Non-Profit Tax

For an organisation to claim the status of "non-profit" it may make profits but it is must not distribute these profits to its members in the form of money, property or any other form. Instead any profit made is reinvested into the organisation and used to provide programs and services to members and/or to improve its facilities.

Although an organisation may be "non-profit" it must still comply with taxation law of the nation in which it exists.

For example, in Australia a non-profit organisation must comply with:

Income Tax (unless exempt)
PAYG Tax
Fringe Benefits Tax

Income Tax

A non-profit sport organisation (i.e. a club or an association) is exempt from paying tax in Australia if it has physical presence in Australia. It is important to understand that not every non-profit organisation is exempt from income tax. For example an association that exists for social or recreational objectives may not have exempt status. Organisation managers should obtain advice on whether Income Tax is payable or not.

PAYG Withholding Tax

All sporting organisations, whether non-profit or profit, are required to deduct amounts from the pay of any employees of the organisation. The amount to be withheld from an employee's pay depends on the amount they are paid and the information contained within the Tax File Declaration Form and Withholding Declaration Form given by the employee to the organisation.

Sport organisations do not have deduct any tax from payments they give to volunteers unless that payment is in the form of goods or services supplied to a business enterprise carried on by the volunteer, and the volunteer has NOT quoted their Australian business number (ABN).

Fringe Benefits Tax

If a non-profit organisation provides non-cash benefits to workers in lieu of salary and wages, Fringe Benefits Tax (FBT) can apply. However, benefits provided to volunteers do not attract FBT. Reimbursing a volunteer for out-of-pocket expenses does not cause them to become an employee and does not give rise to any FBT.

Good and Services Tax (GST)

Goods and services tax is a tax that a non-profit organisation must collect and remit to the Tax Office if its total annual income reaches $150,000. If total annual income is less than $150,000, the organisation can choose whether to be registered for GST or not. However if it is registered for GST it must collect tax from its customers, and must remit to the Tax Office.