Do you need to lodge
To work out whether your not-for-profit (NFP) organisation needs to lodge the Company tax return 2024, you need to:
- determine whether your organisation is a NFP company or other taxable company
- know your organisation’s taxable threshold for lodgment
- calculate your organisation’s taxable income.
NFP company or other taxable company
For income tax purposes, taxable NFP organisations are treated as either:
An NFP organisation does not need to be incorporated to be treated as a company for income tax purposes. Both unincorporated and incorporated associations are treated as a company for income tax purposes.
NFP companies
NFP companies are organisations that operate for their purpose and not for the profit or gain (direct or indirect) of its individual members. Their governing documents must prohibit them from making any distributions to their members, whether in money, property or otherwise.
Other taxable companies
Other taxable companies include clubs, societies and associations that are not carried on for the purposes of profit or gain to their individual members but whose constituent documents do not prohibit distributions to their members.
You can see further information on the difference between NFP companies and other taxable companies at Taxable NFP organisations.
NFP companies and other taxable companies should complete the Company tax return 2024.
Taxable threshold for lodgment
NFP companies
NFP companies that are Australian residents have special arrangements for lodging tax returns and special rates of income tax.
An NFP company with taxable income for the 2023–24 income year of:
- $416 or less, can submit a non-lodgment advice (also known as a return not necessary) with us to avoid receiving lodgment reminders. You do not need to lodge the Company tax return 2024, unless we specifically request you to.
- more than $416, must lodge the Company tax return 2024 for the 2023–24 income year.
See more information at Taxable NFP organisations.
Other taxable companies
If your organisation is an ‘other taxable company’ and its taxable income is greater than $0 for the 2023–24 income year, it will need to lodge the Company tax return 2024.
Calculate your organisation’s taxable income
Taxable income is rounded down to the nearest dollar. It is calculated as the difference between an organisation’s assessable income and allowable deductions:
- Taxable income = assessable income − allowable deductions.
The taxable income of a club, society or association is calculated in the same way as a company for income tax purposes.
Mutuality principle
One particular issue that affects many clubs, societies and associations is the taxation treatment of mutual dealings with members.
As a result of the mutuality principle:
- receipts derived from mutual dealings with members are not assessable income (these are called mutual receipts)
- expenses incurred to get mutual receipts are not deductible.
Mutual receipts are not subject to income tax because they are not income.
See further information in Mutuality and taxable income for not-for-profits.
Four steps to calculate taxable income
Because of the mutuality principle, revenue and expenses of an organisation fall within one of the following 3 categories for income tax purposes.
|
Category |
Revenue |
Expenses |
|---|---|---|
|
1 |
Non-assessable |
Non-deductible |
|
2 |
Assessable |
Deductible |
|
3 |
Apportionable |
Apportionable |
These categories are used in the following 4 steps to calculate an organisation’s taxable income:
- Step 1: Classifying revenue into non-assessable, assessable and apportionable
- Step 2: Classifying expenses into non-deductible, deductible and apportionable
- Step 3: Separating apportionable items using appropriate apportionment methods
- Step 4: Calculating taxable income.