Incorporated organisations along with other nonprofit organisations are subject to state and federal taxation requirements including Income Tax, FBT, GST, Land Tax, Payroll Tax and Stamp Duty. A number of exemptions are available to certain types of associations for these taxes or duties, but in each case the organisation must formally apply for exemption from the relevant authority. The Income Tax Assessment Act affects both the income of an organisation and the donations made to it. All taxpayers, including persons and organisations, are required to pay tax on their income unless they are granted exemption by the Tax Office.

As employers, most organisations are obliged to take tax from the salary of their employees before the wage is paid, as well as account for superannuation contributions. This is sent to the Tax Office. Instructions on how this occurs and rates of tax to be deducted are readily available. If your organisation adopts a salary sacrifice policy, then further obligations under FBT will be imposed. You should speak to your accountant, auditor or the Tax Office about the circumstances of your organisation to choose which system suits you.

The most common income tax exemption for community organisations will either be as a ‘charitable institution’ or a ‘society, association or club established for community service purposes (except political or lobbying purposes)’. There are other categories which can be found through the Tax Office material mentioned in the Useful Resources section below.

The Not-for-profit portal of the Australian Tax Office website specifcally addresses the not-for-profit sector. It contains details of:

  • the various concessional statuses available;
  • fringe benefit tax exemptions and rebates available to public benevolent institutions and other organisations;
  • income tax exemptions;
  • GST concessions;
  • tax deductions for charitable gifts;
  • lastest news on the federal tax system;
  • information about ABN's and GST;
  • tax rate calculators and
  • compliance information.

An easy way to determine your organisation's current status is with the ABN Lookup tool.

    Charitable Institution

    The Tax Office refers to charitable institutions as Tax Concession Charities (TCC). All charitable institutions are required to be endorsed by the Tax Office. To be endorsed as an TCC, an entity must have an Australian Business Number (ABN). This must be the ABN of the entity itself. An ABN held for GST purposes by a nonprofit sub-entity is not sufficient. An entity must also meet other requirements to be entitled to endorsement.

    In 2000, the federal taxation law was amended to require charitable institutions and funds to be endorsed by the Tax Office. The law generally exempts from tax all income generated by these organisations provided that:

    • The organisation’s main purpose or object is exempt and its actual activity is directed to these purposes
    • The organisation is nonprofit (i.e. it does not distribute, and is constitutionally prohibited from distributing, its surplus to anyone or any purpose, other than its stated exempt objectives)
    • The organisation has an appropriate dissolution clause which transfers any surplus to a similar tax-exempt organisation, not its members or controllers

    If the Tax Office endorses an entity as an income tax exempt charity then:

    • The entity is exempt from income tax
    • The entity does not need to lodge income tax returns, unless specifically asked to

    TCCs may also be entitled to the refund of excess imputation credits, certain fringe benefits and GST concessions. Income taxation exemption does not confer any gift deductibility status on an organisation. This is a different status and is discussed below in the section on deductible gift recipients (DGRs).

    To be a charitable institution, an entity must be an establishment, organisation or association that is instituted to advance or promote charitable purposes. Types of organisations that may be charitable institutions include welfare agencies, churches, public libraries, parents and citizens associations, refuges and research institutes. The common law defining charity has been built up over 400 years of legal cases developing precedents. It is not a completely logical and rational body of law. The lack of contemporary Australian case law further contributes to ‘fuzzy’ areas of contention that often lead to different conclusions by the ATO, the sector and even judges in the rare instances that a case is brought. The common law definition of charity has been extended for all federal legislation to include the provision of child care, open and non-discriminatory self-help groups (mutual support disease groups) and contemplative religious orders.

    For a further explanation of the definition of charity, refer to the Report of the Inquiry into the Definition of Charities and Related Organisations, the Tax Office publication Income Tax Guide for Non-profit Organisations (NAT 7967) and the draft Taxation Ruling TR2005/21 and TR2005/22 (both available at on the ATO website).

    Public benevolent institutions

    A public benevolent institution (PBI) is a non-profit institution organised for the direct relief of poverty, sickness, suffering, distress, misfortune, disability or helplessness.

    The characteristics of a PBI are all of the following:

    • it is set up for needs that require benevolent relief 
    • it relieves those needs by directly providing services to people suffering them
    • it is carried on for the public benefit 
    • it is non-profit 
    • it is an institution 
    • its dominant purpose is providing benevolent relief. 

