Not-for-profit organisations' income is treated differently depending on what kind of income it is.
Common not-for-profit income types include:
- subscriptions
- grants and subsidies
- donations or koha
- fees
- raffle money
- trading profits
- proceeds from selling assets.
Some grants made to not-for-profits can be an unconditional gift or donation, especially if given by charitable trusts.
Income tax on grants and subsidies
Income liable for GST and income tax
The table below shows whether:
- you'll have to pay income tax on different types of income, if you do not have an exemption from income tax
- you'll need to charge GST on income, if your not-for-profit is GST-registered.
|
Income type |
Liable for income tax |
Not liable for income tax |
Liable for GST |
Not liable for GST |
Exempt from GST |
|---|---|---|---|---|---|
|
Subscriptions |
|
✔ |
✔ |
|
|
|
Donations |
|
✔ |
|
✔ |
|
|
Koha |
|
✔ |
|
✔ |
|
|
Bequests |
|
✔ |
|
✔ |
|
|
Grants |
|
✔ |
✔ |
|
|
|
Unconditional gifts |
|
✔ |
|
✔ |
|
|
Subsidies |
|
✔ |
✔ |
|
|
|
Suspensory loans |
✔ |
|
✔ |
|
|
|
Trading activities |
✔ |
|
✔ |
|
|
|
Raffles or housie proceeds |
|
✔ |
✔ |
|
|
|
Admission fees |
✔ |
|
✔ |
|
|
|
Affiliation fees |
✔ |
|
✔ |
|
|
|
Sale of donated goods or services |
|
✔ |
|
|
✔ |
|
Sale of purchased goods |
✔ |
|
✔ |
|
|
|
Sale of assets or equipment |
|
✔ |
✔ |
|
|
|
Insurance receipts |
|
✔ |
✔ |
|
|
|
Hall or equipment hire |
✔ |
|
✔ |
|
|
|
Rent received (residential) |
✔ |
|
|
|
✔ |
|
Rent received (commercial) |
✔ |
|
✔ |
|
|
|
Penalty payments (fines) |
✔ |
|
✔ |
|
|
|
Advertising or sponsorship |
✔ |
|
✔ |
|
|
|
Interest or dividends |
✔ |
|
|
|
✔ |
|
Gaming machines |
✔ |
|
✔ |
|
|
If your income is exempt from GST
If your income is ‘exempt from GST’, it's different from income that's ‘not liable for GST’. This is important when you're working out your claim for GST input tax credits on goods and services for your not-for-profit organisation.
Claiming input tax credits on expenses
If you're a GST-registered not-for-profit you may claim input tax credits on expenses (credits for the GST you've spent on goods and services).
These tax credits can be claimed on expenses gained from income that's either liable or not liable for GST.
You cannot claim expenses gained from income that's exempt from GST, for example renting a residential property (see the table above).
