4WD Clubs News FAQs (frequently-asked questions)

Whilst the Association does not collect any income outside its member base, no income tax is applicable. The following letter from the ATO in 1991 explains:

OurReference: 51/CCA 440
Contact Officer:MS B Kerr

Mr K Hunter
Recreational Four Wheel Drive Clubs Association of NSW and ACT Incorporated
GPO Box 3870, SYDNEY NSW 2001

Dear Mr Hunter,

INCOME TAX: RECEATIONAL FOUR WHEEL DRIVE CLUBS ASSOCIATION OF NSW AND ACT INCORPORATED

Reference is made to your letter of 20 May concerning an exemption from income tax of the above association.

No provision currently exists in the Income Tax Assessment Act to exempt from income tax the income of an organisation of this nature.

It is however accepted that due to the association being incorporated under the Associations Incorporations Act 1984 which contains satisfactory non-profit and dissolution sections that the association is not operating to realise profit. The association exists for mutual purposes o­nly. In view of the above, this office will grant “non-profit” status to the association.

A non-profit organisation does not pay tax unless the taxable income exceeds $416 The rates applicable to non-profit organisations are as follows:

In calculating taxable income the principle of mutuality should be considered. This principle recognises that a persons or organisations income consists o­nly of moneys derived from sources outside of himself or the organisation. The members of an organisation cannot derive an income from themselves. The effect of this is that assessable income (non-mutual income) of the organisation will include income from outside investments of the organisation’s funds eg: bank interest, dividends o­n shares, rental from property and any receipts from non-members. Excluded from income will be membership fees and any other monies from members eg. proceeds from functions, raffles for members etc. (mutual income)

Deductions may be claimed for any expenses relating to the derivation of assessable income. This would include bank charges, expenses relating to the management of investment income and expenses relating to non-member income. Some expenses may need to be apportioned between mutual and non-mutual income.

It will not be necessary to lodge returns unless the taxable income of the association exceeds $416 in any year of income.

For Tax File Number purposes the enclosed form should be completed and forwarded to the relevant financial institutions. If taxable income is less than $416, in the box for exemptions write “NL - non-profit organisation, income <$416”. If taxable income exceeds $416, a tax file number must be applied for, and the financial institution where your account is held must be advised of the number by using the notification form.

We trust this satisfies your enquiry.

Yours faithfully
R J Tomkins

DEPUTY COMMISSIONER OF TAXATION