    To be a PBI, your organisation must be a charity.

    Community Organisation

    The income of a society, association or club established for community service purposes is exempt from income tax, except where it is for political or lobbying purposes.

    This provision catches those organisations that often for some technical reason fail to be regarded as charitable, but are set up for altruistic purposes such as promoting, providing or carrying out activities, facilities or projects for the benefit or welfare of the community or any members of the community who have a particular need by reason of youth, age, infirmity or disablement, poverty or social or economic circumstance.

    The definition of ‘society, association or club’ refers to a voluntary organisation having members associated together for a common or shared purpose. Such bodies may be incorporated or unincorporated, but do not include any body formed and controlled by government and performing functions on behalf of government.

    The Tax Office has specifically considered the following to be exempt:

    • Service clubs such as Apex, Rotary, Lions, Zonta, Quota
    • Country Women’s Association of Australia
    • Non-profit child care centres including long day care, after school care, day child care in activity caravans
    • Aged pensioner and senior citizens associations
    • Associations of play groups
    • Associations of Justices of the Peace

    Not all nonprofit associations will qualify for the exemption as the purpose of the association must be for ‘community services’. ‘Community services’ is to be determined not merely by reference to whether a service is provided or available to the community, but also the motive by which it is provided. There is a distinction to be drawn between an association that is advancing its members’ interests and an association advancing some community interests. The Tax Office states that the following will not be included in the exemption:

    • Clubs that only provide a social forum for expatriates of a particular country
    • Clubs that promote public speaking or debating
    • Clubs that provide a social forum for retired and semi-retired business people and others
    • Bodies established to promote tourism
    • Military service unit organisations
    • Particular residential areas
    • Philatelic (stamp collecting) societies

    However, even though political and lobbying activities may be driven by altruistic motives, the legislation specifically excludes such purposes. This does not mean that any political or lobbying activities will preclude an organisation from the section. Only those organisations whose dominant purposes are political or lobbying will be excluded and incidental occurrence of such activities will not be fatal to exemption status.

    For further explanation of this category refer to the Tax Office publication Income Tax Guide for Non-profit Organisations (NAT 7967) and the Taxation Determination TD93/190 (both available at

    Deductible Gift Recipient

    ‘Deductible Gift Recipient’ (DGR) is a term used in taxation law. The main purpose of the definition is to identify organisations, funds or authorities to which a gift may be tax deductible by the donor. Classes of organisations and specifically named organisations described in Division 30 of the Income Tax Assessment Act 1997 can be the recipients of tax deductible gifts, some subject to further conditions. The main category is a Public Benevolent Institution (PBI) and includes some but not all community organisations.

    A PBI is a nonprofit institution whose dominant purpose is the direct relief of poverty, sickness, destitution, suffering or misfortune and for the benefit of the community, or a section of it. The Tax Office has issued a ruling on the definition of PBI in TR 2003/5 which is available on the Tax Office web site.  Like the definition of charity discussed above, the definition of PBI has many fuzzy parts and is subject to ongoing dispute.

    The condition or misfortune that is relieved by a PBI will be such as to arouse pity or compassion in the community. Needs might be caused by poverty or lack of financial resources. Disability or sickness can also give rise to misfortune or helplessness. On the other hand, needs that are to be met by education, training or the promotion of cultural or social objectives will not normally arouse community compassion and call forth the giving of benevolent relief. However, they might do so where the needs arise from poverty or helplessness.

    Fees charged for the provision of services will be one of the factors to be considered in determining whether an organisation is a PBI. The type and level of charges and any waiver policy may, in light of the types of services provided, indicate that an organisation is not primarily for the relief of distress and suffering.

    A PBI directs its activities towards persons in need of relief. If an organisation exists to promote social welfare in the community it will generally lack the required direct benevolence. Similarly, a purpose of preventing distress or misfortune from arising will not on its own be benevolent in the required sense. In the same way, it is not sufficient that the consequences of an organisation’s activities tend to relieve distress and suffering.

    Purely governmental bodies, which are constituted, funded and controlled by government and perform the accepted functions of government, operate to promote the welfare of the community generally and are unlikely to be PBIs.

