Clubs may have obligations for GST, Pay As You Go (PAYG) and Fringe Benefits Tax (FBT). These and other taxes can apply irrespective of whether the organisation is exempt from income tax.
Australian Business Numbers (ABN)
The Australian Business Number (ABN) is the single identifier that the Australian Taxation Office (ATO) uses for non-profit organisations to interact with the ATO to gain access to information relating to the club’s obligation for the
All clubs should register for an ABN even if they do not register for GST. If a club doesn’t have an ABN or does not show the number to other businesses to whom it supplies goods or services, those businesses will be required to deduct PAYG withholding tax from payments to that business, which is currently 48.5 per cent (for 2003). An ABN is useful for all non-profit entities because even tax-exempt organisations have obligations for other taxes.
Goods and Services Tax (GST)
GST is a broad-based tax of 10 per cent on the supply of goods and services consumed in Australia. Non-profit bodies must register for GST if their annual turnover is greater than $150,000. They can choose to register if their turnover is lower. Other organisations are required to register when turnover exceeds $75,000.
Pay As You Go (PAYG) System
The pay as you go system (PAYG tax payment) is designed to cover the taxes which are payable to the Australian Taxation Office. The PAYG system consists of two systems: PAYG withholding and PAYG instalments.
PAYG withholding is a system whereby the club withholds tax from payments. These may include:
- Salary and wage payments made to employees
- Payments to suppliers that do not quote an ABN number on their tax invoice
- Voluntary payments with contractors
Football clubs that run as non-profit enterprises are not exempt from PAYG withholding arrangements.
Fringe Benefits Tax (FBT)
Fringe Benefits Tax is a tax payable by employers which provide fringe benefits to employees. It is a separate tax from income tax and organisations that are exempt from income tax may still be required to pay FBT. The tax is calculated on the taxable value of the fringe benefit provided. Examples of a fringe benefit include allowing an employee to use a work vehicle for private use, providing employees with cheap housing, loans or paying their private health insurance. Volunteers are not paid, either cash or in kind (fringe benefits).
A volunteer may be reimbursed for out-of-pocket expenses incurred. The amount of fringe benefits provided to an employee should be recorded and when the amount for an employee exceeds $1000 in a given year, the amount should be included on the employee annual PAYG payment summary.
Business Activity Statements (BAS)
Clubs that are registered for GST or employ people are required to prepare either monthly or quarterly Business Activity Statements and lodge forms with the Australian Taxation Office within 28 days of the period ending. Failure to comply with the lodgement may result in the ATO applying late lodgement penalties for outstanding lodgements. Where a club has GST and PAYG or any other payment obligations, the ATO will implement separate penalties for each of the payment obligations. Payroll tax more than the state or territory threshold is required to be paid.
A BAS is the single form that you need to complete and return to the ATO to report your obligations and entitlements relating to a number of taxes, including GST, FBT and PAYG withholding amounts. All clubs with GST, FBT and PAYG tax obligations must complete a BAS at the end of each tax or reporting period, which is either monthly or quarterly.