Not for profit entities that aren’t registered charities are now required to complete an annual Not For Profit Self Review return.
Lodgement Date Update – Not-for-profit (NFP) reporting requirements for self-assessed income tax exemption
The NFP self-review return due date is approaching. For all NFP’s who have yet to lodge a return with a 30 June 2024 year end the new lodgement date is 31 March 2025.
Non-charitable NFPs with an active Australian business number (ABN) must lodge the return to confirm their eligibility for income tax exemption.
However, an entity that has a different year end date, will need to apply to the ATO to adopt a Substituted Accounting Period (SAP) and be approved.
SAPs may be granted to NFPs where they can demonstrate that an ongoing event, industry practice, business driver or other ongoing circumstance makes 30Â June an inappropriate or impractical balance date.
For more information on lodgement due dates and substituted accounting periods please see link: ATO Lodgement Dates
Who will need to lodge?Â
Various categories of NFPs will not be included in the new return and will not have a lodgement obligation.
However, if your NFP falls into the below category it will need to self-assess and lodge a return with the ATO:
- Community service organisations
- Cultural organisations
- Educational organisations
- Health organisations
- Employment organisations
- Resource development organisations
- Scientific organisations
- Sporting organisations
Any NFP’s who do not meet the above categories but are either one of the following are considered exempt from lodging the return:
- Government entities
- Taxable not-for-profits
- NFPs with only charitable purposes
- Non-profit sub-entities for GST purposes
What changed for not for profit organisations in 2024?Â
The not-for-profit (NFP) self-review reporting is arguably the largest change in this sector since the establishment of the Australian Charities and Not-for-Profit Commission (ACNC) in late 2012. It is important to note that no changes have been made to the legislation allowing entities to self-assess their income tax exempt status. Every organisation that has been appropriately self-assessing its status the Income Tax Assessment Act 1997 will remain eligible to self-assess for the income tax exemption from 1 July 2024.
The new requirement asks these organisations to formally report the specific basis of their assessment, by reference to the category of organisation and the specific eligibility criteria that apply to that category.
It has always been a requirement that these organisations review their eligibility to self-assess for the income tax exemption on an ongoing basis and now it will be a requirement that this assessment is lodged with the Australian Taxation Office (ATO).
We note that there is no requirement to provide detailed financial information outside of disclosing a revenue band into which the organisation falls, which allows the population to be dissected on the basis of size in the future.
How will an organisation know if they need to lodge?Â
For those organisations already identified by the ATO, the return will be automatically generated. It will show on the entity’s ‘For action’ page in Online services for business (OSB), which may help identify the requirement for some organisations that lodge periodic activity statements via this method. Tax or BAS agents who assist with meeting GST obligations may be well-placed to identify.
Call to Action
As the Not For Profit self review return reporting regime is relatively new, we would suggest the following actions:
- Contact the NFP accounting specialists in our Business Services Team to discuss the matter.
- Allow us to review your reporting obligations and notify you whether you meet the requirements of having to lodge a return and if there is the potential of the organisation meeting a taxable outcome.
- If you are considered a reporting entity, we would highly suggest that you allow our office to prepare and finalise this return.
Should you have any questions or wish to discuss this matter further, please do not hesitate to contact our office.
