New Not for Profit Reporting Requirements

Certain NFP entities that aren’t registered with Australian Charities and Not-for-profits Commission (ACNC) have to lodge an annual statement with the ATO. This obligation commences in July 2024 for the year ending 30 June 2024 and impacted NFP’s should commence preparing now to lodge this statement. 

New reporting requirements for not-for-profits entities that are not registered with the ACNC

The 2021–22 Federal budget announced reforms to the reporting requirements for not-for-profit (NFP) organisations that self-assess as income tax exempt.

From 1 July 2023, non-charitable NFP entities with an active Australian Business Number (ABN) that wish to access an income tax exemption are required to lodge an annual self-review return with the ATO. If the NFP is a charity registered with the Australian Charities and Not-for-profits Commission (ACNC) this reporting obligation will not apply to the NFP as it already lodge an annual information statement with the ACNC each year (conversely, if the NFP is not registered with the ACNC then this new reporting obligation is likely to apply).

NFP’s should check as to whether this requirement applies to them and ensure they are ready to meet this new (and additional) reporting obligation. The reforms apply from 2023–24 income year, with lodgments falling due between 1 July 2024 and 31 October 2024, early balancers may commence preparations after the self-review return is made available by the ATO in July 2024.

These reporting obligations will not give rise to an income tax liability for the NFP unless it has incorrectly self-assessed its income tax exempt status.

Preparation for annual reporting

To prepare for self-review annual return lodgment, NFP organisations should: 

• ensure the organisation’s ABN details are up to date;
• ensure myGovID and Relationship Authorisation Manager (RAM) authorisations have been established for online services for business (OSB) – this could be challenging for NFP’s that have not previously interacted with the ATO online;
• locate and review the organisation’s governing documents and continue to review the organisation’s purpose, obligations and activities; and
• review the “existing income tax status worksheet” for self-assessing NFP organisations introduced by the ATO (refer: https://www.ato.gov.au/forms-and-instructions/income-tax-status-for-self-assessing-non-profit-organisations-review-worksheet).

NFP entities could consider if they are eligible to be registered as a charity as they may then be able to register with the ACNC to avoid falling under the changed reporting requirements that are now in effect. It is likely though that most NFP’s that are eligible to register with the ACNC have already done so.

Only certain categories of NFP organisations are eligible to self-assess as income tax exempt, so it is prudent to make sure your NFP organisation fits into one of the 8 eligible categories and understand the additional requirements to be eligible to self-assess.

Transitional arrangements 

The ATO has indicated transitional support arrangements will be available for entities that require additional time to meet their obligations. This may include: 

• lodgement deferrals
• payment plans for organisations that identify they are a taxable not-for-profit for the 2023–24 income year
• remission of general interest charges and other penalties that may apply.

Also, as a transitional arrangement for the 2023–24 income year, eligible NFPs can use ATO’s interactive voice response phone service if they are unable to lodge online.

Entities exempt from changed reporting requirements 

The following entities are exempt from the changed reporting requirements (i.e., they are not subject to this new annual reporting obligation:

• a government entity or charity registered with the Australian Charities and Not-for-profits Commission (ACNC), as they already lodge an annual information statement with the ACNC each year, and
• taxable NFP organisations, as they already lodge an annual income tax return.

For more details on whether this might impact your NFP organisation and this new reporting obligation please follow this link to the ATO website.

Please do contact your accounting or taxation advisor should you need any further assistance with these matters.