The simultaneous presence of taxable and privileged income raises the question of the distribution of expenses attributable to a specific type of activity. This aspect applies to both business entities and non-profit organizations (NPO). Correct reasoned distribution allows you to optimize taxation, reducing payments to the budget on a legal basis. However, the choice and justification of the methodology creates problems for business entities, since it is under the close scrutiny of auditing structures.
Non-profit organizations and business activities
Law No. 7-FZ of 12.01.1996, which regulates the activities of non-profit organizations, does not prohibit the parallel implementation of entrepreneurial activities, but only creates certain restrictions. Extraction of profit with subsequent distribution is not allowed only as the main goal reflected in the Charter (clause 1 of Article 2 of Law No. 7-FZ). Entrepreneurial and similar income-generating activities are permitted (clause 2 of article 24 of Law No. 7-FZ) if:
serves to achieve the goal of creation;
fixed in the constituent documents;
carried out within the limits and subject to the restrictions established by special regulations.
The income received within the framework of entrepreneurship must be fully directed to the documented goals of a non-profit organization. However, the fulfillment of this requirement does not exempt the company from taxation, but only does not allow the supervisory authority to suspend activities due to the misuse of funds.
Taxation of non-profit organizations in accordance with the Tax Code of the Russian Federation
Carrying out commercial activities equates a “non-profit” organization for tax purposes with business entities. This makes it possible to choose the tax regime. To reflect tax expenses in reducing the object of taxation, an NCO may apply:
OSNO – “by default” automatically with payment of the following payments:
- income tax at the rate of 20%;
- VAT on condition of non-receipt of exemption from payment;
- property taxes in the presence of the corresponding fixed assets on the balance sheet.
2. STS with the object “income minus expenses” – subject to the submission of an application for choosing this mode. The tax is paid in the amount of:
at the standard rate of 15% on the difference between revenue and allocated costs;
at a reduced rate if set by regional authorities.
The status of a non-profit organization is not a basis for the application of tax benefits. The transition to the “simplified system” is possible if the restrictions on the number, revenue and book value of fixed assets are met, provided that an application is submitted to the tax authority before the end of the year preceding the desired application of the simplified tax system.
Obligation to keep separate records of income
If, along with the main activity, the NPO carries out entrepreneurial activities, then it is obliged to keep separate accounting of income for tax purposes. To do this, it is necessary to distinguish between taxable and privileged income. Those exempt from taxation include:
Earmarked income for the maintenance of NPOs received on a gratuitous basis and not requiring the fulfillment of a counter obligation (clause 2 of article 251 of the Tax Code of the Russian Federation), including:
monetary funds and property assets transferred as contributions by founders and participants on a voluntary or mandatory basis;
transferring property rights by way of inheritance on the basis of a will;
funds transferred by legal entities and individuals and used by recipients to conduct statutory activities (for example, donations to charitable foundations);
patronage and volunteer services;
subsidies provided by budgets of all levels.
Property assets within the framework of targeted financing (subparagraph 14 of clause 1 of article 251 of the Tax Code of the Russian Federation). This type includes received budgetary appropriations and grants, subject to mandatory separate accounting, otherwise the funds received are equated to taxable income from the moment of actual receipt.
In order to be exempt from taxation, the proceeds must have no “veiled” signs of any compensation. It is advisable to fix in the contract the conditions for the provision of gratuitous assistance and the procedure for use in order to avoid the risks of retraining as remuneration for the services provided, which will entail additional charges to the budget with financial sanctions.
Organization of separate accounting of expenses
If income can be directly attributed to taxable or exempt from taxation, then it is necessary to organize separate accounting of expenses independently, providing an algorithm and documenting it. Expenses should be segregated into three components:
related to the receipt of income from the sale of goods and materials, works and services and non-operating income;
attributable to earmarked income and targeted financing of a non-profit organization within the framework of its statutory activities;
distributed between taxable and tax-exempt income due to the impossibility of direct attribution to a specific type.
Only economically justified and documented costs can take part in the distribution (clause 1 of article 252 of the Tax Code of the Russian Federation). Tax expenses are accounted for in a manner similar to income, regardless of the selected tax regime.
In practice, the company covers the shortage of funds for the targeted direction or the loss received from non-commercial activities at the expense of income earned from entrepreneurship. However, this is not a basis for attributing the costs associated with the main goal to the financial result of entrepreneurial activity.
