If you operate or work for a non-charitable not-for-profit (NFP) organisation that has an Australian Business Number (ABN), it’s important to know that changes to tax reporting requirements have come into effect for the current financial year.

Introduced by the Government, these changes have the goal of levelling the playing field for NFPs and ensuring only eligible organisations access income tax exemptions.

It’s important to note that these changes do not apply to charities registered with the Australian Charities and Not-for-profits Commission (ACNC).

New NFP reporting requirements in Australia

In the past, non-charitable, not-for-profit organisations that hold an ABN and self-assess as income tax exempt have not had to lodge an annual self-review return.

This has now changed and these types of organisations are required to submit what’s referred to as a self-review return, due by 31 October 2024.

According to the ATO, a self-review completed by a not-for-profit organisation must:

• Respond to questions that are similar to those provided in the current self-review worksheets
• Consider purpose and activities against specific eligibility requirements of an income tax-exempt entity
• Include an estimation of income range.

Once you have submitted the return (it can be lodged digitally by you or a registered tax agent), you’ll receive a notification from the ATO confirming whether or not your organisation is exempt from paying income tax.

This new requirement is mandatory and failing to lodge an annual self-review return can make your NFP ineligible for tax exemption status.

Will the change affect your NFP?

Self-assessed lodgements are required from all ​​Australian non-charitable NFPs with an Australian ABN.

There are eight categories of income tax-exempt entities that will be required to self-assess:

• Community service
• Sporting
• Cultural
• Educational
• Health
• Employment
• Scientific
• Resource development.

If your organisation meets the criteria and conditions, it’s likely you’ll need to self-assess at the end of the financial year. Learn more about the types of tax exempt organisations here.

If your NFP organisation meets the eligibility criteria for a self-assessed return, you do have the option to use the ATO’s online services, starting from the end of the current financial year.

A couple of steps to take now are:

• Ensure your ABN is still valid
• Locate and review your organisation’s governing documents so you’re clear on its purpose, obligations and activities
• Review the existing income tax status worksheet for self-assessing Not-For-Profit organisations.

You will also need to set up myGovID and RAM (Relationship Authorisation Manager) to access the online self-review services.

If you would like assistance with these changes, connect with us to ensure your organisation meets tax reporting requirements.

For more information, reach out to AFS & Associates today.