Section 335: regular income of a registered non-profit organisation

Introduction

Regular income is the starting pool for the non-profit tax computation. Section 335 brings together registered charitable or religious activity income, qualifying property income, voluntary contributions and permitted commercial gains.

Each clause has its own scope; corpus donations and other statutory exclusions should be reconciled under the adjacent provisions before testing how much income was applied.

Key takeaways

What counts as regular income

Regular income of a tax year for a registered non-profit organisation means:

• Income from any charitable or religious activity for which the organisation is registered, carried out by it in that tax year
• Income (other than income covered by the commercial-gains clause below) derived from any property, deposit or investment held wholly for charitable or religious purposes by the organisation in that tax year
• Income (other than income covered by the commercial-gains clause below) derived from any property, deposit or investment held in part for charitable and religious purposes, as referred to in Section 332(2)(b)(ii), in that tax year
• Voluntary contributions received by the organisation in that tax year
• Gains of any commercial activity permissible under Sections 344, 345 and 346, carried out by the organisation in that tax year, computed in the manner prescribed

Activity income and income from property

Clauses (a) to (c) cover the registered charitable or religious activity and income from property, deposits or investments held wholly or partly for those purposes. Partly held property is linked to section 332(2)(b)(ii).

Contributions and permitted commercial gains

Voluntary contributions enter regular income under clause (d). Clause (e) separately brings in gains from commercial activity permitted by sections 344 to 346, computed in the prescribed manner. The organisation should classify these receipts before testing application or accumulation.

Step-by-step flow for identifying regular income under Section 335

1. 1

   Is the receipt from the charitable or religious activity for which the organisation is registered, carried out in the tax year?

   If yes, it is regular income under Section 335(a).

2. 2

   Is it income from property, deposits or investments?

   If held wholly for charitable or religious purposes, it falls under Section 335(b). If held in part for those purposes by an organisation covered by Section 332(2)(b)(ii), it falls under Section 335(c). In both cases, gains of a commercial activity are excluded here and dealt with under clause (e).

3. 3

   Is it a voluntary contribution received in the tax year?

   Voluntary contributions are regular income under Section 335(d). Check Section 338 separately: corpus donations under Section 339 are not included in regular income.

4. 4

   Is it a gain from a commercial activity permissible under Sections 344, 345 and 346?

   If yes, it is regular income under Section 335(e), computed in the manner prescribed. Section 335 does not itself give the computation method.

5. 5

   Add up the items under clauses (a) to (e)

   The total is the regular income for the tax year, which is then used in the later provisions of this Part.

Practical checklist

Frequently asked questions