Income tax exemption checklist – Employment organisations
Your organisation can self-assess that it is exempt from income tax if it meets all of the following requirements:
- it is one of the following types of organisations
- a trade union
- an employee association registered or recognised under the Fair Work (Registered Organisations) Act 2009 or an Australian law relating to the settlement of industrial disputes
- an employer association registered or recognised under the Fair Work (Registered Organisations) Act 2009 or an Australian law relating to the settlement of industrial disputes
- it is not a charity
- it complies with all the substantive requirements in its governing rules
- it applies its income and assets solely for the purpose for which it is established
- it meets further conditions for exemption.
If all of your organisation's purposes are charitable purposes for the public benefit and you do not have any independent non-charitable purposes, your organisation cannot self-assess as income tax exempt under this category. Your organisation will need to be registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC) and receive our endorsement to access an income tax exemption.
For more information on what is a charitable purpose, see the Australian Charities and Not-for-profits Commission's websiteExternal Link.
Trade union
A trade union is an association that has been formed to deal with its members’ employers and to protect and further its members’ employment conditions.
An association that merely provides financial assistance to its members is not a trade union.
Further conditions
For an employment organisation that is not a charity to be exempt from income tax, it must meet both of the following conditions:
- be located in Australia
- pursue its objectives and incur its expenditure principally in Australia.
Principally means mainly or chiefly. Less than 50% is not considered principally.
The pursuit of objectives in Australia can include things done offshore if they are only a means of pursuing those objectives. For example, sending employees to an offshore conference to aid their efficiency for the Australian objectives will be pursuing objectives in Australia.
You will also meet these conditions if your organisation exists, operates, pursues its objectives and incurs its expenditure solely and entirely in Australia.
If your organisation does not meet all the requirements for exemption for this category, you should check the other exemption categories in Eligible types of income tax exempt organisations.