Australian Taxation Office Requirements
A number of clubs have received letters from the Federal Government Australian Tax Office advising them of the possibility that they may be required to file a tax return.
If you are running a business and you employ staff on salary then you need to submit a tax return.
If you are only generating business for club members then you maybe exempt from submitting a tax return..
If you sell fertilisers to non members for a profit that maybe considered as a business then the Club would be required to submit a tax return.
Whatever happens clubs must not ignore this issue in the hope that it will just go away.
The issue is complex and QCGC doe not have the expertise or authority to provide definitive advice on how clubs should proceed.
Clubs with concerns could take the following actions;
- Check out the ATO website. Insert the number 23099 in the search tab at the top and this should take you to the relevant page to start.
- Contact the ATO to ask specific questions. The ATO has a section dedicated to not for profit organisations. Be sure to take note of the date of your inquiry and the person to whom you spoke.
- If you have access and/or can afford it you might consult a tax accountant or lawyer for advice.
It may be worthwhile to modify your club’s “Articles of Association” in your constitution and rules in order to take into account the definitions of types of community associations listed on the ATO website.
You might also find it useful to differentiate income derived from within your club i.e. from your members from income derived from outside sources e.g. interest, plant sales to the general public.
GST maybe an issue..
You may need to tell ATO who are the Club's Public Officers representatives
Taxation Tax Exemption Declaration
ATO Taxation Self Assessment form
ABN and Web sites
Many clubs have an ABN number as a result of registration withthe Office of Fair Trading. You can discover the ABN number by searching the Internet.
Most businesses in Australia operate a corresponding website. This might be simply for informational purposes or to sell products online. In either event, it’s important that the details you provide are accurate and up to date. If you apply for a domain name that ends with .com.au or .net.au, then you will need to provide your ABN upon registration. However, once you have registered your domain name, there is no legal requirement for you to display your ABN on your website. However, certain documents on your website such as your terms and conditions and privacy policy will contain your ABN. In any event, it is best practice to show your ABN on your website.
GARDEN CLUBS AND TAX
A number of clubs are dealing with the issue of having to lodge an NFP self review return or a tax return. The ATO website and phone service can help.
SELF HELP SERVICE PHONE NUMBER – 137226 (for filing a NFP self review return)
NOT FOR PROFIT ATO PHONE NUMBER – 1300 130 248 (probably the best one to use)
TO FILE A ‘RETURN NOT NECESSARY’ – ATO WEBSITE PAGE 33593 – PHONE NUMBER 131142
Before beginning it is necessary to have available:
- Your organisation’s full name as incorporated
- Your organisation’s ABN and TFN (tax file number)
- The reference number of any letter received from the tax office
- Ensure that you are an authorised person able to deal with the matter
- You will need to identify yourself which may include your personal TFN and/or your mygovid.
STEPS
- Go to ATO website page QC 73184
- Read all the material regarding NFP to determine whether or not the organisation can claim tax exempt status. The self review return can only be lodged on-line or by phone.
- Pay particular attention to the list of types of organisations that are exempt from tax. Most garden clubs would be classified as social clubs and therefore are not able to claim tax exempt status.
- If it is determined that the organisation is an NFP liable to pay tax:
- Check all the material on assessable income under the mutuality principle
- Determine what income is assessable, what is non assessable and what is apportionable (organisations may need to develop a method for allocating apportionable income e.g. raffle income from non members). . Income derived from members used for the common purposes of the organisation as stated in the Constitution and Rules is not assessable. It is also important that the organisation’s Constitution and Rules contains a clause prohibiting the distribution of income (funds) to individuals. (this does not preclude the reimbursement of funds expended on behalf of the organisation e.g. stationery etc). Donations to the organisation are not assessable.
- If assessable income is below the taxable threshold (currently $416) then the organisation should advise the ATO via a “Return Not Necessary” – (page 33593) . this can be done by phone or in writing as prescribed.
- If it is determined that there is tax to pay the organisation will need to file a business tax return. The Tax Office will provide guidance if required.
Two other matters that need to be considered:
- As a result of changes in personnel and functions it may be necessary to update the organisations details with the ATO. If new people are to be added this requires a form to be completed and the new people will need to supply identifying documentation plus proof e.g. AGM minutes that they have been appointed to the position.
- Many organisations operate on a calendar year basis whereas the tax office uses the financial year. It may be worth considering either changing the accounting period to the financial year OR applying for a Substitute Accounting Period. There is a process outlined for this on the ATO website.
Finally, if you are uncertain ring the Tax Office Not For Profit Section on1300 130 248 for advice and assistance.
Dont forget to pass the correct motions at the Clubs AGM