NDIS. Accounting. Business Advisory.

Income tax exemption is an exemption from paying income tax, removing the need to lodge income tax returns. Entities that are endorsed as income tax exempt are entitled to a refund of franking credits on franked dividends they receive.

There are a range of goods and services tax (GST) concessions for transactions involving endorsed charities:

• Gifts and GST credit adjustments – adjustments for GST credits are not required where an item acquired by a business is subsequently gifted to the charity.
• Accounting on a cash basis – the charity may choose to account on a cash basis regardless of its annual turnover.
• Non-commercial activities – where the charity makes sales and the payment it receives in return is less than a certain amount, the sales are GST-free.
• Donated second-hand goods – sales of donated second hand goods by the charity are GST-free.
• Raffles and bingo – tickets to raffles and bingo sold by the charity are GST-free provided the holding of the raffle or bingo event does not contravene a state or territory law.
• Fundraising events – the charity may choose to treat all supplies it makes in connection with certain fundraising events as input taxed. The charity is not required to remit GST on supplies made in connection with the event. However, the charity is not entitled to claim GST credits for related purchases.
• Non-profit sub-entities – the charity has the option of treating any of its separately identifiable branches as separate entities for GST purposes. Provided that the annual turnover of the non-profit sub-entity is less than $150,000, the sub-entity is not required to register for GST. An unregistered non-profit sub-entity does not remit GST on sales and does not claim GST credits for purchases.
• Reimbursement of volunteer expenses – the charity 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 charity.

Your not-for-profit organisation may be exempt from FBT if it is a:

• registered public benevolent institution (other than hospitals) endorsed by the ATO
• registered health promotion charity endorsed by the ATO
• public or non-profit hospital
• public ambulance service.

If your organisation is eligible for FBT exemption, benefits provided are exempt from FBT if the total grossed-up value of certain benefits (which are benefits that are not otherwise exempt) provided for each employee during the FBT year is equal to, or less than, the capping threshold. If the total grossed-up value of fringe benefits provided to any employee is more than the capping threshold, your organisation will need to report the details and pay FBT on the excess.

Be aware that if your organisation exceeds the capping threshold for any employee you will need to provide details of fringe benefits provided to all employees not just the details for the employee that exceeded the exemption cap.

The table below outlines the capping thresholds that apply and which organisations need to be endorsed by us to access FBT exemption.

Goods and services tax (GST) concessions are available to not-for-profit (NFP) organisations.

Additional GST concessions are available to:

• Australian Charities and Not-for-profits Commission (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.

Australian taxation laws provide generous tax concessions for not for profit organisations like Barnardos Australia. One such concession is an exemption for Fringe benefits tax (FBT).

This means an employer are able to pass on to their employees a proportion of their wages as a reimbursement of personal expenses and no income tax is payable on this money, in effect a proportion of your salary each pay is tax free. (Salary packaging)

You may choose to package a range of items, such as your mortgage, rent, school tuition fees, private health insurance or even a personal loan repayment, or you may decide to use our convenient Salary Packaging Payment Card (Encompass) to package everyday living expenses including groceries, clothing and utility bills.

If you choose to package your salary (it is an option) money is deducted from your salary pre-tax. You pay tax only on the remaining portion of your salary not the salary packaged money, significantly reducing the income tax you pay.

Barnardos employees working over 17.5 hours per week and employed on pay level 33 or above of the Barnardos Australia Enterprise Agreement 2011 have the option of packaging a vehicle as part of their salary. The Barnardos Australia vehicle is available to you for both business and personal use and is of significant value to our staff.

A Public Benevolent Institution (PBI) is a type of charity which has a predominant (main) purpose of relieving needs arising from conditions such as poverty, sickness, distress or helplessness. This is known as providing 'benevolent relief'.

For a need to attract benevolent relief, it must be significant enough, and the circumstances difficult enough, to arouse a feeling within the community that action should be taken to relieve it.

The characteristics of a PBI are:

• it is a charity
• it is an institution
• it is set up to relieve needs requiring benevolent relief
• it relieves the needs through providing goods and/or services which are directed to people who are in need
• its predominant (main) purpose is providing benevolent relief.

Examples of public benevolent institutions include:

• some organisations providing services for the homeless, such as shelters and meals
• some hospitals and hospices
• some disability support services
• some aged care services
• some providers of low rental or subsidised housing, for people in need
• some organisations that undertake active fundraising activities to generate income for a partner with a common purpose of providing benevolent relief, where the partner provides services to people in need of benevolent relief.

PBIs must be registered with the ACNC as a charity and as the PBI subtype of charity before they can be endorsed by the ATO to access tax concessions available to PBIs.

For more information please see ACNC PBI factsheet  on the ACNC website.