No more hiding your money in a not-for-profit structure
No more hiding your money in a not-for-profit structure denphumi

Avoiding tax through not-for-profits is a no go

ARRANGEMENTS by not-for-profit organisations is being reviewed by the Australian Tax Office in northern NSW and southern Queensland.

In a statement on their website, the ATO said it will be scrutinising individuals and small businesses who may be incorrectly claiming to be a NFP in order to avoid paying tax.

Not always private foundations

Assistant Commissioner Scott Parkinson said some ‘private foundations’ have been set-up 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,” hesaid.

“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 said that it is illegal to operate business activities through a not-for-profit organisation for the sole purpose of avoiding income tax responsibilities.

Fines apply

“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.”

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.

More information

For more information on these arrangements, refer to Taxpayer Alert 2016/5.

If you have information about these arrangements or would like to make a voluntary disclosure, phone us on 1800 177 006 (press 1 for the taxpayer alert option). You can also email us on reportataxscheme@ato.gov.au



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