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WHAT ARE THE PRE-REQUISITES FOR NOT-FOR-PROFIT (NFP) ORGANISATIONS? WHAT ARE THE DIFFERENT NFP ORGANISATIONS?

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24
May

Not-for-profit organisations are those which do not operate for making profit for their owners and other members, rather they operate for meeting its purposes only. However, ATO recognises an organisation as NFP if it justifies the following:

  •  Not directly or indirectly operating for the profit or gain of its individual members;
  • Not making distributing money, property or otherwise to its members during regular operation; 
  • Not making distribution of money, property or otherwise to its members on dissolution; 
  • Consistent activities with its constituent document's clauses;
  • Sufficient controls to ensure that members don’t receive the property or assets of the company;
  • Profits made by the organisation are used to carry out its purposes.

For tax purposes, NFP organisations are categorised into two broad categories –

  • Charities and;
  • Other types of NFP organisation.

Charities can be further broken down into following categories –

  • Public Benevolent Institutions;
  • Health Promotion Charities; 
  • Other Charities.

However, charities are the receiver of highest tax concessions. Some charities, clubs, societies and associations are also deductible gift recipients. Here are some examples of NFP organisations:

  •  Church Schools;
  • Churches;
  • Community Child Care Centres;
  • Cultural Societies;
  • Environmental Protection Societies; 
  • Neighbourhood Associations; 
  • Public Museums and Libraries; 
  • Scholarship Funds; 
  • Scientific Societies; 
  • Scouts;
  • Sports Clubs; 
  • Surf Lifesaving Clubs; 
  • Traditional Service Clubs.

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