the box explains
that a not-for-profit organisation is seeking public support to fund
medical research. Chamith places $2 into the box and takes a badge as
recognition for his gift. Chamith made the payment voluntarily. The
badge is not suitable as a piece of jewellery nor can it serve any
useful purpose. The badge does not give Chamith any material benefit.
Chamith's payment is a gift. The gift made to the NFP organisation is not consideration for a sale and it is not subject to GST.
Example 2 – Consideration for a sale
Matt pays $2
to a not-for-profit organisation and in return for his payment receives
a chocolate bar. As the chocolate bar can be eaten as a sweet it has a
use or function and therefore provides Matt with a material benefit in
return for his payment.
Matt's payment is not a gift. The payment received by the
not-for-profit organisation is consideration for a sale. If the
organisation is registered for GST, or is required to be registered, the
price of the chocolate includes GST and the organisation needs to remit
the GST to us.
End of example
If an NFP organisation is registered for GST, or is required to be
registered, GST is payable on the full amount of a ticket price to a
dinner or similar function conducted by the NFP organisation, even
though part of the ticket price may be intended to be a gift to the
organisation. When a person attends the dinner they are receiving a
material benefit (the dinner) in exchange for the purchase price of the
ticket. No part of the payment is a gift when the full purchase price
must be paid in order to receive the dinner. This is so even when the
ticket price is much more than the value of the meal.
Example 1 – Fundraising event tickets
Mel
attends a '$1,000 a plate' dinner for an NFP organisation. The value of
the meal is $150. Mel has received a material benefit.
The purchase of the ticket is not a gift. The money received by the
NFP organisation for the ticket is consideration for a sale. If the
organisation is registered for GST, or is required to be registered, the
price of the ticket includes GST and the organisation needs to remit
the GST to us. This is the case, even though part of the ticket price is
intended to be a gift.
Example 2 – Purchase at charity auction
Tracey buys a clock at a charity auction. The clock has a market value of $500, but Tracey pays $1,000.
The amount paid to the charity cannot be split between the market
value of the clock and a 'gift'. The money received by the charity for
the clock is consideration for a sale. If the charity is registered for
GST, or is required to be registered, the price of the clock includes
GST and the charity needs to remit the GST to us.
End of example
When a payment is made in addition to the purchase price of a ticket
to a dinner or some other item and is truly voluntary, with no material
benefit passing to the donor or their associate, the payment is a gift
and is not subject to GST. This may occur if a NFP organisation charges
an entrance fee to attend a dinner or function and separately seeks
gifts at the event.
Example – Ticket purchase and donation
Troy attends a fundraising trivia night in aid of a not-for-profit
organisation and pays $20 for admission. Later in the evening he donates
$10 to the organisation.
The $20 cost of admission is not a gift. However, the $10 donation is
a gift. The $20 paid for admission to the trivia night is consideration
for a sale. If the not-for-profit organisation is registered for GST,
or is required to be registered, the price of the ticket includes GST
and the organisation needs to remit the GST to the ATO.
End of example
School tuck shops
If an NFP organisation (for example, a parents and citizens
association) operates a school tuck shop on the grounds of a primary or
secondary school, it can choose to treat all sales of food through the
tuck shop as input taxed.
If an organisation chooses to treat all sales of food through a school tuck shop as input taxed, they:
- must keep records containing details about its choice (for example, in accounts or meeting minutes)
- do not need to notify us of their choice.
This means that the organisation does not charge GST on its sales, and does not claim GST credits for its purchases.
As input taxed sales are not included when calculating the GST
turnover for GST registration purposes, choosing to treat all sales of
food as input taxed may mean that the organisation does not have to
register for GST.
If the organisation is registered for GST, treating all sales of food
as input taxed makes managing GST easier. Without this concession, some
sales of food would be GST-free and others taxable. For example, the
sale of fresh fruit is GST-free and the sale of a meat pie is taxable.
Once the
organisation chooses to treat all sales of food as input taxed, it
cannot revoke that choice for 12 months. The organisation cannot make
another choice to treat all sales of food as input taxed within 12
months after the previous choice was revoked.
GST registration threshold
The GST registration threshold for an NFP organisation is $150,000.
This means your NFP organisation is not required to be registered for
GST unless the GST turnover of your organisation is $150,000 or more.
You may still choose to register your organisation for GST if its GST
turnover is less than $150,000. The decision to voluntarily register
for GST is one that should be based on the administrative needs of your
organisation. Some organisations may choose not to register for GST
because they consider the GST reporting requirements to be a greater
burden than the benefit they would receive, for example, access to GST
credits.
All non-profit sub-entities are entitled to the $150,000 GST
registration turnover threshold regardless of whether their parent
entity is a non-profit entity or not.
See also:
Non-profit sub-entities
Raffles and bingo
A raffle is a game of chance where the prizes are either goods or cash, or a combination of the two.
The sale of tickets in a raffle and the acceptance of a person's
participation in a game of bingo by a registered charity, gift
deductible entity (see
note 2) or government school are GST-free provided they do not contravene state or territory law.
