Non-Profit Organisations

Non-profit organizations are organizations that are formed with an intension not to make profit or gain. Usually there exist to benefit their members or the public at large. There are also known as Public Benefit Organizations. These organizations include, Public trusts, Social and Sporting associations and charitable, religious and educational institutions.

The Income Tax Act, 1995, defines these organizations as companies for tax purposes; therefore taxation treatment of non-profit organizations is the same as taxation treatment of companies except for the following exceptions;

1. Charitable, Religious, Educational Institutions and Public Trusts

• Income from the above organizations is taxable only if it is business income or disposal gains and has not been applied / utilized for public objectives.

• The income must have been applied within the accounting period

• The application period may be extended by the Commissioner General to such a period as allowed by him as a result of a request for an extension by the institutions.

• A request is done through an application form for extension of application of funds (see forms).

• Non business income like donations, offerings, tithes, subscriptions fees etc, and income applied for public objectives within the accounting period is not liable to tax.

2. Social and Sporting Associations

• All income (business or non business) from social and sporting associations is liable to tax if not applied / utilized for public objectives.

• The income must have been applied within the accounting period

• The application period may be extended by the Commissioner General to such a period as allowed by him as a result of a request for an extension by the institutions.

• A request is done through an application form for extension of application of funds (see forms).

Just like any other company non-profit organizations have to register for tax purposes and file necessary returns.