While many not-for-profit (NFP) organisations are exempt from paying income tax, different rules apply to various types of entities. Below, you’ll find an easy-to-follow flowchart and some information to help you determine whether your organisation is tax-exempt and, if so, what you need to do about it. 

How do I determine if my not-for-profit organisation pays income tax? 

If your organisation is a charity registered with the Australian Charities and Not-for-profits Commission (ACNC), you don’t need to perform an annual NFP self-review assessment, but you may still need to pay income tax. The flowchart below explains this in more detail.  

But if you’re not an ACNC-registered charity, your income tax exemption eligibility depends on a range of factors.  

Generally speaking, if your organisation doesn’t operate for the profit, personal gain or other benefit of its owners and falls into one of 8 categories listed in Division 50 of the Income Tax Assessment Act 1997, you may be exempt from paying income tax.  

The categories are:  

  • cultural 
  • community service 
  • educational 
  • employment 
  • government 
  • health – hospital 
  • health – private health sector 
  • resource development 
  • scientific – research fund 
  • scientific – other 
  • sporting.  

Follow our NFP tax exemption flowchart to find out if you’re exempt:

not for profit tax exemption flowchart davidsons

What do tax-exempt NFPs need to do?  

From 1 July 2024, all self-assessed non-charitable not-for-profit organisations with an active Australian business number (ABN) must lodge an annual NFP self-review return with the ATO.  

It’s important to review your exemption status annually or after any major organisational changes to check that you’re still exempt from paying income tax.   

Check out our guide to NFP self-review returns for more information.  

Need help understanding your income tax exemption eligibility?  

Chat with our experienced accounting team  

Our team of specialists have extensive experience working with not-for-profit organisations.  

You can reach out to us by:   

  • calling us on 03 5221 6399  

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This article was written by Audit and Assurance Manager Lucy Partridge

Disclaimer: The information provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.