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New tax exemption self-review requirement for non-profits

Commencing July 1, 2024, non-charitable not-for-profits (NFPs) holding an active Australian Business Number (ABN) will be mandated to file an annual NFP self-review return with the Australian Taxation Office (ATO) to affirm their income tax exemption status. 

This directive applies to approximately 150,000 NFPs currently self-assessing as income tax exempt. The introduction of this new reporting mandate in the 2021–22 Federal Budget aims to bolster transparency and integrity across the tax, super, and registry system, ensuring that only eligible non-charitable NFPs access income tax exemption privileges. 

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
  • setting up myGovID and linking it to the organisation’s ABN using Relationship Authorisation Manager.

When it comes time to lodge, NFPs can use Online services for business which lets organisations manage their reporting at a time that is convenient to them.

For NFPs that have engaged a registered tax agent, their agent can also lodge on their behalf through Online services for agents.

As an interim arrangement for the 2023–24 transitional year, eligible NFPs unable to lodge online will be able to submit their NFP self-review return using an interactive voice response phone service.

The first return is for the 2023–24 tax year and NFPs will need to prepare and submit their annual self-review between July and October 2024.

Assistant Commissioner Jennifer Moltisanti of the ATO emphasized the ATO’s commitment to assisting NFPs in preparing for these changes well in advance. ‘It’s important to us that affected not-for-profits understand the new reporting requirements and are prepared to lodge their first annual return come 1 July,’ said Ms Moltisanti. ‘Even though the due date is in October, there are things you should do now to make sure you are ready. We also recommend not waiting until the last moment to report, you can report from as early as 1 July.’ ‘This new reporting requirement will help drive a level-playing field, giving confidence to not-for-profits that only organisations who are entitled to concessions can access those concessions.’

For more information about the upcoming changes and how organisations can get ready, go to the ATO website at ato.gov.au/NFPtaxexempt.

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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