Whether you’re starting a charity, a religious organisation, a community club, or an association, setting up a not-for-profit (NFP) in Australia involves a distinct set of legal, financial, and compliance steps — different from starting a regular business. Getting the foundations right early on will save you time, protect your organisation’s tax concessions, and keep you in good standing with regulators.
At CBD Accountants, we help clients across Sydney CBD, Blacktown, Liverpool and Newtown set up and run compliant not-for-profit organisations. Here’s what you need to know before you start.
What Counts as a Not-for-Profit?
A not-for-profit organisation operates for a collective purpose rather than for the financial gain of individual members. This can include:
- Charities (welfare, health, education, religious)
- Religious institutions
- Sporting clubs and community associations
- Cultural and arts organisations
- Professional and industry associations
- Environmental and advocacy groups
Importantly, an NFP can still make a profit — it just can’t distribute that profit to members, directors, or owners. Any surplus must go back into furthering the organisation’s purpose.
Choosing a Structure
Before registering, you’ll need to decide on a legal structure. Common options include:
Incorporated association — A popular, relatively low-cost option regulated at the state level, well suited to smaller community organisations that operate mainly within one state.
Company limited by guarantee — Registered with ASIC and regulated federally, this structure suits organisations planning to operate nationally or that need a more robust governance framework.
Unincorporated association — The simplest option, but members may be personally liable for the organisation’s debts and obligations, since it has no separate legal identity.
Trust — Sometimes used for charitable purposes, particularly where assets need to be held and managed for a specific charitable object.
The right structure depends on the size of your organisation, its activities, funding sources, and long-term goals.
Key Steps to Setting Up
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- Define your purpose and governing rules — Draft a constitution or set of rules outlining your organisation’s objectives, governance, and operations
- Choose and register your structure — Register as an incorporated association (state-based) or as a company limited by guarantee (ASIC)
- Apply for an ABN — Required for most dealings with the ATO and other organisations
- Register as a charity (if applicable) — Organisations seeking charitable status need to register with the Australian Charities and Not-for-profits Commission (ACNC)
- Apply for tax concessions — Eligible organisations can apply for income tax exemption, GST concessions, and, for charities, deductible gift recipient (DGR) status
- Set up financial systems — Establish proper bookkeeping, banking, and reporting processes from day one
Tax Concessions Available to NFPs
One of the biggest advantages of the not-for-profit sector is access to a range of tax concessions, including:
- Income tax exemption for many types of NFPs
- GST concessions, including certain exemptions on income and simplified accounting methods
- FBT rebates or exemptions for eligible organisations, which can significantly reduce the cost of providing benefits to employees
- Deductible Gift Recipient (DGR) status, allowing donors to claim tax deductions for gifts to your organisation — a major advantage for fundraising
Not every NFP automatically qualifies for these concessions — eligibility depends on your organisation’s purpose, structure, and activities, and in many cases requires a formal application.
Ongoing Compliance Obligations
Once established, NFPs — particularly registered charities — have ongoing reporting obligations, which may include:
- Annual reporting to the ACNC (for registered charities)
- State-based reporting for incorporated associations
- ASIC reporting for companies limited by guarantee
- Maintaining proper financial records and, for larger organisations, audited financial statements
- Ensuring activities remain consistent with your registered charitable purpose
Failing to meet these obligations can put your registration, tax concessions, and DGR status at risk — which is why many NFPs choose to work with an accountant who understands the sector.
Why Get Professional Advice?
Not-for-profit accounting and compliance is a specialised area. From choosing the right structure to securing DGR status and managing ongoing reporting, there are plenty of details that can trip up a well-meaning committee or board without the right guidance.
Set Up Your Not-for-Profit with CBD Accountants
CBD Accountants supports charities, associations, and community organisations across Sydney CBD, Blacktown, Liverpool and Newtown — from initial setup and registration through to ongoing compliance and reporting. We’ll help you choose the right structure, secure the tax concessions you’re entitled to, and keep your organisation compliant as it grows.
Contact CBD Accountants today to get expert guidance on setting up or managing your not-for-profit organisation.