This is an overview of some legal/tax concepts that are relevant to Wikimedia Australia (WMAU). Note WMAU is incorporated in Victoria and the comments below may not be relevant to any other organisation (hopefully they are accurate for WMAU!).
Ausralian Tax Office.
Consumer Affairs Victoria.
In Victoria the process of incorporation is governed by CAV:
Incorporation is a voluntary process whereby a not-for-profit club or community group can apply to become its own 'legal person' (i.e. the association becomes a distinct legal entity that continues regardless of changes to its membership).
Incorporation is governed by the Associations Incorporation Act 1981 (state law - be careful when searching for this, most states have an Act with the same name!).
According to the ATO:
The Tax Office accepts an organisation as non-profit where its constituent or governing documents prevent it from distributing profits or assets for the benefit of particular people – both while it is operating and when it winds up. These documents should contain acceptable clauses showing the organisation's non-profit character. The organisation's actions must be consistent with this requirement.[...]
A non-profit organisation can still make a profit, but this profit must be used to carry out its purposes and must not be distributed to owners, members or other private people.
WMAU meets these requirements by clauses 35 (Winding up) and 37 (Use of funds) in its Rules.
Seemingly synonymous with "non-profit" as to who it applies to. Perhaps clearer in meaning than "non-profit", as it is a mistaken assumption that non-profits should not "try" to make a profit. As the ATO uses "non-profit" this document will as well.
Non government organisation (NGO)
Seemingly not used by the ATO in any definition, so we should avoid using it. AusAID uses it.
In contrast to the private sector (business) and the public sector (government). WMAU is definitely part of the third sector. It tends to include NGOs, as well as community organisations/groups.
The characteristics of a charity are:
- it is an entity that is also a trust fund or an institution
- it exists for the public benefit or the relief of poverty
- its purposes are charitable within the legal sense of that term
- it is non-profit, and
- its sole purpose is charitable.
DGR introduction An organisation or fund that has Deductible Gift Recipient status. This status lets the organisation/fund tell the public that their donations are tax-deductible.
DGR status can be gained by:
- Being endorsed by the ATO according to their set criteria. This is the usual method.
- Getting listed by name in the tax law.
Some charities (but not all) are eligible to apply for DGR status. But they still have to apply! There is no automatic recognition of charities as having DGR status.
ATO definition & explanation A public fund needs to:
- have a constitution or founding document that clearly sets out its aims
- have the intention that the public will contribute to the fund
- have an administration/controlling group that involves "the public" (such as Church authorities, school principals, judges, clergy, solicitors, doctors and other professional people, mayors, councillors, town clerks and members of parliament)
- operate on a non-profit basis (see above) inlcuding re: dissolution
- a separate bank account and appropriate accounting.
Tax deductible donations
- What does it mean?
- Are we eligible? How do we apply?
- What are the costs/benefits to us?
- http://www.consumer.vic.gov.au/ - Consumer Affairs Victoria (CAV)
- http://www.ato.gov.au/nonprofit/ & 1300 130 248 (their non-profit info line)
- http://pilch.org.au/community_org/ - PILCH - a Victorian non-profit that provides free and low cost legal information for not-for-profit community organisations