Reading time: 3 minutes

Sometimes when you are starting a new business, particularly if you are setting up an enterprise which is social, ethical and will operate for the good of mankind in general, rather than just acting as another cog in the capitalist/consumer system, you probably should step back and think (for at least 60 seconds) during the initial structuring phase whether you are actually a not for profit enterprise (NFP), before going ahead and incorporating a proprietary company limited by shares (the standard legal vehicle for a for profit enterprise).

Why is this important?

Because if you are an NFP and structure yourself as such (and the legal structures for NFP and for a profit entity are quite different), then you may be eligible for a variety of tax concessions (if not tax deductibility for donations – these are restricted to particular types of charity only).

Don’t imagine that NFPs are confined to entities like the local kids soccer club! One of this country’s largest health insurers, HCF, is a NFP!

Here is an overview of the types of tax concessions available to NFPs can be found on the Australian Taxation Office website.

The table below provides a summary of tax concessions and the types of NFPs that can access them.

The table groups NFPs as follows:

  • registered charities – including registered public benevolent institutions and registered health promotion charities
  • other non-profit organisations.

The table also refers you to more information about each concession.

There are also concessions for:

  • public and non-profit hospitals and public ambulance services
  • registered religious institutions and GST concessions for charities, gift deductible entities and government schools
  • non-profit companies and live-in residential care workers.

It is important to check the notes to the table, as your organisation may need to meet certain requirements before it can access a concession.

TABLE: Summary of tax concessions and types of non-profit organisations

tableNFPs

Notes to table

  1. The organisation must be endorsed by us to access this concession.
  2. Only certain types of non-profit organisations are exempt from income tax. Many non-profit organisations are taxable, but may be entitled to special rules for calculating taxable income, lodging income tax returns and special rates of tax.
  3. Public and non-profit hospitals and public ambulance services are eligible for this concession.
  4. Certain non-government non-profit organisations are eligible for this concession.
  5. The organisation must be a deductible gift recipient to access this concession.
  6. The organisation must be endorsed by us as a deductible gift recipient to access this concession. The only organisations that do not need to be endorsed are those listed by name in tax law.
  7. The organisation must be an entity that is endorsed by us as exempt from income tax or a deductible gift recipient to access this concession.
  8. The organisation must be endorsed by us to access this concession. Not all registered charities are eligible for this concession.

While the ATO provides a wealth of helpful information on its website apart from the above, there is no substitute for getting proper professional advice on these matters at an early stage.

Conclusion

If you need help setting up a not-for-profit, read the ACNC checklist on steps you can take before you start your charity.

Webinars

New Kid on the Blockchain: Understanding the Proposed Laws for Crypto, NFT and Blockchain Projects

Wednesday 25 May | 10:00 - 10:45am

Online
If you operate in the crypto space, ensure you understand the Federal Government’s proposed licensing and regulation changes. Register today for our free webinar.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Online
Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

Day in Court: What Happens When Your Business Goes to Court

Thursday 2 June | 11:00 - 11:45am

Online
If your business is going to court, then you need to understand the process. Our free webinar will explain.
Register Now

How to Manage a Construction Dispute

Thursday 9 June | 11:00 - 11:45am

Online
Protect your construction firm from disputes. To understand how, join our free webinar.
Register Now

Startup Financing: Venture Debt 101

Thursday 23 June | 11:00 - 11:45am

Online
Learn how venture debt can help take your startup to the next level. Register for our free webinar today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards