Resources > GST

Self Help Groups and the GST

If you have any comments or information about the issues raised here, please contact COSHG info@coshg.org.au

MORALLY
The GST is a retrograde step with negative effects for the self help movement. COSHG's first aim is "a more equitable distribution of power and wealth in society". Taxes can be a powerful way of working for a more equal society - but not the GST, which is more likely to increase the gap between wealth and poverty.

PRACTICALLY
Business with an annual turnover of $50,000 or more have to register for the GST. Those below $50,000 may choose to register. For non-profit organisations the registration threshold is $100,000.
So, if you are a self help group with an annual turnover of under $100,000, you can choose not to register for GST. We would be pleased to communicate with groups making this choice. Whether or not you register for GST, the group may decide to get an ABN, which is separate - See below.
If your group registers:-

1. The group will generally charge 10% GST when you make a supply of most goods and services. You will collect GST you have charged and report it monthly or quarterly to the ATO. 
2. The group will be able to claim input tax credits for GST you have paid on things the group acquires.

Deciding whether to register for GST
Disadvantages of registering could be:-
- Registering involves extra work. You have to lodge a monthly or quarterly Business Activity Statement (even if it's a nil report).
- The group has to collect and pay GST on things it charges money for (including memberships, subscriptions, handbooks, activities, admission fees).
- The element of surveillance and the possibility that concerns about tax will interfere with the group's decision making.

The advantage of registering is that you can claim input tax credits on things you need to purchase in order to run the group (for example, buying equipment, getting equipment serviced, rental of business premises, power, telephone, postage , photocopying and advertising costs). The amount is one eleventh of the price. For example, if you buy something for $11, one dollar of this is GST, so you would claim $1 tax input on this item.

GRANTS & DONATIONS
Some grants (from the government or philanthropic trusts) are subject to GST. Donations are not subject to GST. The difference is that grants are given for specific purposes. A donation is given to the group to be spent how the group decides

The GST charged on grants will normally be balanced by credit input claimed and therefore the GST shouldn't make any difference to the amount you get. However it will be important for groups to let the funding body know whether the group is registered for GST or not.

MORE GST INFORMATION
Phone the ATO Non-profit infoline on 1300 130 248. They can give you information over the phone and/or send booklets. ato.gov.au/nonprofit and follow the links for GST.

Australian Business Number - ABN 

If your group is likely to get a grant or other payments over $50 from registered organisations (as distinct from private individuals), the group probably needs to get an ABN. Otherwise, the payment is subject to a with-holding tax of 48.5%. Groups can register for an ABN, whether or not they are going to register for the GST. 

Information is available from he ATO Non-profit infoline on 1300 130 248. They can give you information over the phone and/or send booklets. ato.gov.au/nonprofit and follow the links for ABN.

Some self help groups were previously registered as Public Benevolent Institutions or 'for charitable purposes' and people who donated $2 or more could claim that donation as a tax deduction. In order to continue to have donations tax deductible, these groups will need to get an ABN. The ABN registration pack includes questions asking if you are a charitable institution and if you intend to apply for endorsement as a deductible gift recipient. If you answer YES to either or both of these questions, you will be sent the relevant form(s).

Deductible Gift Recipient status (DGR)

Some self help groups were previously registered as Public Benevolent Institutions or 'for charitable purposes' and people who donated $2 or more could claim that donation as a tax deduction. This has now been replaced by deductible gift recipient status (DGR). In order to apply for DGR, you fill in the application form for an ABN and tick the box to apply for DGR. The group is unlikely to get DGR unless it provides some sort of direct service (such as food or clothing). However if you group deals with a health or disability, it is worth finding out if you can get DGR status.

The current review of Charities and DGR looks like it will extend DGR status to many more self help groups.

Income Tax Exempt Charity (ITEC)
If your group applies for an ABN, you will see a question on the form asking if you are applying for registration as an Income Tax Exempt Charity (ITEC). You would tick yes for this question, as ITEC simply means that the group does not have to fill in an annual tax return. ITEC is quite easy to get. "Charity" in this case is interpreted widely. COSHG, for example, has ITEC, but would not be able to get DGR.

The Genetic Support Network Victoria has produced handouts on how to go about getting ITEC and DGR.

More information

The ATO Non-profit infoline on 1300 130 248. They can give you information over the phone and/or send booklets. Online information from ato.gov.au/nonprofit

COSHG has a collection of booklets about the new tax system.
'The Club Pack' is one booklet has information relevant to non-profit groups. This includes organisations like bushwalking groups that are not charities.

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