The ATO provides Goods and Services Tax (GST) concessions to eligible charities. A charity is an institution or fund established and operated for altruistic purposes that the law regards as charitable. Charities include a wide variety of organisations, such as aged persons homes, homeless hostels, groups that relieve the special needs of people with disabilities and societies that promote the fine arts and religion for example. The common characteristics of a charity are:
• it is an entity which is also a trust fund or an institution
• it exists for the public benefit or the relief of poverty
• its purposes are charitable within the legal sense of that term
• it is non-profit, and
• its sole purpose is charitable.
An organisation will not be classed as a charitable institution or charitable fund if the purpose is for:
• sporting, recreational or social purposes
• political, lobbying or promotional purposes
• commercial or illegal purposes
Charitable institutions must be endorsed by the Tax Office in order to access the GST charity concessions, as well as other tax concessions. Below is a list of the GST concessions a charitable institution may be eligible for.
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.
Fundraising events – an eligible entity may choose to treat all sales it makes in connection with certain fundraising events as input taxed.
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.
Accounting on a cash basis – an eligible entity may choose to account on a cash basis regardless of its GST turnover.
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.
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 entity.
Donated second-hand goods – sales of donated second hand goods by an eligible entity are GST-free.
Non-profit sub-entities – an eligible entity may conduct some of its activities through a non-profit sub-entity.
GST religious groups – some charities can be approved as a GST religious group. Transactions between members of the group are excluded from GST.
Charitable retirement villages – an eligible entity may provide GST-free accommodation, accommodation related services and meals to residents of such retirement villages
If a charity wants to access the relevant GST charity concession, it must be endorsed by the Tax Office. In order to be considered for endorsement your business must show that it is actually a charity by demonstrating all of the characteristics for a charity (stated above) and have an Australian Business Number (ABN).
Here at The Quinn Group our experienced team of accountants and tax agents can assist you with any of your GST or other taxation needs. For more information on how to have your business endorsed for the GST charity concession or any other charity related concession please submit an online enquiry, or call us on 1300 QUINNS (784 667) or on +61 2 9223 9166 to book an appointment.
