Private ruling: NFP - eligibility for tax concessions
Date of advice: 17 December 2025
Published: 9 February 2026
Ruling period: Year ended 30 June 20XX to year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: If Entity A enters into the proposed project, will they continue to be entitled to be endorsed as an income tax exempt charity under section 50-110 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Issue 2 - GST | Q2: Will Entity A, when it enters into the proposed project, continue to be entitled to be endorsed as a charity under section 176-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act 1999)? | A2: Yes. | Q3: Is the crediting of a third party account under the proposed project conditions by Entity B consideration under section 9-15 of the GST Act 1999 for the supply of X by Entity A to Entity B? | A3: Yes.

Relevant facts and circumstances: 1. Entity A is a Unit Trust registered with the Australian Charities and Not-for-profits Commission (ACNC) as a charity. 2. Entity A has and ABN and has been registered for GST since DDMMYYYY on an accruals basis. 3. Entity A has been endorsed to access the following concessions: • income tax exemption; • GST concession; and • fringe benefits tax (FBT) rebate. 4. A copy of the Amended Trust Deed for Entity A was provided which included appropriate not-for-profit and dissolution clauses. 5. You propose to enter into a community project. You provided us with details of the proposed project. Assumptions 1. Entity A will continue to hold an ABN. 2. Entity A will continue to be registered as a charity with ACNC. 3. Entity A will apply its income and assets solely for the purpose that Entity A was established.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 30-15 | Income Tax Assessment Act 1997 Division 50 | Income Tax Assessment Act 1997 section 50-1 | Income Tax Assessment Act 1997 section 50-5 | Income Tax Assessment Act 1997 section 50-47 | Income Tax Assessment Act 1997 section 50-50 | Income Tax Assessment Act 1997 subsection 50-50(1) | Income Tax Assessment Act 1997 subsection 50-50(2) | Income Tax Assessment Act 1997 section 50-52 | Income Tax Assessment Act 1997 section 50-110 | Income Tax Assessment Act 1997 subsection 995-1(1) | Australian Charities and Not-for profits Commission Act 2012 subsection 25-5(5) | A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 section 9-10 | A New Tax System (Goods and Services Tax) Act 1999 section 9-15 | A New Tax System (Goods and Services Tax) Act 1999 section 176-1

Reasons for decision: Detailed Reasoning - Question 1: If Entity A enters into the proposed project, will they continue to be entitled to be endorsed as an income tax exempt charity under section 50-110 of the Income Tax Assessment Act 1997 (ITAA 1997)? | Summary: The proposed project does not impact Entity A from satisfying the requirements to continue to be endorsed as exempt from income tax under section 50-110 of the ITAA 1997. | Detailed Reasoning - Detailed reasoning: Unless otherwise stated, all legislative references are to the Income Tax Assessment Act 1997 . | Detailed Reasoning - Endorsement as an income tax exempt charity: An entity is entitled to be endorsed pursuant to section 50-110 as an income tax exempt charity if it: • has an ABN • is covered by item 1.1 of the table in section 50-5 • satisfies section 50-47, and • satisfies the special conditions in sections 50-50 and 50-52. Section 50-1 states: The total ordinary income and statutory income of the entities covered by the following tables is exempt from income tax. In such cases, the exemption is subject to special conditions. The tables referred to in section 50-1 are contained in sections 50-5 to 50-45. A registered charity is listed at item 1.1 in the table in section 50-5. The registered charity must meet the special conditions in section 50-50, 50-52 and 50-47. Entity A has an ABN. Entity A is currently registered as a charity with the Australian Charities and Not-for profits Commission (ACNC) and it is covered by item 1.1 'registered charity' in the table under section 50-5. | Detailed Reasoning - Section 50-47: Section 50-47 provides a special condition for all entities covered by section 50-1, it states: An entity that: (a) is covered by any item; and (b) is an Australian Charities and Not-for-profits Commission (ACNC) type of entity; is not exempt from income tax unless the entity is registered under the Australian Charities and Not-for profits Commission Act 2012 (ACNC Act). 