Tax Facts - Discounts From Suppliers

The Australian Tax Office has recently received an increase in the number of inquiries from Not for Profit organisations wanting confirmation of their income tax status to obtain proof of their eligibility for discounts offered by commercial suppliers.

Suppliers of goods or services who offer discounts to community organisations often ask them to provide information to support their claim to the discount and some will ask specifically for a statement from the Tax Office.

But the ATO says this may result in unnecessary contact with its Office as most clubs, societies and associations can self-assess their income tax status and do not receive confirmation of their status from the Tax Office.

A new Tax Fact Sheet has been prepared to assist Not for Profit organisations in this area and it explains the notices of endorsement issued by the Tax Office and the types of organisations that receive them as well as the types of Not for Profit organisations that are not required to be endorsed.

Under the income tax law, certain organisations may receive the following written notices from the Tax Office:

 endorsement as an income tax exempt charity (ITEC).
 endorsement as a deductible gift recipient (DGR).

A charity that has been endorsed by the Tax Office as an income tax exempt charity (ITEC) receives a written notice from the Tax Office of its endorsement. Details on the ITEC endorsement notice include:

 the charity’s name
 its Australian business number
 the endorsement date of effect, and
 the item number(s) in the tax law under which the charity is exempt.

These charities include most Not for Profit religious institutions, educational institutions, aged persons homes, homeless hostels, organisations relieving the special needs of people with disabilities and societies that promote the fine arts.

Clubs, societies and associations that can self-assess their income tax status do not receive a notice of endorsement as an ITEC.

Not for Profit organisations that can self-assess their income tax status – as income tax exempt or as a non-profit company – are not required to obtain confirmation of their income tax status from the Tax Office.

Examples of organisations that can self-assess their income tax include social clubs, ethnic cultural associations, cinema clubs, friendship clubs, wine societies, fan clubs, rowing clubs, football clubs, dancing clubs, athletic clubs, model train societies, boating and fishing clubs, boxing clubs, golf clubs, car clubs, motor racing clubs, most business and professional associations, and community service organisations such as Apex and Lions.

The Fact Sheet outlines other documents that organisations might submit to a commercial supplier.

If you would like an electronic copy of the Tax Office Fact Sheet just send us an e-mail to probono@probonoaustralia.com.au.