Starting from the 2023–24 income year, more than 100,000 non-charitable not-for-profits with an active Australian business number (ABN) must lodge an annual self-review return to notify the ATO of their eligibility to self-assess as income tax exempt. The new reporting obligation was introduced to ensure only eligible not-for-profits are accessing income tax exemptions. The new reporting obligation applies to a diverse range of not-for-profits including sporting clubs and community service organisations. Charitable not-for-profits already registered with the Australian Charities and Not-for-profits Commission aren’t required to lodge the return.
This self-review return is due to be lodged with the ATO by 31 March 2025.
There are several lodgement options: if the not-for-profit organisation already has access to Online services for business, the NFP self-review return can be lodged today. This is the quickest way to lodge. If you can’t lodge online, phone the self-help phone service on 13 72 26, and it should only take about 10 minutes to complete the lodgement – you will need to have your responses ready, by completing the self-review return question guide (linked below) prior to calling. A registered tax agent can also lodge on behalf of the not-for-profit organisation, through Online services for agents.
There are only two pathways to income tax exemption for a not for profit organisation:
- Registration with the Australian Charities and Not-for profits Commission as a charity, or
- Meet the requirements of one of the eight categories in tax law, and self-assess as income tax exempt
If a not for profit organisation doesn’t meet one of these two pathways, then it is a taxable not for profit, and is required to lodge an income tax return.
If a not for profit organisation believes it may be charitable, but is not registered with the Australian Charities and Not-for profits Commission, it can still complete the NFP self-review return and the ATO will work with the organisation – simply mark question 5“Does the organisation have any charitable purposes” as Yes or Unsure.
If a not for profit organisation realises that it is a taxable NFP with a taxable income greater than $416, the ATO can provide a concessional due date to lodge the income tax return and pay any income tax liability and will remit any applicable general interest charge and penalties. The organisation can also enter into a payment plan to allow any income tax liability to be paid progressively. The organisation will need to contact the ATO NFP line to discuss and agree these concessional matters.
The ATO have provided detailed guidance and information:
- To view key facts click here.
- To view reporting requirements to self-assess income tax exemption click here.
- To view NFP self-review return question guide which lists all the questions asked on the return click here.
- To view webinar on how to lodge the self-review return; how to set up myID and RAM; how to update ABN details and how to lodge online click here.
- In addition, the ATO NFP advice line 1300 130 248 provides technical advice and assistance for not for profit organisations
To view the Australian Charities and Not-for profits Commission guidance for charitable not-for-profits that have been self-assessing as income tax exempt click here.
To view the Australian Charities and Not-for profits Commission registration tool, to assist organisations assess their eligibility for charity registration click here.
To view the NFPLaw resources to assist not-for-profit organisations click here.