Important ATO Information for Not-For-Profits

From the 2023-24 income year onward, non-charitable not-for-profits (NFPs) with an active ABN will need to lodge an annual NFP self-review return to confirm their income tax exemption status.

The new reporting requirement was introduced in the 2021–22 Federal Budget to enhance transparency and integrity in the tax, super and registry system by ensuring only eligible non-charitable NFPs access that income tax exemption.

NFPs can lodge the self-review return for the 2023-24 financial year anytime between 1 July and 31 October 2024.

NFPs with an accounting period ending on a date other than 30 June (i.e. a substituted accounting period (SAP), will use their SAP to lodge their NFP self-review return.  The SAP concessional due dates for 2023-24 are available here.

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

The NFP self-review return will guide NFPs to consider their organisation’s purpose and activities against the requirements of an eligible income tax exempt entity.  This will help them determine the basis on which to self-assess as income tax exempt, and report this to the ATO.  While NFPs need to report using the NFP self-review return, they will not pay tax on income unless they are a taxable not-for-profit.

Non-charitable NFPs who have an active ABN can get ready now by:

• conducting an early review of their eligibility by using the ATO’s guide;
• checking all their details are up to date, including authorised associates, contacts and their addresses are current;
• reviewing their purpose and governing documents to understand the type of NFP they are; and
• setting up myGovID and linking it to the organisation’s ABN using Relationship Authorisation Manager so the NFP can access Online services for business.

Details on how to lodge the return can be accessed here. Additional information in relation to reporting requirements can be accessed here.

Who does not need to report

Government entities or charities registered with the Australian Charities and Not-for-profits Commission (ACNC) are not required to lodge an NFP self-review return. Charities already lodge an annual information statement to the ACNC each year.

Please note that sporting and recreation clubs are not eligible to register as a charity with the ACNC unless they have one or more charitable purposes.  Therefore, very few sporting and recreation organisations are charities.  Please do not assume that your club is a charity and therefore does not need to report.

Taxable NFPs are also not required to lodge an NFP self-review return as they lodge an income tax return or notify the ATO that a return is not necessary each year.

 The above is not intended to be, and is not to be taken as, tax or legal advice and clubs should speak to their registered tax agents/accountants about lodging the self-review return.  If a club prepares its own returns, it can seek guidance from the ATO on how to prepare the return.