ATO reviews the legitimacy of not-for-profit set ups

ATO reviews the legitimacy of not-for-profit set ups

ATO reviews the legitimacy of not-for-profit set ups

The ATO is reviewing arrangements by taxpayers located primarily in northern NSW and southern Queensland who may be incorrectly claiming to be a not-for-profit organisation in order to avoid paying tax.

Assistant Commissioner Scott Parkinson said that the ATO is currently reviewing instances where individuals and small businesses have set-up ‘private foundation’ 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,” Mr Parkinson said.

“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.

“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.”

Ref: Taxpayer Alert TA 2016/5.

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