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Tax office targeting not-for-profit structures

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Tax office targeting not-for-profit structures

The ATO has warned it is targeting taxpayers using not-for-profit set-ups inappropriately in an attempt to avoid paying tax.

Tax&Compliance Staff Reporter 03 May 2016
— 1 minute read

The Tax Office has said it is reviewing arrangements by taxpayers who may be incorrectly claiming to be a not-for-profit organisation.

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In issuing the warning, the tax office indicated it would be targeting the northern NSW and southern Queensland regions, though gave no indication as to why these areas have been chosen.

Assistant commissioner Scott Parkinson said that the ATO is reviewing instances where individuals and small business have set up private foundations through which they stream their contractor or business income.

"In these cases the foundations and people who control them do not comply with their tax obligations such as income tax, superannuation and GST," Mr Parkinson said.

"We are currently engaging with a number of taxpayers who we believe are operating under similar structures to get a better understanding of the arrangements in place. The ATO will take compliance action where we identify taxpayers that have entered into this type of arrangement."

Mr Parkinson warned it is illegal to operate business activities through a not-for-profit organisation for the sole purpose of avoiding income tax responsibilities.

"Significant financial and criminal penalties could apply to people that make false or misleading claims about their tax affairs, such as falsely claiming to be a not-for-profit organisation," Mr Parkinson said.

"Not-for-profit organisations exist to help others, to promote cultural, religious, community and recreational activities, or to improve our society. They don’t exist to help people stay out of the tax system."

The tax office said individuals and businesses who have concerns about the way they have structured their affairs can contact the ATO to make a voluntary disclosure to provide advice and correct past mistakes.

Tax office targeting not-for-profit structures
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