Question

a) Please explain the income tax requirements for not-for-profit organizations Answer must include brief explanations of the following: - Income tax exemptions - ATO endorsement - NFPs obligation for yearly reviews

b) Please explain the GST requirements for not-for-profit organizations Answer must include brief explanations of - Requirement to register - Registration threshold.

TOTAL WORD COUNT IS 350 FOR BOTH. (SHORT Q/A)

Answer 1

Not for profit corporation tax is tax liability that is different than other corporations due to their operation as a charity operation that does not function as a way to earn a profit. The IRS tax code Section 501 provides a federal tax exemption for nonprofit organizations that engage in both private and public activities without pursuing either commercial or monetary growth.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.As a non-profit that isn’t a charity, you don’t need ATO endorsement, or to be registered with the ACNC, to be exempt. To compete a self-assessment, you need to go through the following steps outlined by the ATO: Check the list of exempt organisations Make sure your organisation meets all requirements.For annual periods beginning on or after 1 January 2019, NFPs will need to review all grant contracts and other receipts to determine whether these should be accounted for as revenue under the new revenue standard, AASB 15 REVENUE from contracts with customers, or as income under the new income standard, AASB 1058 Income of Not-for-Profit Entities.

b)Not-for-profit organisations must register for GST if their GST turnover is $150,000 or more. Various GST concessions are available. Not-for-profit organisations must register for GST if their GST turnover is $150,000 or more. Various GST concessions are available.The GST registration threshold for an NFP organisation is $150,000. This means your NFP organisation is not required to be registered for GST unless the GST turnover of your organisation is $150,000 or more.You may still choose to register your organisation for GST if its GST turnover is less than $150,000. The decision to voluntarily register for GST is one that should be based on the administrative needs of your organisation. Some organisations may choose not to register for GST because they consider the GST reporting requirements to be a greater burden than the benefit they would receive, for example, access to GST credits.The non-profit GST registration turnover threshold applies to all non-profit sub-entities regardless of whether their parent entity is a non-profit entity or not.A registered charity, gift deductible entity or government school may choose to treat certain fundraising events as input taxed.If an organisation chooses to treat a fundraising event as an input taxed fundraising event, it will have to treat all sales it makes in connection with the event as input taxed. The choice must be made before any sales take place.The organisation will not be entitled to claim GST credits for any purchases for the event and it will not be required to remit GST on the sales it makes. The organisation will not be entitled to claim GST credits regardless of whether the supply would have been GST-free had it not made the election.Proceeds from input taxed fundraising events do not form part of an organisation's GST turnover. Therefore, if an organisation chooses to treat all sales in connection with certain fundraising events as input taxed, it does not need to register for GST provided its GST turnover is less than $150,000