    For further explanation of PBIs refer to the Tax Office publication GiftPack (NAT 3132) available on the ATO website.

    Other Income Tax Requirements

    Each organisation is required by taxation law to appoint a public officer of the organisation for the purposes of the income tax provisions. A written notice of appointment and a change in particulars of the public officer is required by the Act. The person so appointed must be over 18 years and resident in Australia. The appointment is usually minuted by the management committee.

    Organisations will need to ensure they keep complete records of all business-related transactions within their books of account. These records may be kept either manually or electronically.

    The Income Tax Assessment Act requires organisations to keep sufficient records to explain all transactions and acts that may be relevant to the income tax legislation over a specified period, usually five years. These records must be in English. The publication Keeping Good Records (NAT 3029) describes the issues of preparing and maintaining adequate business records.

    Need help writing successful grant or funding applications? Looking for tips to make your funding applications stand out? Want to know more about Skilling Queenslanders for Work and how to apply for funding? QCOSS is again partnering with the Department of Employment, Small Business and Training to...
    The New South Wales Financial Inclusion Network, in partnership with University of New South Wales' Centre for Social Impact and Northern Rivers Community Gateway, invite you to the 4th Financial Inclusion Conference – Roads to Resilience, to be held in Sydney over 18 and 19 March 2020. Register...
    Media Statement Minister for Communities, Women and Youth, Minister for Child Safety and Minister for the Prevention of Domestic and Family Violence The Honourable Shannon Fentiman Financial assistance is now available for south-east Queensland’s not-for-profit organisations that have been affected...
    Breaking the cycle of over representation of Aboriginal and Torres Islander children in out-of-home-care is the focus of Queensland’s first social impact investment initiative, announced by Queensland Treasurer Curtis Pitt in Cairns today. The ‘New Parent Infant Network’ (NEWPIN) service is the...
    Anglicare Australia, together with the Australian Charities and Not-for-profit Commission (ACNC) and the Australian Accounting Standards Board (AASB) today launched a new issues paper on not-for profit sector reporting and accountability. The paper, entitled: Issues Paper: Better Financial...
    If your not-for-profit organisation is in need of financial guidance and has an annual turnover of under $250,000, you can sign up to the Mentor the Treasurer program . In partnership with Pro Bono Australia, CPA Australia assists not for profits by connecting them with qualified CPA Australia...
    If your organisation is a charity registered with the Australian Charities and Not-for-profits Commission (ACNC), your 2016 Annual Information Statement may be due soon. The ACNC has a wealth of resources to assist you with completing the Annual Information Statement, including a checklist, a step-...
    Case studies show social purpose organisations are reaping the benefits of improved process efficiencies. According to Olivia Hilton, Executive Director, SVA Consulting, “A lot of social purpose organisations just do not have the luxury of spending time wondering if there are other ways to achieve...
    Treasurer Curtis Pitt has outlined three shortlisted proponents seeking to deliver innovative services under the state government’s Social Benefit Bonds program . Mr Pitt said there had been strong interest in the pilot Social Benefit Bonds initiative that will involve investors, the social...
    Not-for-profit organisations may need to register for fringe benefits tax (FBT) if they provide benefits to employees during an FBT year (1 April to 31 March). Depending on the type of organisation, it may be entitled to a rebate or an exemption for FBT. The Australian Taxation Office has produced...


