Tax Law for Associations, Charities & Not-For-Profit Organisations:

Taxation is a major consideration for any Charities and Not-For-Profit organisations, especially because of the separate and different treatment they receive compared to other bodies and associations. A consultation with a specialised Taxation Lawyer can be immensely rewarding and useful to ensure that the charity you are involved in complies with Australian tax law and fully takes advantage of all available concessions and discounts.

Firstly, certain entities are subject to taxation exemptions and they include charities and not-for-profit organisations. Entities that qualify for exemption under this category include charitable, religious, scientific and public educational institutions; a fund established by will or instrument of trust for public charitable purposes; a fund established to enable scientific research to be conducted by or in conjunction with a public university or public hospital; and a non-profit society, association or club established for the encouragement of science. An experienced Taxation Lawyer may have regard to your circumstance to make a determination of whether or not your entity satisfies this criteria and/or what steps are required to ensure this is achieved.

In addition, the ordinary or statutory income of a religious, scientific, charitable or public education institution is exempt from income tax. An institution may be described broadly as some form of undertaking designed to promote some definite purpose of general or public utility. It comprehends all that which makes up the society or association formed to promote the defined purpose to benefit the public or some defined group of people.

The exemptions described above will apply to any such institution which meets any of the following criteria; it has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia, it is specifically referred to in the gift deduction provisions, it is a prescribed institution which is located outside Australia and is exempt from income tax in its country of residence, or it is a prescribed charitable or religious institution which has a physical presence in Australia but which incurs its expenditure and pursues its objectives principally outside Australia. Case law has affirmed that the privileged state of exemption from income tax demanded strict adherence to the requirements of the law has been defined as “substantially in accordance with its constituent terms”. This includes the requirement that the fund must be applied for the purpose for which it was established and not only substantially or principally for that purpose, having regard to the whole administration of the fund including the subjective intention of the Trustees or administrators. A consultation with a specialised Taxation Lawyer can be immensely rewarding and useful in ensuring your entity or association fulfils these requirement to be eligible for these exemptions.

If you need further legal advice on your matter, you may book an appointment with us by telephone (02) 9233 4048 or by email to info@navado.com.au. 

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