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Not-for-profit organisations' income is treated differently depending on what kind of income it is.

Common not-for-profit income types include:

  • subscriptions
  • grants and subsidies
  • donations or koha
  • fees
  • raffle money
  • trading profits
  • proceeds from selling assets.

Some grants made to not-for-profits can be an unconditional gift or donation, especially if given by charitable trusts.

Income tax on grants and subsidies 

Donations (koha)

Income liable for GST and income tax

The table below shows whether:

  • you'll have to pay income tax on different types of income, if you do not have an exemption from income tax
  • you'll need to charge GST on income, if your not-for-profit is GST-registered.
 

Income type

Liable for income tax

Not liable for income tax

Liable for GST

Not liable for GST

Exempt from GST

Subscriptions

 

 

 

Donations

 

 

 

Koha

 

 

 

Bequests

 

 

 

Grants

 

 

 

Unconditional gifts

 

 

 

Subsidies

 

 

 

Suspensory loans

 

 

 

Trading activities

 

 

 

Raffles or housie proceeds

 

 

 

Admission fees

 

 

 

Affiliation fees

 

 

 

Sale of donated goods or services

 

 

 

Sale of purchased goods

 

 

 

Sale of assets or equipment

 

 

 

Insurance receipts

 

 

 

Hall or equipment hire

 

 

 

Rent received (residential)

 

 

 

Rent received (commercial)

 

 

 

Penalty payments (fines)

 

 

 

Advertising or sponsorship

 

 

 

Interest or dividends

 

 

 

Gaming machines

 

 

 

 

If your income is exempt from GST

If your income is ‘exempt from GST’, it's different from income that's ‘not liable for GST’. This is important when you're working out your claim for GST input tax credits on goods and services for your not-for-profit organisation.

Claiming input tax credits on expenses

If you're a GST-registered not-for-profit you may claim input tax credits on expenses (credits for the GST you've spent on goods and services).

These tax credits can be claimed on expenses gained from income that's either liable or not liable for GST.

You cannot claim expenses gained from income that's exempt from GST, for example renting a residential property (see the table above).