This redistribution is conditional, just as the absence of funds on the account of a business entity does not mean that it is unprofitable, and the availability of resources does not indicate profitability and a high level of profitability.
Separate accounting algorithm
There is no cost sharing mechanism in tax legislation in the implementation of taxable and tax-exempt transactions, therefore each business entity must establish the method and principles independently. Allocation is subject to indirect costs that cannot be attributed to a specific type of activity.
As a basis for distribution, enterprises take the income received or financing by type of activity.
For example, a non-profit enterprise during the reporting period received funding from the budget according to the estimate approved by the higher authority of 800 thousand rubles, grants in the amount of 500 thousand rubles and revenues for the provided information and consulting services 200 thousand rubles. “Dual-use” costs amounted to RUB 300 thousand. The calculation and distribution of expenses for commercial and non-commercial income is carried out according to the following algorithm:
The total amount of income is calculated: 800,000 + 500,000 + 200,000 = 1,500,000 rubles. When determining entrepreneurial income, revenue should be taken into account only if the organization uses the simplified tax system or the cash method to determine the taxable base for income tax.
The share of commercial income in the composition of all receipts to the current account is determined. Distribution coefficient: 200/1500 = 0.133. The reflection of income from commercial activities is made in a manner similar to total income. If an organization maintains tax accounting on an accrual basis, then income is reflected by the date of signing the act of completion or acceptance of goods and materials on shipping bills, and the date of payment does not matter.
Indirect costs are calculated that appear in the composition of tax expenses to reduce the object of taxation: 300,000 * 0.133 = 39,900 rubles. This amount of indirect costs will be included in the cost component along with direct costs and reflected in the tax return.
The economic sense consists in calculating the specific weight of the indicator taken as the basis for the distribution, with the subsequent adjustment of the distributed costs by the coefficient obtained arithmetically.
Selection of the basis for distribution
Allocating expenses to taxable income is the most commonly used scheme, but not mandatory for non-profit institutions. The organization has the right to choose a different “foundation” for distribution, based on the specifics of the activity. Basic values for the expense section can be:
- the area of the premises involved in different types of activities;
- book value of non-current assets operated in taxable and non-taxable operations;
- share of leased fixed assets;
- labor costs of hired personnel with parallel participation in budgetary and commercial activities.
The organization has the right to choose as a basis any indicator that is significant for the distribution. The most important factor will be the argumentation of economic expediency, and not the desire to receive an unjustified tax benefit, punishable by fines and additional charges during inspections.
Reflection in accounting policies
The selected methodology for maintaining and separating accounting should be fixed in the accounting policy of an economic entity. When choosing a base for distribution, it is necessary to take into account the principle of fairness for an objective and neutral division of the expenditure component between the activities carried out and the sources of receipt of financial flows.
Although questions about direct costs do not arise, it is advisable to indicate this in a local document, as well as to determine the list of indirect costs to be allocated. Among them are the costs of general business purposes:
- the costs of maintaining the management apparatus (salary with charges to compulsory insurance funds);
- communication services and utilities in terms of heating, water supply and electrification of premises;
- fuels and lubricants and depreciation of vehicles during business trips for various purposes;
- office supplies and low-value wear items used by administrative staff.
The absence of a distribution mechanism in accounting policies does not amount to a misreporting of substantive transactions. But the tax authorities will try to prove the illegality of reducing the tax base, and it will be difficult for a business entity to select counter-arguments, since the distribution procedure has been transferred to taxpayers for development.
If the distribution principle depends on the specifics of a specific operation, then it is advisable to develop a separate local act, such as a provision on the formation of the cost, a link to which is given in the accounting services. It is unlikely that the auditing structures will thoroughly study it, but they will be deprived of arguments in terms of proving the illegality of the overestimation of the expenditure component.
To reduce payments to the budget, as much of the cost as possible should be attributed to income from commerce. However, the inspectors will especially scrupulously study the distribution mechanism not only when losses are incurred, but also when the indicators of the “tax burden” established in the internal documents of the Federal Tax Service are not met. Since in this case NPO is equated to business entities for tax purposes, then one should use the arguments of business:
- profit is not an obligation, but only a goal;
- economic benefit is not momentary, but expected in the future;
- pricing policy – dumping to conquer the market with further coverage of costs by own sources in order to save budget funds.
- The absence of a regulated distribution procedure in tax legislation is an additional plus in favor of a business entity.