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Car Donation To Charity Definition

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You use an activity statement to report your business tax entitlements and obligations, including goods and services tax (GST), pay as you go (PAYG) instalments, PAYG withholding and fringe benefits tax (FBT) instalments.

Associates

Associates include people and entities closely associated with you, such as relatives, or closely connected companies or trusts. A partner in a partnership is an associate of the partnership.

Australian business number (ABN)

Your ABN is your identifier for certain dealings with us and other government departments and agencies.

Charity

A charity is an institution or fund established for a charitable purpose.

Examples of charities include:

religious institutions

aged persons homes

homeless hostels

primary or secondary schools run by churches

organisations relieving the special needs of people with disabilities

societies that promote the fine arts.

Charitable fund

A charitable fund is a fund established under an instrument of trust or a will for a charitable purpose. The purposes set out in the will or instrument of trust must be charitable. Charitable funds mainly manage trust property, or hold trust property to make distributions to other entities or people. If the trustee mainly carries on activities that are charitable, the fund will be treated as a charitable institution and not as a charitable fund.

Charitable institution

A charitable institution is an institution that is established and run to advance or promote a charitable purpose. An organisation's purposes can be found from its governing documents and from its activities, history and control. A charitable institution will carry on charitable activities while a charitable fund mainly manages or holds trust property.

Charitable purpose

A charitable purpose is one which the law regards as charitable. The term 'charitable' has a technical legal meaning which is different from its everyday meaning. Charitable purposes are any of the following purposes:

the relief of poverty, sickness or the needs of the aged

the advancement of education

the advancement of religion

the provision of child care services on a non-profit basis

other purposes beneficial to the community.

Deductible gift recipient (DGR)

A DGR is an organisation that is entitled to receive income tax-deductible gifts. All DGRs have to be endorsed by us, unless they are listed by name in the income tax law.

There are two types of endorsement, either:

where an organisation is endorsed as a DGR in its own right

where an organisation is endorsed as a DGR for a fund, authority or institution that it operates.

For the second type, only gifts to the fund, authority or institution are tax deductible.

Endorsement

Endorsement is the process where organisations apply to us for approval to do either of the following:

access charity concessions under the income tax, FBT and GST laws - complete the Application for endorsement as a tax concession charity or income tax exempt fund (NAT 10651)

receive income tax-deductible gifts - complete the Application for endorsement as a deductible gift recipient (NAT 2948).

Enterprise

An enterprise includes a business and other commercial activities. It does not include any of the following:

private recreational pursuits and hobbies

activities carried on as an employee, labour hire worker, director or office holder

activities carried on by individuals (other than trustees of charitable funds) or partnerships (in which all or most of the partners are individuals) without a reasonable expectation of profit.

It includes the activities of entities such as charities, deductible gift recipients, religious and government organisations, and certain non-profit organisations.

Entity

For this guide, an entity means an individual, a body corporate, a corporation sole, a body politic, a partnership, an unincorporated association or body of persons, a trust or a super fund.

Also, the trustee of a trust or super fund is considered to be an entity made up of the people who are trustees at the time. That entity is a different entity to a person acting in their personal capacity. When we refer to an entity of a particular kind (for example, trustee), we mean the entity only in its capacity as that kind of entity.

Fringe benefits tax (FBT)

FBT is a tax payable by employers who provide fringe benefits to their employees or associates of their employees. For example, a fringe benefit is generally provided when an employer:

allows an employee to use a work car for private purposes

gives an employee a cheap loan

pays an employee's private health insurance costs.

Gift deductible entity

For GST purposes, an entity is a gift deductible entity if gifts or contributions made to it can be deductible under the income tax law.

Goods and services tax (GST)

GST is a broad-based tax of 10% on the sale of most goods, services and anything else consumed in Australia.

Government school

A government school is a school run by the Australian Government or a state or territory government that provides preschool courses, full-time primary or secondary courses.

GST credits

A GST credit, also referred to as an input tax credit, is claimed on an activity statement to get back the GST paid in the price of purchases made for your business or enterprise. You are entitled to a GST credit for the GST included in the price of purchases for use in your business or enterprise, but not to the extent that you use the purchase to make 'input taxed sales' or for private purposes.

If you use the purchase partly for private purposes, you will not be able to claim a credit for the full amount of GST, only the amount that relates to your business or enterprise use. You must have a tax invoice before you can claim a GST credit on your activity statement (except for purchases of $75 or less, excluding GST).

GST-free sales

Some things are not subject to GST and are sold without GST in their price. These sales are referred to as GST-free sales.

You do not include GST in the price of GST-free sales that you make, but you are entitled to GST credits for purchases or importations you have made for use in carrying on your activities. Some examples of GST-free sales are basic food, exports, sewerage and water, the sale of a business as a going concern, non-commercial activities of charities and some education and health services.

