ATO releases new guide for not-for-profit tax return 2022

The guide applies to organisations that are both not-for-profit and taxable. Examples of the types of organisations covered by the guide can be seen on the industry codes table.

The basic premise of a not-for-profit (NFP) organisation is that it is not operating for the profit or gain of its individual members, whether these gains are direct or indirect. This applies while the organisation is operating and when it winds up.

Any profit made by the organisation goes back into the operation of the organisation to carry out its purposes. It is not distributed to any members.

The ATO said it can accept an organisation as NFP where its constituent or governing documents prevent it from distributing profits or assets for the benefit of particular people. These documents should contain acceptable clauses showing the organisation’s NFP character. The organisation’s actions must be consistent with this requirement.

Not-for-profit organisations can be either exempt or taxable. Many NFP organisations are taxable and may need to lodge tax returns and pay income tax.

Put simply, if your NFP organisation is not exempt from income tax, it is taxable. Only certain types of NFP organisations are exempt from income tax.

To find out if an NFP organisation is taxable or exempt, see does my not-for-profit need to pay income tax?

Organisations that are not covered in the newly released guide include partnerships, strata-title bodies corporate, friendly societies, life assurance companies, life insurance companies, mutual insurance companies, and credit unions.