'ACNC type of entity' is defined in subsection 995-1(1) as an entity that meets the description of a type of entity in column 1 of the table in subsection 25-5(5) of the ACNC Act. Column 1 of the table in subsection 25-5(5) of the ACNC Act describes a charity. | Detailed Reasoning - Application to your circumstances: Entity A is registered with the ACNC as a charity, therefore is an ACNC type of entity and covered under item 1.1 under 50-5. Section 50-47 applies to Entity A. Entity A satisfies the special condition in section 50-47, A registered charity in section 50-5 must also comply with the special conditions in section 50-50 and 50-52. | Detailed Reasoning - Sections 50-50 and 50-52: Has a physical presence in Australia and, to that extent it pursues its objectives and incurs its expenditure principally in Australia Subsection 50-50(1) will be met if you have a physical presence in Australia, and to the extent incurs your expenditure and purses your objects principally in Australia, or is a Deductible Gift Recipient (DGR) under item 1 in the table in section 30-15. Taxation Ruling TR 2019/6 Income tax: the 'in Australia' requirement for certain deductible gift recipients and income tax exempt entities summarises the explanatory memorandums and explains the Commissioner's view on how the physical presence requirement applies to entities seeking exempt entity status under Division 50. 'The DGR in Australia condition is concerned with the location of the fund, authority or institution as an entity or organisation, rather than the physical presence of particular assets or transactions' (paragraph 6 of TR 2019/6). TR 2019/6 also says that: • 'an entity has a physical presence in a place where it employs assets or people to conduct physical operations' (paragraph 53) • 'where an entity has a physical presence in Australia only, it must incur its expenditure, and pursue its objectives, principally in Australia' (paragraph 56). 'Incur its expenditure' means that 'the required connection will ordinarily exist where the decision to pay is made in Australia, and payment is to occur from an Australian source' (paragraph 62 of TR 2019/6). Entity A will carry on its activities in Australia. Entity A is a resident of, will have assets in, and is located in Australia. Entity A will apply its income and assets solely for the purpose for which it was established. Complies with substantive requirements in its governing rules and applies its income and assets for its purpose Subsection 50-50(2) provides that Entity A must: • comply with all the substantive requirements in its governing rules; and • apply its income and assets solely for the purpose for which the entity is established. Paragraphs 18 and 19 of Taxation Ruling 2015/1 Income tax: special conditions for various entities whose ordinary and statutory income is exempt (TR 2015/1) explain that an entity's substantive requirements are those rules that define the rights and duties of the entity, such as those that: • give effect to the object or purpose of the entity • relate to the non-profit status of the entity • set out the powers and duties of directors and officers of the entity • require financial statements to be prepared and retained • set out the criteria for admission as a member of an entity • require an entity to maintain a register of members, and • relate to the winding-up of the entity. Paragraph 33 of TR 2015/1 states that: The income and assets condition requires an entity to apply its income and assets 'solely' for the purpose for which the entity is established. This means that the entity must exclusively or only apply its income and assets for that purpose. Taxation Ruling TR 2011/4 Income tax and fringe benefits tax: charities sets out the Commissioner's view on the meaning of 'charitable' and 'charitable institution'. The following paragraphs state, in relation to benefits for members: 49. An institution set up to advance the interests of its members in their capacity as members cannot be charitable as it cannot satisfy the public benefit requirement. The members of such institutions do not, as members, constitute a section of the public in the relevant sense, and the benefits derived by the members are, as a result, private in nature. 50. However, an institution that benefits its members can still be charitable if: • the member benefits are simply incidental or ancillary to the purpose of benefiting the community; or • the institution is an open and non-discriminatory self-help group that is deemed to have a purpose that is for the public benefit under the Extension of Charitable Purpose Act 2004 . Based on the supporting facts and assumptions, including the above analysis, Entity A will comply with the substantive requirements of its governing rules and will apply its income and assets solely for the purpose for which it has been established. Section 50-52 states that an entity covered by item 1.1 in section 50-5 is not exempt from income tax unless it is endorsed as exempt under Subdivision 50-B (a charity). As Entity A is currently registered as a charity with the ACNC it satisfies section 50-52. | Detailed Reasoning - Application to your circumstances: Based on the above, Entity A will continue to be endorsed as an income tax exempt entity pursuant to section 50-110 provided it maintains the charity registration with the ACNC, keeps an ABN, and continues to meet the requirements of sections 50-47, 50-50, and 50-52. | Detailed Reasoning - Question 2: Will Entity A, when it enters into the proposed project, continue to be entitled to be endorsed as a charity under section 176-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act 1999)? | Summary: The proposed project does not impact Entity A from satisfying the requirements to be endorsed by the Commissioner