Fundraising events
A registered charity, gift deductible entity (see
note 2) or government school may choose to treat certain fundraising events as input taxed.
If an organisation chooses to treat a fundraising event as an input
taxed fundraising event, it will have to treat all sales it makes in
connection with the event as input taxed. The choice must be made before
any sales take place.
The organisation will not be entitled to claim GST credits for any
purchases for the event and it will not be required to charge GST on the
sales it makes. The organisation will not be entitled to claim GST
credits regardless of whether the supply would have been GST-free had it
not made the election.
Proceeds from input taxed fundraising events do not form part of an
organisation's GST turnover. Therefore, if an organisation chooses to
treat all sales in connection with certain fundraising events as input
taxed, it does not need to register for GST provided its GST turnover is
less than $150,000.
Example – Annual turnover
XYZ Charity has total annual sales of $150,000, which includes
$80,000 from sales made at five input-taxed fundraising dinners. As
input-taxed sales are not included in annual turnover for GST purposes,
XYZ Charity has an annual turnover below $150,000 for GST purposes and
therefore does not need to register for GST.
End of example
A sale will be input taxed if all of the following criteria are met:
- the organisation conducting the event is a charity, gift deductible entity or government school
- the sale is made in connection with the fundraising event
- the organisation chooses to treat all sales in connection with the
fundraising event as input taxed before any transactions take place
- the event is referred to in the organisation's records as an event that is treated as input taxed.
If your organisation chooses to treat a fundraising event as input taxed you:
- must keep records containing details of its choice (for example, in accounts or meeting minutes)
- do not need to notify us of this choice.
The following fundraising events may be treated as input taxed:
- a fete, ball, gala show, dinner, performance or similar event – a
similar event may include a charity auction, a cake stall, wine tasting
or fashion parade
- an event where all goods are sold for $20 or less, but
- the event cannot involve the sale of alcohol or tobacco
- the selling of the goods must not be a normal part of the supplier's
business, for example, a charity holds an annual flower day where it
sells flowers for $2 each and the charity is not in the business of
selling flowers
- an event that has been approved by us as a fundraising event. If a
fundraising event is not one of the types listed above (for example, a
golf day, car rally or an art show), the organisation can write to us
and ask for approval to treat the event as an input taxed fundraising
event. We will grant approval only if:
- the event is held for the purpose of fundraising
- the organisation is not in the business of conducting such events, and
- the proceeds from the event are for the direct benefit of the organisation's charitable or NFP purposes.
The sale of alcohol and tobacco at a fete, ball, gala show, dinner,
performance or similar event will not prevent the event from being
treated as an input taxed fundraising event.
Example 1 – Input taxed eventThe
Homes for Homeless Teens charity is organising a fundraising dinner. It
chooses to treat the dinner as an input taxed fundraising event. The
dinner will be held at a prominent function centre. A well-known
television personality will make cocktails during the evening.
Although the charity is selling alcohol, these sales are part of the
activities of the fundraising dinner and are input taxed sales.
Example 2 – Input taxed eventThe Assisting with
Education charity is organising a fundraising ball. It chooses to treat
the ball as an input taxed fundraising event. A car dealership has
donated a car as a prize for a raffle. The raffle tickets will only be
sold at the fundraising ball, and the raffle will be drawn on the night.
The sale of the raffle tickets is part of the fundraising dinner. The
proceeds from the sale of the raffle tickets are treated as input taxed
sales.
Example 3 – Lottery ticketsAt the fundraising
dinner held by The Homes for Homeless Teens charity, the charity intends
to sell tickets for its home lottery at the door and draw the winning
ticket at the dinner. The home lottery has been conducted throughout the
year, and tickets have been sold throughout the year.
The home lottery is a separate event from the dinner. As such, the
lottery tickets sold at the door are not treated as input taxed sales.
The sale of lottery tickets may, however, be GST-free. See
Raffles and bingo
End of example
An organisation cannot choose to treat an event as input taxed unless
the event is held for the purpose of fundraising. For example, if an
organisation holds a dinner for its next AGM, the dinner is not being
held for the purpose of fundraising and therefore the sale of tickets to
the dinner and other sales it makes cannot be treated as input taxed.
A charity, gift deductible entity or government school can conduct a
particular fundraising event up to 15 times in a financial year and
choose to treat each event as input taxed.
If an organisation holds more than 15 of the same type of event in a
financial year, none of the events can be treated as input taxed
fundraising events. For example, if an organisation holds 16 fundraising
dinners in a financial year, none of the dinners can be treated as
input taxed and the organisation must account for GST for each of the
earlier 15 dinners by revising the related BAS. However, the
organisation may be able to exclude the sales it makes at the sixteenth
and subsequent dinners by forming a non-profit sub-entity for these
dinners.
See also:
GST and fundraising dinners or similar functions
Non-commercial activities
The commercial activities of a registered charity, gift deductible entity (see
note 2) or government school are taxable but the non-commercial activities of these organisations can be GST-free.
