Overview

The Australian Taxation Office is introducing new reporting requirements for many Not-for-Profit organisations who currently self-assess as income tax exempt. 

Under these changes, these organisations will now be required to lodge annual self-review returns with the Australian Taxation Office. The first return for the year ended 30 June 2024 must be lodged between 1st July and 31st October 2024.

Some types of Not-for-Profits are not affected by these changes. These include: 

• Not-for-Profits currently registered as a charity with the Australian Charity and Not-for-profit Commission
• Certain types of Government entities, including state and territory bodies or municipal entities, and  
• Not-for-Profits that are subject to income tax and lodge tax returns.

The new reporting requirements impact specifically non-charitable Not-for-Profits, with active Australian Business Numbers, who self-assess as income tax exempt. This includes social clubs, sporting and recreational organisations, professional trade groups, and other non-charitable Not-for-Profits.

These changes will also affect those Not-for-Profits who are eligible for charity registration but who have not yet done so. If you are not currently registered as a charity, you should consider checking with the Australian Charity and Not-for-profit Commission to confirm whether you are eligible to register.

If an organisation is eligible for registration as a charity, they will not ordinarily be able to self-assess for income tax exemption and must instead register with the Australian Charity and Not-for-profit Commission and be endorsed by the Australian Taxation Office for income tax exemption.  

The Australian Taxation Office and Justice Connect have all produced resources that outline the tax requirements for not-for-profit organisations which can be found below:

Australian Taxation Office – Not for Profit Self-review return fact sheet

Australian Taxation Office – Straight from the source April 2024 

Justice Connect – Changes to income tax reporting requirements 

We know that many volunteer-involving organisations are Not-for-Profits who may be impacted by these changes, and that they may not be aware of these changes as they have previously been able to self-report as tax exempt without lodging with the Australian Taxation Office. We have produced this resource based on information from the Australian Taxation Office, Australian Charity and Not-for-profit Commission , and Justice Connect to summarise the most relevant information for volunteer-involving not-for-profit organisations. This resource and those linked herein will help you navigate your tax obligations as a Not-for-Profit.  

We encourage you to carefully review the requirements and check with the Australian Taxation Office and your internal governance systems if your organisation is likely to be impacted by these changes. 

What are the new reporting requirements?

The self-review return will need to be lodged annually at the end of each financial year. This can be done either through the Australian Taxation Office's Online Services portal or through a registered Tax Agent. In order to access the Australian Taxation Office Online Services portal, you will require an ABN, a myGovID, and a Relationship Authorisation Manager (or RAM).

Apart from an estimate of revenue, the self-review return does not require financial information. You will be required to advise of the exempt category you are self-assessing against and consider the Not-for-Profits purpose and activities against the specific set of eligibility requirements.

Once lodged, you will receive a notice confirming the submission, as well as the outcome of the self-assessment. Each year following the first self-review lodgment, you will be required to either confirm or update the information which will pre-populate from the prior year's return.

If you are concerned that you are required to self-report to the Australian Taxation Office, you should ask yourself the following questions: 

1. Is my organisation eligible to register as a charity? 
2. Is my organisation eligible to self-assess as income tax exempt?
3. Is my organisation required to lodge a tax return? 

Is my organisation eligible to register as a charity? 

Only Not-for-Profits who are registered with the Australian Charity and Not-for-profit Commission as a charity can be formally endorsed by the Australian Taxation Office as being income tax exempt and entitled to other tax concessions, like the GST concessions and FBT rebate or exemption.

If you think you may be eligible to register as a charity, you may want to use the Australian Charity and Not-for-profit Commission 's checklist for charity registration, register as a charity, and then apply to be formally endorsed as income tax exempt. If you register with the Australian Charity and Not-for-profit Commission and are endorsed as income tax exempt, you will be subject to separate reporting requirements and the annual self-review returns will not apply. 

If you are unsure as to whether or not you qualify as a charity, contact either the Australian Charity and Not-for-profit Commission Advice line on 12 22 62, or the Australian Taxation Office Not-for-Profit Advice Service on 1300 130 248.

The Australian Charity and Not-for-profit Commission has also produced specific resources for Not-for-Profit organisations who have been assessing as tax exempt and are now exploring their charitable eligibility. 

Australian Charity and Not-for-profit Commission: Organisations That Have Been Self-Assessing as Income Tax Exempt 

Is my organisation eligible to self-assess as income tax exempt? 

If you do not qualify as a charity, then you should consider this next option. The Australian Taxation Office recognises 8 categories of non-charitable Not for Profits that can self-assess as income tax exempt. These are: 

• Community Service Organisations 
• Cultural Organisations 
• Educational Organisations 
• Health Organisations 
• Employment Organisations 
• Resource Development Organisations 
• Scientific Organisations 
• Sporting Organisations

The new reporting requirements will typically apply to organisations falling into one of these categories.

Many volunteer-involving organisations fit into these categories, but you should always check with the Australian Taxation Office, or alternatively seek legal advice, to ensure you are compliant. If your organisation is eligible to self-assess based on these categories, it will be required to submit a self-review return to the Australian Taxation Office between July 1 and October 31 2024.

These changes do not impact eligibility to income tax exemption, but penalties apply for failure to lode and Not-for-Profits who fail to lodge these returns face a high risk of Australian Taxation Office audit to check their eligibility. 

If you are not sure whether or not your organisation is eligible, contact the Australian Taxation Office Not-for-Profits Premium Advice Service on 1300 130 24 for further advice, or see the Australian Taxation Office Website for Not For Profits.

Is my organisation required to lodge a tax return?

If you are not eligible to register as a charity, do not want to register as a charity, or do not qualify for self-assessment of tax exemption under one of the 8 recognised categories, you need to consider if your organisation is required to lodge a tax return and potentially pay income tax.

The Australian Taxation Office and Justice Connect have prepared a range of resources that can provide more information which are linked below.

Justice Connect – Income Tax Exemptions

Australian Taxation Office – Income tax exempt organisations

What Next?

We understand that these changes are complicated and create a burden for volunteers and volunteering organisations. We are working together with other volunteering peak bodies and Not-for-Profits around Australia to advocate to the Australian Taxation Office about the impact that these changes will have on the sector and the lack of transparency and communication around this process.

Members of The Centre for Volunteering are also able to access pro bono legal advice from Hall and Wilcox if the needs of their particular organisation are not fully covered by the generic resources. Please note that conditions apply to this service.

We strongly encourage any Not-for-Profits to check their tax requirements as soon as possible. The large scope of these changes have meant that organisations such as the Australian Charity and Not-for-profit Commission and Australian Taxation Office are experiencing a high volume of requests for information and applications around tax for Not-for-Profits. If you are concerned about your requirements, eligibilities, and liabilities, contact the relevant organisations as soon as you are able to ensure enough time is given to fully assess your organisation’s requirements.