The Goods and Services Tax (GST), is a 10% value added tax on the sales of goods and services. Australian businesses who have a turnover of $75,000 or more must register with the Australian Tax Office (ATO) for the GST. Non-Profits that turnover at least $150,000 must also register for the GST. If your non-profit does not meet the $150,000 threshold, you can still voluntarily register with the ATO for GST.

Calculating GST and GST Credits Can be lengthy, Complex Process

NFPs face various duties and obligations regarding the proper calculation of GST and potential GST credits. Once registered, organisations must include GST in the sales price for what they charge for various goods and services.

There are some items that NFPs will not include GST in their sales price because these items are either taxed under input taxes or are GST free and therefore exempt. Figuring out whether or not certain types of sales are covered under GST can be very complex and difficult.

A common example of an item that is covered under input taxes, and therefore not subject to GST is the income that you might earn from renting out a residential property. The proceeds that you receive when you sell a business that is a going concern are also GST free. GST exemptions can be especially tricky for non-profits. For example, NFPs must pay GST on the sponsorship that they receive, but NFPs that receive grants don’t have to pay GST on the funding payment unless they supply something in return for the payment.

Concessions Vary Based on the Type of Non-Profit

Non-profits that are endorsed by the ATO, government schools, entities that are gift deductible, and ACNC registered charities that are approved to receive GST charity concessions, are eligible for a number of GST concessions that allow them to treat certain sales as GST Free or input taxed. It’s important to note that whether or not your non-profit qualifies for a concession will depend on its specific type and other factors.

For example, sales related to certain types of fundraising events can be treated as input taxed. When non-profits reimburse volunteers for certain expenses, the non-profit can claim GST credits. When NFPs sell secondhand items that were donated to them, they can treat the sales as GST-free.

When your organisation purchases good and services that include GST in the sales price, you may be able to claim credits for the GST that was paid for by your non-profit. These credits can be claimed on a cash or noncash basis. Non-profits and other entities cannot claim GST credits on GST exempt items.

Since tax obligations, credits and concessions can be very difficult for treasurers to determine, the Not for Profit Compliance Support Centre offers a host of helpful information to help you learn more about GST and other tax obligations as well as tax credits and concessions.

GST Collection and Payment

The treasurer is responsible for ensuring that the GST is collected and retained so that payment can be sent to the ATO on a timely basis. Non-profits normally report GST sales and purchases on their annual returns, and can also lodge activity statements. Your NFPs GST is due to be paid when your return or statement is filed with the ATO.

Since calculating GST and GST credits can be such a complicated matter, the ATO publishes a handy guide, Tax Basics for Non-Profit Organisations that provides a great deal of guidance regarding the GST as well as other types of taxes for which your non-profit may be obligated to pay.

Keeping up with all of the rules, regulations and requirements surrounding GST can be quite a headache. Admin Bandit software can help to simplify this complex process by automatically tracking your non-profit’s GST, as well as keeping up with fundraising related GST separately. The system also makes it fast, easy and painless to calculate and file quarterly BAS and annual end of year reports. Get in touch today to learn more about how Admin Bandit Software simplifies the mystery and complexity surrounding GST, GST Credits, Concessions and other potential tax obligations!