as Charity under section 176-1 of the GST Act 1999. | Detailed Reasoning - Detailed reasoning: Unless otherwise stated, all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 . An entity is entitled to be endorsed by the Commissioner as a Charity for GST purposes if it satisfies all the requirements under section 176-1. Section 176-1 states: | Detailed Reasoning - Endorsement by Commissioner as charity: (1) The Commissioner must endorse an entity as a charity if: (a) the entity is entitled to be endorsed as a charity (see subsection (2)); and (b) the entity has applied for that endorsement in accordance with Division 426 in Schedule 1 to the Taxation Administration Act 1953. (2) An entity is entitled to be endorsed as a charity if the entity: (a) is an * ACNC - registered charity; and (b) has an * ABN. | Detailed Reasoning - Application to your circumstances: Based on the above, Entity A is currently registered as a charity with the Australian Charities and Not-for profits Commission (ACNC) and has an ABN, satisfying section 176-1 for endorsement as a charity by the Commissioner. | Detailed Reasoning - Question 3: Is the crediting of a third party account under the proposed project conditions by Entity B consideration under section 9-15 of the GST Act 1999 for the supply of X by Entity A to Entity B? | Summary: The crediting of the third party account under the proposed project conditions by Entity B is consideration under section 9-15 of the GST Act for the supply of X by Entity A to Entity B. | Detailed Reasoning - Detailed reasoning: Section 9-15 of the GST Act provides: | Detailed Reasoning - Consideration: 1. Consideration includes: (a) any payment, or any act or forbearance, in connection with a supply of anything; and (b) any payment, or any act or forbearance, in response to or for the inducement of a supply of anything. 2. It does not matter whether the payment, act or forbearance was voluntary, or whether it was by the * recipient of the supply. Goods and Services Tax Ruling GSTR 2001/6 Goods and services tax: non-monetary consideration (GSTR 2001/6) sets out the Commissioner's view of what constitutes non-monetary consideration for the purposes of section 9-15. Although non-monetary consideration is not an issue arising in this case, the general principles contained in GSTR 2001/6 of how the Commissioner interprets section 9-15 have application on these facts. Paragraphs 49 to 51 of GSTR 2001/6 provide that there needs to be a connection between the supply and the payment for the supply to be made for consideration, and that the recipient of the supply need not be the provider of the consideration: What is 'consideration' ? 49. Consideration is defined in section 195-1 to mean 'any consideration, within the meaning given by section 9-15, in connection with the supply'. The meaning given to consideration in section 9-15 extends beyond payments to include such things as acts and forbearances. It may include payments made voluntarily, and payments made by persons other than the recipient of a supply. 50. Section 9-15 further provides that a payment will be consideration for a supply if the payment is 'in connection with', 'in response to' or 'for the inducement' of a supply. Thus, there must be a sufficient nexus between a particular payment and a particular supply for the payment to be consideration for that supply. 51. It follows that there are two elements to the definition of consideration. The first is the payment by one entity to another. The second element is the nexus that must be established between the payment and a supply. Paragraphs 64-69 and 71-72 of GSTR 2001/6 provide that the test of determining a sufficient nexus between the supply and the consideration is an objective one based on the true character of the transaction, and is broader than a direct 'for' link: 64. A supply is not subject to GST in Australia unless it is made for consideration. Consideration 'for a supply or acquisition' is defined in section 195-1 as any consideration, within the meaning given by sections 9-15 and 9-17, that is 'in connection with the supply or acquisition'. 65. We consider that, in the context of the GST Act, the expression 'you make the supply for consideration' in paragraph 9-5(a) has a similar meaning to 'there is consideration for the supply that you make'. 66. The references in the GST Act to 'supply for consideration' and more commonly to 'consideration for a supply' underscore the close coupling between the supply and the consideration that is necessary before a payment will be consideration for a supply that will make the supply subject to GST. 67. In a similar fashion to the GST legislation in New Zealand, the nature of the nexus required between supply and consideration is specified in the definition of consideration. A payment will be consideration for a supply if the payment is 'in connection with', 'in response to' or 'for the inducement' of a supply. 