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Mutuality and taxable income for not-for-profits

Explains mutuality and helps not-for-profit clubs, societies and associations calculate taxable income. (NAT 73436).

Last updated 3 December 2018

This guide has been prepared for not-for-profit (NFP) clubs, societies and associations that are taxable – that is, NFP organisations that are not exempt from income tax.

It helps these organisations to:

  • work out if they need to lodge an annual income tax return
  • calculate their taxable income, including how to treat mutual dealings with their members.

What's new

This guide applies from 1 July 2015 and replaces Mutuality and taxable income (NAT 73436-06.2010) which was released in June 2010. It has been updated to include the law change to the tax rates for not-for-profit companies which occurred since the last edition of the guide.

See also:

Below is a list of rulings that are referred to throughout this guide:

  • GSTR 2002/3 Goods and services tax: prizes
  • TR 97/11 Income tax: am I carrying on a business of primary production?
  • TR 2004/5 Income tax: taxation treatment of volume rebates paid to a retailer association

Who is this guide for

Which not-for-profit (NFP) member-based organisations are covered by this guide and which ones are not.

Lodgment rules and tax rates

How to work out if your organisation needs to lodge a tax return and its tax rate.

Taxable income and mutuality

How to identify whether a person is a member how it affects your revenue and expenditure for income tax purposes.

Classifying revenue

To calculate taxable income, an organisation needs to classify revenue as non-assessable, assessable or apportionable.

Classifying expenses

To calculate taxable income, an organisation needs to classify expenses as non-deductible, deductible or apportionable.

Separating apportionable items

The methods you can use to apportion income and expenses.

Other issues

An overview of the other issues you need to consider such as CGT, GST and FBT.

Calculating taxable income

The steps for calculating taxable income and 2 detailed case studies.

QC23099