Health promotion charity (HPC)

A health promotion charity is a non-profit charitable institution whose main activity is promoting the prevention or control of diseases in human beings. The characteristics of a health promotion charity are both of the following:

its principal activity is promoting the prevention or control of diseases in human beings

it is a charity which is a charitable institution.

Examples of activities that can promote the prevention or control of disease include:

providing relevant information to sufferers of a disease, health professionals, carers and to the public

researching how to detect, prevent or treat diseases

developing or providing relevant aids and equipment to sufferers of a disease.

Income tax exempt fund (ITEF)

An ITEF is a non-charitable fund established by a will or instrument of trust. The beneficiaries of ITEFs can include DGRs that are charities and DGRS that are not charities.

Input taxed sales

Some things are sold without GST in their price, even though GST was included in the price of purchases used to make or supply them. These sales are referred to as input taxed sales.

If you make input taxed sales you cannot claim GST credits for the GST in the price of purchases used to make the things you sold. In some cases you may be entitled to claim reduced GST credits. Some examples of input taxed supplies are most financial supplies and supplies of residential rent and residential premises.

Instalment income

Generally, instalment income is your total ordinary income for the period for which you are paying your PAYG instalment.

Instalment rate

Your instalment rate is a percentage figure that approximates the proportion of your business and investment income that is paid as tax. It is worked out by us based on information in your most recent income tax assessment. You multiply your instalment rate by your instalment income for a quarter (or year) to work out the amount to pay in your PAYG instalment. We will give you an instalment rate if you must pay PAYG instalments.

Non-profit

For determining income tax-exempt status, an organisation is considered non-profit if it is not carried on for the profit or gain of its individual members. This applies for direct and indirect gains, and both while the organisation is being carried on and when it is winding up. We accept an organisation as non-profit if its constitution or governing documents prohibit distribution of profits or gains to individual members and its actions are consistent with the prohibition.

Non-profit company

A non-profit company for determining rates of income tax and whether to lodge income tax returns is one of the following:

a company that is not carried on for the purposes of profit or gain to its individual members and is, by the terms of the company's constituent document, prohibited from making any distribution, whether in money, property or otherwise, to its members

a friendly society dispensary.

Pay as you go (PAYG) instalments

PAYG instalments are a system for paying amounts towards the expected tax liability on your business and investment income for the financial year.

Pay as you go (PAYG) withholding

PAYG withholding requires an entity to withhold an amount if it makes certain listed payments, including salary, wages, commission, bonuses or allowances to an employee, directors' fees, payments for a supply (goods or services) to another business that has not quoted an ABN, and certain dividend, interest and royalty payments.

Public benevolent institution (PBI)

A public benevolent institution is a non-profit institution organised for the direct relief of poverty, sickness, suffering distress, misfortune, disability or helplessness.

The characteristics of a PBI are all of the following:

it is set up for needs that require benevolent relief

it relieves those needs by directly providing services to people suffering them

it is carried on for the public benefit

it is non-profit

it is an institution

its dominant purpose is providing benevolent relief.

Examples of PBIs are organisations that do one or more of the following activities:

provide hostel accommodation for the homeless

treat sufferers of disease

provide home help for the aged and the infirm

transport the sick or disabled

rescue people who are lost or stranded.

Registered charity

Registered charity means an entity that is registered with the Australian Charities and Not-for-profits Commission (ACNC).

Religious institution

A religious institution is a non-profit institution operated for the public benefit to advance religion in a direct and immediate sense. Religion involves belief in a supernatural being, thing or principle and the acceptance of canons of conduct which give effect to that belief. Examples of religious institutions include:

bible colleges

churches and other religious congregations

institutions of missionaries

seminaries.

Tax concession charity (TCC)

A tax concession charity is a charity that is endorsed by us to access one or more of the following tax concessions:

income tax exemption

GST charity concessions

FBT rebate

FBT exemption.

Tax invoice

A tax invoice is a document generally issued by the seller in the approved form. It shows the price of a sale, indicating whether it includes GST, and may show the amount of GST. It must also contain sufficient information to enable the following key items to be readily identified:

the seller's identity and Australian business number (ABN)

the nature of the sale

the amount of GST payable.

You must have a tax invoice before you can claim a GST credit on your activity statement for purchases of more than $75 (excluding GST).

Tax period

A tax period is the length of time for accounting for GST in your activity statement. It may be quarterly, monthly or annually. Quarterly tax periods are periods of three months ending on 30 September, 31 December, 31 March and 30 June. Monthly tax periods end on the last day of each calendar month. Annual tax periods are the same as a financial year and end on 30 June. An activity statement must be lodged for each tax period.