Income tax exempt organisations

To work out if your not-for-profit (NFP) organisation is exempt from income tax you first need to know if it is a charity.

If your organisation is a charity, it must be endorsed by us to be exempt from income tax.

If your organisation is not a charity, you can self-assess its income tax status. 'Self-assess' means an organisation can work out for itself whether it is income tax exempt or taxable. Organisations that can self-assess their income tax status do not need to be endorsed by us or get confirmation of their income tax status from us.

This flowchart shows how to work out if your organisation is exempt from income tax.

Working out if your organisation is exempt from income tax

Charity endorsement

Charities must be endorsed by us to be income tax exempt.

Charities, including health promotion charities, public benevolent institutions and religious institutions, must be registered with the Australian Charities and Not-for-profits Commission (ACNC) before we can endorse them to access charity tax concessions.

If your organisation is a charity, it cannot self-assess as income tax exempt, even where it might fall in the description for a type of entity that can self-assess. Instead, it must meet the requirements for charity registration and then become endorsed to be income tax exempt.

See also:

• Tax concession charity endorsement
• Not-for-Profit Law -External Link provides legal information and advice

Self-assessment

If your organisation is not a charity, it can self-assess if it is exempt from income tax. It does not need to be registered with the ACNC or endorsed by us to be exempt.

To self-assess, you need to take the following steps:

1. Check the types of income tax exempt organisations

Check the Types of income tax exempt organisations to see if your organisation fits within any of the types listed. Entities that can self-assess their income tax status come from these broad groups:

• Community service organisations
• Cultural organisations
• Educational organisations
• Employment organisations
• Health organisations
• Resource development organisations
• Scientific organisations
• Sporting organisations

See also:

• Types of income tax exempt organisations

2. Check your organisation meets all the requirements

If you think your organisation fits within any of the types of exempt entities, check the requirements for that entity type to make sure your organisation meets all the requirements.

For many of the exempt entity types, your organisation must be 'not-for-profit' and also meet the following conditions:

• pass one of three tests
• comply with all the substantive requirements in its governing rules
• apply its income and assets solely for the purpose for which it is established.

You will be directed to further information if these requirements apply.

See also:

• Requirements for self-assessing organisations

3. Complete the worksheet

Complete the relevant worksheet as a record of your review.

Next steps:

• Sporting organisations use the worksheet in our guide Income tax exemption and sporting clubs
• Other not-for-profit organisations use the worksheet Income tax status review worksheet for self-assessing non-profit organisations

4. Understand the outcome

Understand what the outcome from the worksheet means for your organisation and what to do next – see the table below.

Table: Self-assessment outcomes

Exempt	Not-exempt	Unsure
If you work out your organisation is income tax exempt: Your organisation does not need to pay income tax or lodge income tax returns, unless we specifically ask it to. Your organisation does not need to get confirmation of its exemption from the ATO. You should carry out a yearly review to check if your organisation is still exempt. You should also do this when there are major changes to your organisation's structure or activities. The worksheet will help you self-review. See Review your tax status.	If you work out your organisation is not income tax exempt: Your organisation is taxable and may have to lodge income tax returns and pay tax. Your organisation may have the benefit of special rules for working out its taxable income, lodging income tax returns and special rates of tax. For more information refer to our guide Mutuality and taxable income (QC 23099).	If you cannot work out if your organisation is income tax exempt: You can phone us on 1300 130 248 from 8.00am to 6.00pm Monday to Friday for help. You can apply for a private ruling from us on the exemption of your income - refer to Application forms and supporting documentation for private ruling applications (QC 17010). We will need information and copies of documents relevant to your possible exemption.

The steps required to work out if your not-for-profit (NFP) organisation is exempt from income tax.