68. In determining whether a payment is consideration under subsection 9-15(1), the test is whether there is a sufficient nexus between the supply and the payment made. 69. This test may establish a nexus between consideration and supply in a broader range of cases than the 'direct link' test that applies in the European Community and in Canada. While caution needs to be exercised in applying decisions on connective terms in other contexts, the term 'in connection with' has been held to be broader in scope than 'for'. ... 71. In determining whether a sufficient nexus exists between supply and consideration, regard needs to be had to the true character of the transaction. An arrangement between parties will be characterised not merely by the description that parties give to the arrangement, but by looking at all of the transactions entered into and the circumstances in which the transactions are made. 72. The test as to whether there is a sufficient nexus is an objective test. The motive of the supplier and the recipient also may be relevant in determining whether the supply was made for consideration, if a reasonable assessment of the evidence supports that motive. Similar discussion to the above about the nexus test can also be found at paragraphs 89 to 96 of Goods and Services Tax Ruling GSTR 2001/4 Goods and Services Tax: GST consequences of court orders and out-of-court settlements (GSTR 2001/4) and at paragraph 180 of Goods and Services Tax Ruling GSTR 2006/9 Goods and services tax: supplies (GSTR 2006/9). Before examining the required nexus between the provision of consideration and the making of a supply to satisfy section 9-15 (and, by extension, paragraph 9-5(a)), the meaning of 'supply' must now be examined. Section 9-10 provides the meaning of supply and states: (1) A supply is any form of supply whatsoever. (2) Without limiting subsection (1), supply includes any of these: (a) a supply of goods; (b) a supply of services; (c) a provision of advice or information; (d) a grant, assignment or surrender of real property; (e) a creation, grant, transfer, assignment or surrender of any right; (f) a financial supply; (g) an entry into, or release from, an obligation: (i) to do anything; (ii) to refrain from an act; (iii) to tolerate an act or situation; (h) any combination of any 2 or more of the matters referred to in paragraphs (a) to (g). Importantly, with regard to subsection 9-10(1), the words ' A supply is any form of supply whatsoever ' cover all supplies regardless of whether they concern goods or services. This obvious breadth of the concept of supply is confirmed by the Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Bill 1998 (the EM), which states at paragraph 3.6: This is defined broadly and is intended to encompass supplies as widely as possible. The intended scope of subsection 9-10(1) is more fully illustrated in subsection 9-10(2), of which paragraph 3.6 of the EM states: [It] provides a list of things that are included as supplies. It is not an exhaustive list. It does not limit the possible breadth of the definition of supply in subsection 9-10(1). Subsection 9-10(2) does not limit subsection 9-10(1). Something that is not listed in subsection 9-10(2) but falls within subsection 9-10(1) will be a supply. Paragraphs 22 and 23 of GSTR 2006/9 outline 16 propositions which may be relevant to characterising and analysing supplies. The most pertinent of the propositions on these facts include: • Proposition 2: Generally, for every supply there is a recipient and an acquisition • Proposition 4: A transaction may involve two or more supplies • Proposition 5: An entity will make a supply if it provides something of value to another entity • Proposition 6: 'Supply' usually, but not necessarily, requires something to be passed from one entity to another • Proposition 11: The agreement is the logical starting point when working out the entity making the supply and the recipient of that supply • Proposition 14: A third party may pay for a supply but not be the recipient of the supply • Proposition 16: The total fact situation will determine the nature of a transaction, the entity that makes a supply and the recipient of the supply | Detailed Reasoning - Application to your circumstances: Under the proposed project Entity A makes supplies of X to Entity B meeting the definition of a supply under section 9-10. | Detailed Reasoning - Consideration provided: In addition to the payment by Entity B for the supply of X by Entity A, Entity B will credit a third party account. As detailed above in GSTR 2001/6 at paragraph 71, in determining whether a sufficient nexus exists between supply and consideration, regard needs to be had to the true character of the transaction. The arrangement between parties will be characterised not merely by the description that parties give to the arrangement, but by looking at all of the transactions entered into and the circumstances in which the transactions are made. In application of paragraph 71 of GSTR 2001/6, the credit by Entity B to a third party account is 'in connection with', 'in response to' or 'for the inducement' of a supply of X by Entity A to Entity B. There is a clear nexus between the application of the credit by Entity B and the supply of X by Entity A, thereby meeting the requirements of consideration as detailed in section 9-15.