This means that, if it is registered for GST, the registered charity,
gift deductible entity or government school does not pay GST on the
payment it receives for its non-commercial sales, and it can claim GST
credits for the GST included in the price of purchases it uses to make
these sales.
The term 'non-commercial activities' refers to sales made when the
payment received for the sale is less than a specified amount. The sale
is GST-free if the amount charged is either of the following:
- less than 50% of the GST-inclusive market value
- less than 75% of the amount the registered charity, gift deductible
entity or government school paid to purchase the item that is
subsequently sold.
When the sale is a supply of accommodation by a registered charity,
gift deductible entity or government school, the sale is GST-free if the
amount charged is either of the following:
- less than 75% of the GST-inclusive market value of the accommodation
- less than 75% of the cost of providing the accommodation.
Example – GST-free sales
The Children in Need charity sells banana and carrot cakes at a fete
for $3.00 each. Similar cakes would sell at a cake shop for $6.50 each.
As the consideration received for each cake is less than 50% of the
GST-inclusive market value, the sale of the cakes is GST-free.
End of example
Accounting on a cash basis
Organisations that account for GST use either a cash or non-cash (accruals) method of accounting.
Organisations may choose to account for GST on a cash basis if their
GST turnover does not exceed the cash accounting turnover threshold.
A registered charity, gift deductible entity or government school is
entitled to use the cash basis of accounting regardless of turnover
(except where the gift deductible entity operates a fund, authority or
institution which can receive tax-deductible gifts or contributions –
see
note 3).
See also:
Choosing an accounting method
Reimbursing volunteer expenses
Where a registered charity, gift deductible entity (see
note 2)
or government school reimburses an individual person for an expense
they have incurred that is directly related to their activities as a
volunteer of that organisation, the organisation can claim a GST credit
for the GST included in the price of the item purchased if the
organisation is registered for GST.
A payment is a reimbursement where the recipient is compensated
exactly (meaning precisely, not approximately), whether wholly or
partly, for an expense already incurred although not necessarily
disbursed.
To enable the charity, gift deductible entity or government school to
claim the GST credit, the volunteer must provide the organisation with
the tax invoice for the purchase they have made.
Example – GST credits
Sam is a volunteer for a small charitable organisation. He works as a
computer programmer and is knowledgeable about different accounting
software applications. Sam purchases a software program that would be
suitable to record the charity's financial and membership records. The
committee reimburses Sam for the expense of purchasing the software
program.
Sam gives the charity the tax invoice relating to the purchase. The
charity can claim a GST credit for the GST included in the price of the
software package.
End of example
See also:
Claiming GST credits on reimbursements to volunteers
Gifts and GST credit adjustments
Generally, an organisation can claim GST credits on purchases made
for its business activities. However, if the organisation has claimed a
GST credit and does not use that purchase as part of its business
activities, it must repay the GST credit previously claimed.
If an organisation donates to an endorsed charity or gift deductible entity (see
note 4)
a purchase for which it has previously claimed a GST credit, it is not
required to repay to us the GST credit previously claimed in respect of
that purchase.
Example – Donation of trading stock
An organisation that sells desktop computers donates two computers
from its trading stock to the Assisting with Education charity. The
organisation has previously claimed GST credits for the computers.
Although the computers are no longer trading stock, the organisation
is not required to repay to the ATO the GST credits it has claimed in
relation to the computers.
End of example
Donated second-hand goods
A sale of donated second-hand goods by an endorsed charity, gift
deductible entity or government school is generally GST-free provided
there is no change in the original character of the goods.
Example – Donated clothing
A charity receives donations of damaged second-hand clothes. If the
donated clothing is cleaned and/or repaired prior to sale it will be
GST-free. If the second-hand clothes are cut up and sold as rags, the
sale of the rags will not be GST-free as they are no longer the same as
the goods that were donated, but have been manufactured by the charity
into a new product, that is, rags.
End of example
Goods donated by a business that were trading stock of the business
are not second-hand goods and therefore cannot be sold GST-free.
Example – Trading stock
The Learning Independence charity holds a fundraising fete where it
sells items donated by individuals and local businesses. The Gifts and
Novelties local business donates some floor-damaged novelty cups to the
charity for sale at the fete. The sale of the donated floor-damaged
goods is not GST-free because the novelty cups were trading stock of the
business.
End of example
Charitable retirement villages
Certain supplies made by a registered charity that operates a
retirement village may be GST-free. Those supplies must be made by the
charity to a resident of the retirement village. Accordingly, supplies
made by the charity to visitors or staff of the retirement village would
not qualify for GST-free treatment unless they are non-commercial
activities of the charity.
The range of supplies to a resident of a charitable retirement
village, which GST-free treatment applies to, includes the supply of
accommodation in the retirement village, and services related to the
supply of accommodation and meals. This would include, for example, the
supply of accommodation in an independent living unit or serviced
apartment, property maintenance fees, gardening services and meals and
beverages.
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