GST concessions for not-for-profits

Find out how your endorsed charity can access additional goods and services tax (GST) concessions.

On this page

• NFP organisations and concessions
• Available GST concessions
• Gifts
• School tuckshops
• GST registration threshold
• Raffles and bingo
• Fundraising events
• Non-commercial activities
• Supplies by residential colleges
• Accounting on a cash basis
• Reimbursing volunteer expenses
• Gifts and GST credit adjustments
• Donated second-hand goods
• Charitable retirement villages

NFP organisations and concessions

Additional goods and services (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 registered with the ACNC and endorsed for GST concessions by the ATO
• a gift deductible entity is an entity that can receive tax-deductible gifts or contributions.

Find out if your organisation is eligible for charity tax concessions.

Available GST concessions

Some concessions only apply to certain types of not-for-profit (NFP) organisations.

Concessions available for not-for-profit (NFP) organisations

GST concession	Eligible entity
Gifts – a gift is not considered payment for a sale if there are no conditions attached to that gift.	All NFP organisations
School tuckshops – an NFP organisation may sell food through a tuckshop or canteen at a primary or secondary school and treat the sales as input taxed.	All NFP organisations
GST registration threshold – the registration turnover threshold is higher for NFP organisations than for other organisations.	All NFP organisations
GST groups – the requirement to satisfy the 90% ownership test is waived if both: the entity is an NFP organisation all the other members of the GST group or proposed GST group are not-for-profit organisations and members of the same NFP association.	All NFP organisations
Raffles and bingo – tickets for raffles and bingo sold by an eligible entity are GST-free as long as the holding of the raffle or bingo event does not contravene a state or territory law.	Endorsed charity   Gift deductible entity   Government school
Fundraising events – an eligible entity may choose to treat all sales it makes in connection with certain fundraising events as input taxed.	Endorsed charity   Gift deductible entity   Government school
Non-commercial activities – when 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   Gift deductible entity   Government school
Accounting on a cash basis – an eligible entity may choose to account on a cash basis regardless of its GST turnover.	Endorsed charity   Gift deductible entity   Government school
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   Gift deductible entity   Government school
Gifts and GST credit gifts adjustments – adjustments of GST credits are not required when an item acquired by a business is then gifted to an eligible NFP entity.	Endorsed charity   Gift deductible entity
Donated second-hand goods – sales of donated second-hand goods by an eligible entity are GST-free.	Endorsed charity   Gift deductible entity   Government school
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   Gift deductible entity   Government school
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
Charitable retirement villages – an eligible not-for-profit entity may provide GST-free accommodation, accommodation-related services and meals to residents of retirement villages.	Endorsed charity

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:

• the payment must be made voluntarily
  • 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
• the donor cannot receive a material benefit in return
  • it 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
  • it is a material benefit if it is 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.

If a NFP organisation is registered for GST, or is required to be registered, GST is payable on the full amount of the material benefit. For example, a ticket price to a dinner or similar function conducted by the NFP organisation, even when part of the ticket price may be intended to be a gift to the organisation.

This is because a person is receiving a material benefit, for example when they attend a dinner or function, 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 to receive the benefit, even when the ticket price is much more than the value of the benefit, such as a meal.

The GST treatment of transactions discussed in this section may vary if an organisation chooses to apply other GST concessions available to it.

Examples of gifts

 

 

School tuckshops

If an NFP organisation (for example, a parents and citizens association) operates a school tuckshop on the grounds of a primary or secondary school, it can choose to treat all sales of food through the tuckshop as input taxed.

If the organisation chooses to treat all sales 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 remit GST on its sales and cannot 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. Additionally, 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 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.

The non-profit GST registration turnover threshold applies to all non-profit sub-entities regardless of whether their parent entity is a non-profit entity or not.

Raffles and bingo

A raffle is a game of chance where the prizes are either goods or cash, or a combination of these.

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 or government school are GST-free, provided they do not contravene state or territory law.

Fundraising events

A registered charity, gift deductible entity 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 remit 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. See Fundraising events Example 1.

When a sale or event may be input taxed

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
• 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, it is 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
  • organisation is not in the business of conducting such events
  • proceeds from the event are for the direct benefit of the organisation’s 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.

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.

An endorsed 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 events 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 activity statement.

Fundraising events examples

 

 

 

Non-commercial activities

The term ‘non-commercial activities’ refers to sales made for a payment that is less than a specified amount.

Non-commercial activities of endorsed charities, gift deductible entities or government schools may be GST-free dependent on certain threshold tests called nominal consideration threshold tests. Commercial activities of these entities are taxable.

