Not all not-for-profits (NFP) are exempt from income tax. Existing tax law outlines the types of organisations that can access this exemption. This includes non-charitable NFPs who can self-assess their eligibility, using the criteria outlined in the Income Tax Assessment Act 1997.
From 1 July 2023, non-charitable NFPs with an active ABN will need to start to notify the ATO that they have self-assessed eligibility to income tax exemption. They will do this by completing a self-review return on an annual basis, with the first lodgement due after 30 June 2024.
Between now and 2024, the ATO will work closely with NFPs and sector advisors to:
• make the return as simple, quick and automated as possible, and
• develop guidance that assists NFPs to understand their tax status to get it right from 1 July 2023.
The return will not look like an income tax return. It is expected to look similar to the worksheet now available to assist and record the self-assessment process.
It is important that all NFPs ensure their contact details are updated with the ATO, by reviewing and updating their ABN.
If your organisation needs assistance working through the self-assessment process, it may be eligible for support from the National Tax Clinic program. This program is designed to help individuals, small businesses and not-for-profit organisations who may not be able to afford professional advice and representation with their tax affairs.
To review the self-assessment process, and access the self-assessment worksheet, click here
To update ABN contact details are updated, click here
To view an article on the new reporting requirements by the ATO Assistant Commissioner, click here
To view further details about the National Tax Clinic program, click here