Financial management

An ABN helps to identify your organisation in its dealings with the Australian Taxation Office (ATO) and other government agencies.

Non-profit organisations can use an ABN to:

• register for goods and services tax (GST) and claim GST credits
• register for pay as you go (PAYG) withholding
• apply to the tax office for endorsement as a deductible gift recipient, tax concession charity or income tax exempt fund
• interact with other government departments, agencies and authorities
• interact with the tax office on other taxes, such as fringe benefits tax (FBT).

How to register for an ABN - ATO website

Goods and services tax (GST) is a tax on transactions and is a broad-based tax of 10% on the sale of most goods and services, and other items sold or consumed in Australia.

Where a non-profit organisation is required to be (or is) registered for GST, the sales price of most goods, services and other items will be inclusive of GST. The organisation may be entitled to claim GST credits on the purchases it makes in carrying out its activities.

A non-profit organisation - whether it is a charity or not - must register for GST if it is carrying on an enterprise and its GST turnover is $150,000 or more in any one year.

Registering for GST, among other things, requires the organisation to complete a business activity statement (BAS) on a regular basis. Find more information about GST on the ATO website.

Fringe benefits tax (FBT) is a tax payable by employers who provide fringe benefits to their employees or to associates of their employees.

If your organisation provides a fringe benefit to its employees or to associates of its employees (typically family members), your organisation may have an FBT liability. This is separate from income tax and is calculated on the taxable value of the benefits provided.

Even if your organisation is exempt from income tax, it may still have to pay FBT. However, there are certain FBT concessions that can reduce your organisation's liability.

More information about FBT on the ATO website.

Under PAYG withholding, you have an obligation to collect tax from payments you make to employees and some businesses so that they can meet their end-of-year tax liabilities.

Businesses and other enterprises must deduct amounts from certain payments they make to others, including:

• payments to employees, company directors and office holders
• payments under labour hire arrangements
• payments under voluntary agreements
• payments where an Australian Business Number (ABN) has not been quoted.

Find more information on PAYG withholding through the ATO website.

Certain organisations are entitled to receive income through tax-deductible gifts and contributions. These organisations are called deductible gift recipients (DGRs).

The income tax law determines which organisations, and which type of organisation, can qualify as a DGR.

Organisations that meet the requirements for endorsement can apply to the ATO using an application for endorsement as a deductible gift recipient.

Depending on the structure of your organisation, you may be obligated to pay state government taxes such as:

• stamp duty
• payroll tax
• land tax
• emergency services levy.

Being aware of the types of records your organisation should keep and good bookkeeping practices will help with organising your taxes.

Some of the basic records you may need to maintain are:

• cash book records of daily receipts and payments
• GST tax invoices and income tax records, such as debtors and creditors lists, stock take records and motor vehicle expenses
• records of payments relating to employees, such as PAYG withholding, superannuation and fringe benefits payments
• records of payments withheld from suppliers who do not quote an ABN
• bank reconciliation statements.

Find out more about record keeping from the Australian Tax Office (ATO).