UPCOMING REPORTING CHANGES - NON-CHARITABLE NOT-FOR-PROFIT ORGANISATIONS

The Australian Taxation Office has recently issued changes to reporting requirements for non-charitable not-for-profit (NFP) organisations. This impacts organisations (such as P&Cs, sporting associations and community groups) that are not registered charities with the Australian Charities and Not-For-Profits Commission (ACNC) or are not taxable NFPs.

The requirement to annually review entitlement to an income tax exemption hasn’t changed; but notifying the ATO of the outcome has.

For the 2023-24 financial year onwards, NFPs must lodge an annual NFP self-review return via ATO online services. This return is due by 31 October 2024.

Get Ready for Annual Reporting

To get your not-for-profit ready to lodge an annual self-review return, the organisation's principal authority needs to:

• check the organisation’s contact details are up to date, including ABN registration details
• review the organisation’s main purpose and its governing documents
• set up a myGovIDExternal Link with either a Standard or Strong identity strength
• link myGovID to the NFPs ABN in Relationship Authorisation Manager (RAM) so you can access Online services for business.

If a not-for-profit doesn't submit their NFP self-review return, they may become ineligible for an income tax exemption and penalties may apply.

Prepare for the Changes

Self-assess your tax status now.

Locate and review your governing documents to ensure you are operating for purpose and that the documents contain appropriate NFP clauses. Organisations that access tax concessions, including income tax exemptions, must have governing documents.

Find out more about income tax exempt and taxable not-for profits at: “Does your not-for-profit need to pay income tax?”

https://www.ato.gov.au/businesses-and-organisations/not-for-profit-organisations/your-organisation/does-your-not-for-profit-need-to-pay-income-tax

Check the types of NFP organisations that can self-assess income tax exemptions at “Types of income tax exempt organisations”.

https://www.ato.gov.au/businesses-and-organisations/not-for-profit-organisations/your-organisation/does-your-not-for-profit-need-to-pay-income-tax/types-of-income-tax-exempt-organisations

Use ATO Worksheets to Review Your Eligibility for an Income Tax Exemption

Sporting Clubs

If you are a sporting club, use the Working out your club’s income tax exempt status worksheet. This worksheet includes a financial comparison for multi-purpose sporting clubs in Schedule 1, which will not be a part of the self-review return.

https://www.ato.gov.au/businesses-and-organisations/not-for-profit-organisations/your-organisation/in-detail/income-tax/income-tax-exemption-and-sporting-clubs

Other NFP’s

For all other not-for-profits use the Income tax status review worksheet for self-assessing not-for-profits form.

https://www.ato.gov.au/forms-and-instructions/income-tax-status-for-self-assessing-non-profit-organisations-review-worksheet

Webinar

The webinar posted by ATO covers the following:

• what NFPs need to know about the new requirements
• how to set up myGovIDExternal Link and linking to Relationship Authorisation Manager
• how to update your organisation's ABN details
• lodging a NFP self-review return in Online services for business.

The webinar also provides information on client-to-agent linking and how NFPs can nominate an agent to lodge the self-review return in Online services for agents.

Webinar: how to lodge the NFP self-review return | Australian Taxation Office (ato.gov.au)

More Information

Check the ATO NFP Newsletter for regular updates as they are published. This will keep you informed with the new reporting requirements, including:

• refreshed information about what you can do to prepare your NFP for the new reporting requirements
• a step-by-step guide on the self-review process.

https://www.ato.gov.au/businesses-and-organisations/not-for-profit-organisations/not-for-profit-newsroom/webinar-how-to-lodge-the-nfp-self-review-return