CharityPack (current to 19 June 2003)

Introduction

This document has been archived. It is current only to 19 June 2003.

A taxation guide for charitable institutions and funds

Publications about taxation & the non-profit sector

CharityPack is for charities.

CharityPack :

• helps you work out if you are a charity
• explains the new endorsement arrangements
• tells you how to apply for endorsement as an income tax exempt charity (ITEC), and
• outlines ABN, GST, PAYG, FBT and other taxes and obligations for charities.

ClubPack is for clubs, societies and associations which are not charities.

ClubPack:

• helps you work out if your organisation is exempt from income tax
• explains your obligations if your organisation is not income tax exempt, and
• outlines ABN, GST, PAYG, FBT and other taxes and obligations for clubs, societies and associations.

GiftPack is for organisations that wish to receive income tax deductible gifts.

GiftPack explains:

• who can receive tax deductible gifts
• the new endorsement arrangements
• what sorts of gifts are deductible, and
• what donors have to do to claim deductions for their gifts.

A range of fact sheets and booklets including Charitable, Religious and Non-profit organisations & The New Tax System - are also available from sources listed on the back cover of this guide.

The information in this guide is current at April 2000.

Please get help from the ATO or a professional tax practitioner if you feel this guide does not fully cover your circumstances. We regularly revise our publications to take account of changes to the law and you should make sure that this edition is the latest. Any changes or developments occurring between editions will be explained in the CharityPack Updater which you should request from the ATO.

As part of our commitment to producing accurate publications, a taxpayer will not be subject to penalties if it is demonstrated that a tax claim is based on wrong information contained in this guide. However, interest could be payable depending on the circumstances of the case.

About this guide

CharityPack has been prepared by the Australian Taxation Office (ATO) to help charities understand their eligibility to income tax concessions. It also gives an overview of some other taxes and obligations.

How will this guide help you?

CharityPack helps you work out if you are a charity. It explains:

• whether you are entitled to endorsement as an income tax exempt charity
• how to apply for endorsement, and
• some other tax entitlements and obligations.

Unsure whether you are a charity?

You will need to check appendix 1 - Are you a charity? which gives a detailed explanation of charities and lists examples of bodies that fall into the categories of charities and those which do not.

Charities are altruistic institutions and funds set up to benefit the community through:

• the relief of poverty or sickness or the needs of the aged
• the advancement of education
• the advancement of religion, or
• other purposes beneficial to the community.

What if you are not a charity?

If you are a non-profit organisation but not a charity, you may be entitled to income tax exemption under other arrangements and should refer to ClubPack (see description).

Endorsement of charities

To be exempt from income tax, charities will need to be endorsed by the ATO.

Endorsement is a two step process. First, you must register for an Australian Business Number (ABN) as soon as possible. Second, you need separate endorsement as an income tax exempt charity (ITEC).

An application form for endorsement will be sent to you if you answered Yes at question 10 on the ABN registration form.

Charities that already have an ABN and did not indicate their charity status on the ABN application will need to contact the ATO by phoning 13 24 78 to obtain an application form for ITEC endorsement.

Organisations that have previously received written confirmation from the ATO that they are charities must still apply for ITEC endorsement.

To see if you are entitled to ITEC endorsement, check Are you entitled to ITEC endorsement?. How to apply for endorsement and your rights and obligations once endorsed are explained in Income tax - ITEC endorsement .

What about gift deductibility?

ITEC endorsement does not entitle you to receive income tax deductible gifts. Separate endorsement as a deductible gift recipient (DGR) is required by most organisations before they obtain this status. Different criteria apply to DGR status and most charities do not qualify. For further information on gift deductibility see the publication GiftPack (see description).

What will The New Tax System mean for charities?

The New Tax System starts on 1 July 2000. It has special features for charities:

• enhancing certainty for income tax exemption
• providing a single identifier for dealings with government
• giving $65 million to help charities make the transition to GST
• making non-commercial supplies GST- free
• refunding GST paid on inputs, and
• simplifying tax withholding arrangements.

Need more information?

If you have any questions after reading this guide, or you need more information, you can contact the sources listed on the back cover of this guide.

ATO references:
NO NAT 3131