From 1 July 2024, the Australian Taxation Office (ATO) will introduce new annual reporting requirements for income-tax-exempt not-for-profit (NFP) organisations. Eligible NFPs will need to self-assess their eligibility for income tax exemption by completing a NFP self-review return.  

In this article, we explain the new NFP self-review return process, why the changes are being introduced and how your NFP can prepare. 

What are the new NFP reporting requirements?  

From 1 July 2024, non-charitable NFPs with an active ABN (including sporting clubs, societies and associations) must lodge an annual self-review return to the ATO by 31 October to retain their income tax-exempt status. 

The self-review is designed to be easy to navigate, with 10 to 15 questions across 3 sections. However, while the format is simple, answering some of the questions will require a significant amount of preparation work. We recommend allowing plenty of time to gather the necessary information and complete the review thoroughly, so it’s a good idea to begin the process well before the deadline. 

The new NFP self-review sections are:  

1. Organisational details: The form will ask for your organisation’s details, including your estimated gross revenue for the financial year.   

2. Eligibility questions: To confirm that you’re eligible to self-assess for tax exemption, you’ll be asked to match your organisation against one of 8 categories listed in Division 50 of the Income Tax Assessment Act 1997, which are:  

  • community service 
  • sporting 
  • cultural 
  • educational 
  • health 
  • employment 
  • scientific 
  • resource development.  

3. Review and submit your declaration.  

Why are the new NFP reporting requirements being introduced? 

The changes were originally introduced in the 2021-22 Federal Budget and apply to over 150,000 NFPs. 

The new self-review process has been put in place to increase transparency and fairness across the NFP sector and to ensure that only eligible NFPs receive tax exemptions. 

Who is exempt from the new NFP reporting requirements? 

The new reporting requirements don’t apply to a range of organisations, including: 

  • Registered charities who are endorsed by the ATO as income tax exempt (although you’ll continue to report annually to the Australian Charities and Not-for-profits Commission (ACNC)) 
  • Certain types of government entities 
  • Taxable not-for-profits that already lodge an income tax return or notify of a return. 

We’ve put together a handy not-for-profit tax exemption flowchart to help you determine if you need to complete a self-review.  

How should NFPs prepare for the new reporting requirements? 

NFPs should start preparing now to ensure you have everything in place before the 31 October deadline. 

In preparation for completing the self-review return, NFPs should: 

  • Know where your revenue comes from and what this means for your tax obligations. 
  • Set up your myGovID and link it to the organisation’s ABN using the Relationship Authorisation Manager. 

It’s also important to note that you don’t have to wait until the 31 October deadline to report – you can do so any time after 1 July. 

How do I lodge an NPF self-review return? 

There are 2 ways to lodge a self-review return:  

  1. Self-lodgement: You can self-lodge using Online Services for Business on the ATO website. The ATO has published a guide on the self-review process.  
  1. Engage a registered tax agent: A tax agent with experience in the NFP sector can guide you through the process, help you understand your obligations and lodge the self-review return for you. 

When is the NFP self-review return due?  

The first NFP self-review return will be for the 2023-24 income year and is due between 1 July and 31 October 2024. 

What happens if I fail to lodge a self-review return? 

Failure to submit a self-review return may result in your organisation’s loss of income tax exemption and possible financial penalties. 

Need help navigating the new not-for-profit reporting requirements? 

Chat with our experienced accounting team  

Our team of specialists have extensive experience working with not-for-profit organisations.  

You can reach out to us by:   

  • calling us on 03 5221 6399  

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This article was written by Audit and Assurance Manager Lucy Partridge.  

Disclaimer: The information provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.