Nominal consideration threshold tests

Supplies may be GST-free when they meet one of the following threshold tests:

• Accommodation supplies can be GST-free when the consideration for the supply is either less than 75% of the
  • GST-inclusive market value of the supply
  • cost to the supplier of providing that accommodation.
• Non-accommodation supplies can be GST-free when the consideration for the supply is either less than
  • 50% of the GST-inclusive market value
  • 75% of the consideration the supplier provided or was liable to provide for acquiring the thing supplied.

If you are a residential college or university that has used the Residential Colleges GST Tool, see Supplies by residential colleges.

Determining the status of your supplies

You can use the market value or cost method under the nominal consideration threshold tests to determine if your supplies are GST-free.

If you determine a supply is GST-free, you:

• don’t pay GST on that supply
• can claim a credit for the GST paid on that supply.

You need to consider how you will determine the GST status of your supplies. There are two methods to determine if your supplies are GST-free under the threshold tests for nominal consideration:

• market value
• cost

See more information on GST-free sales.

Market value

Market value can be used for all types of supplies. Apply the following when determining the market value of your supplies.

Same supply

Look at other organisations that provide the same types of supplies. These should be comparable in size, quality and location. Items should be like-for-like so, for example, don’t compare a bedroom with an ensuite to a dormitory room with shared facilities.

Similar supply

If you can’t identify the same supply, you should use a similar supply and identify the differences and pricing when doing your valuation. For example, if you supply a dormitory with shared facilities and there are no other dormitories in the market of the same quality, location and number of beds you would get a valuation of the similar supply and the value of the differences to calculate the market value.

Other approved methodology

If you can’t identify a same supply or similar supply, you can ask us for an alternative method for valuation by applying for a private binding ruling.

Cost

This only applies to accommodation supplies. When working out the cost of providing something, you should include both:

• all direct costs incurred – for example, materials and direct labour
• a reasonable apportionment of indirect costs incurred – for example marketing, administration, office expenses, electricity, phone and insurance.

What you can’t include

You can’t include things where there aren’t any real costs, such as:

• depreciation of assets
• volunteer labour
• donations
• free rent.

Apportion supplies

When supplying a mixture of taxable, input taxed and GST-free supplies, you need to determine which purchases relate to each type of supply, so you can claim the right amounts of credits. Find out how to apply fair and reasonable principles of apportionment.

Keep records

Remember to keep accurate records, including:

• how you calculated your valuations
• what you considered in the valuation process.

Selecting a valuer

You can source your own valuations or choose a suitably qualified and experienced certified practicing valuer.

Here are some tips, if you decide to engage a valuer:

• Ensure the valuer is qualified and registered or licenced in your state or territory.
• Check if they have professional indemnity insurance and there are no unusual or restrictive conditions that could void the policy.
• Ask if they have conducted similar valuations and request a sample.
• Review the company profile information (such as number of valuers and experience, background of directors and company, quality assurance processes and valuation systems used).

Do a company searchExternal Link to confirm the company is registered and check the directors aren’t former directors of liquidated property valuation firms.

Supplies by residential colleges

As a residential college or university, you may offer a mix of supplies to students and non-students, including:

• accommodation
• meals
• tertiary residential college courses
• other supplies such as student tutoring and religious services.

This means your services can be a mix of GST taxable, input taxed and GST-free. You need to consider how you will determine the GST status of your supplies under the nominal consideration threshold tests.

You can use our public advice and guidance on cost of supply and market value tests to help you determine the GST status of your supplies.

Residential colleges GST tool

The residential colleges GST tool has been available since 2009 to support you in working out the GST status of your supplies.

Following a review of the 2017–21 tool, it was decided to retire the tool and its instructions on 31 December 2021.

To address sector feedback, we have provided an interim residential colleges GST tool and instructions for the 2022 calendar year. This will support you with GST compliance while we collaborate on the design of a longer-term solution.

Draft PCG 2022/D3 GST and residential colleges is currently open for comment until 30 September 2022. It proposes and provides guidance on the use of ATO charity benchmark market values to replace the interim residential colleges 2022 GST tool.

You can continue to use the interim tool for student accommodation contracts for the 2022 calendar year. If you use this interim tool in good faith, we will not apply compliance resources to review the GST status of supplies made from 1 January 2022 to 31 December 2022 determined by the tool.

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.

An endorsed 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 that can receive tax-deductible gifts or contributions).

More detailed information is available to assist you choose an accounting method.

Reimbursing volunteer expenses

If an endorsed charity, gift deductible entity 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 if 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.

Find out how to claim 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 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.

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.

Goods donated by a business that were trading stock of the business are not second-hand goods and therefore cannot be sold GST-free.

 

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 that GST-free treatment applies to includes:

• the supply of accommodation in the retirement village
• 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
• meals and beverages.

Source: gov.au