    Are you looking for support in Queensland, or trying to find a service that meets your needs? Now you can search oneplace , the service directory hosted by the Queensland Family and Child Commission. oneplace is an easily accessible directory of community services to help Queensland families to get...
    The Financial Counsellors' Association of Queensland is the peak professional body representing the membership of 74 Financial Counsellors throughout inner city, suburban and regional Queensland. The FCAQ is also a not for profit organisation whose members provide a fee and accessible financial...
    Foresters Community Finance is a non-profit organisation that has been delivering community finance and social investment products in Australia for the past 20 years. It is a Community Development Finance Institution (CDFI). CDFI’s are socially focused organisations that use community finance and...
    The Legal Health Check is a collaboration between the Queensland Public Interest Law Clearing House (QPILCH) and the National Association of Community Legal Centres Inc. The Legal Health Check provides a number of resources and tools to help organisations identify their clients' legal needs and...
    In the first reading of the 2015 Queensland Budget Speech on 14 July 2015, Treasurer Pitt announced that the Queensland Government will pilot 3 social benefit bonds aimed at sourcing funds from the private sector to finance the achievement of quantifiable social outcomes in the community. The pilot...
    Our Community Pty Ltd has published practical advice on finances for not-for-profit board members. The book is part of CommunitySmart, a national financial literacy program development by Commonwealth Bank Not for Profit Sector Banking and the Institute for Community Directors Australia (part of...
    The Community Financial Centre has been established by Our Community to give not-for-profit organisations of all types and sizes access to tools and resources to help improve their financial management, and better and more cost effective banking services. The site covers managing money,...
    Information technology and online solutions can help your community organisation work better. ACOSS, Infoxchange and the Department of Communications have teamed up to bring you Digital Business Kits which give you the tools and information to do more online. Digital Business Kits are hosted on...
    In March 2014, QCOSS produced the Rethinking Resources: Case Studies of Financial Resilience from Community Services report, in which community organisations from Queensland share how they are working to increase their financial sustainability. The strategies they employ include social enterprise,...
    Authored by: Craig Ford, Polymorphic Solutions Your community organisation might have run on spreadsheets, shared folders and Access databases until one day, when you realised the systems don’t talk to each other and your organisation can’t grow without a single integrated system. Then it is time...
    Many not-for-profit organisations are now developing income-generating activities to reduce the reliance on government and philanthropic funding, and others are establishing social enterprises to respond to client needs in a sustainable way. The development of business skills and systems is very...
    With funding provided by the Australian Government Child Care Services Support Program (CCSSP), Network SA have developed a financial literacy video resource to support directors and management committees of community based child care centres to read and understand financial reporting requirements...
    This resource has been developed by Knode and Foresters to support boards and service managers assess their financial position and strategically build their organistion's financial sustainability. Building financial sustainability in your organistions contains tools to help you: Assess where your...
    Industrial relations legislation in Queensland can be found on the Fair Work Commission's website . The main pieces of legislation are: Fair Work Act 2009 Fair Work Regulations 2009 Fair Work Commission Rules 2013
    Power of Attorney A power of attorney is a formal document allowing someone else to make decisions on your behalf; both personl and financial. This person can apply for a Domestic Violence Order on the behalf of someone experiencing domestic and family violence. The Powers of Attorney Act 1998...
    There are a range of legal structures which may be suitable for Queensland not-for-profit community groups. The four main options are: an incorporated association: Associations Incorporation Act 1981 (QLD) and Associations Incorporation Regulation 1999 (QLD) a company limited by guarantee:...
    The Social Benefit Bond Program, Queensland Treasury

    The competitive tender process for the Queensland government's new Social Benefit Bonds program has recently been launched, and the Invitation for Expressions of Interest (EOI) documents are available via...

    Kylie Hogan, National Disability Services

    The Community Services Industry is facing a myriad of reforms and challenges now and into the future. 

    Challenges such as an ageing population, workforce shortages, sector-wide reforms, technological advances and economic uncertainty are making it more important than ever for...

    The balance between people and money
    Alyce Maschio, Foresters Community Finance

    For social enterprises and non-profit organisations, access to capital means they can build financial independence, own assets, leverage greater community benefits, and develop capacity to build a sustainable long-term future.

    As the funding landscape changes and major sector...

    Social Traders logo
    Mindy Leow, Social Traders

    As the Australian social enterprise sector grows, it’s easier for consumers and organisations to deliver social impact through their spending.

    Social enterprises are businesses that sell goods and services into the marketplace in order to deliver community benefit. The...

    Anne Curson, Queensland Council of Social Service

    This month QCOSS releases the Rethinking Resources: Case Studies of Financial Resilience from Community Services report, in which community organisations from Queensland share how...

    Tiffany Tento, Queensland Council of Social Service

    The Tasmanian Government together with Regional Development Australia and the Tasmanian Early Years Foundation have published a useful guide on the ...

    Managing money
    Tiffany Tento, Queensland Council of Social Service

    The latest edition of the Australian Sector Nonprofit Legal and Accounting Almanac was recently released.

    The annual publication contains a summary of significant cases, legislation, and tax issues impacting on the...

    See videos from StudioQ related to this topic

    Share or Print