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Thousands of not-for-profits will need to lodge annual self-reviews from 1 July to keep their tax-exempt status.
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‘Don’t panic’ over new reporting rules, ATO tells NFPs
01 July 2024
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The ATO has urged not-for-profits not to panic over new reporting requirements that will see them lose their tax-exempt status if they fail to submit an annual review by October.
The changes affect an estimated 157,000 non-charitable NFPs with ABNs and mandate an annual self-review to be lodged between 1 July and 31 October for the past financial year.
During a Senate Economics Legislation Committee hearing last week, Liberal Senator Dean Smith raised concerns from constituents to the ATO over NFPs' inability to meet the requirements.
“These organisations are not well prepared in terms of administrative arrangements,” he said.
"We're dealing with volunteers, we're dealing with people who have held positions for a very long time in their organisation and might not even hold positions anymore, which is creating a bit of a problem.”
NFP representatives have also called the obligations a “ticking time bomb” that threatens their tax-exempt status and viability.
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Cameron MacRae, COO of Australian Neighbourhood Houses and Centres, in April, said most of his organisation's 1,100 members, including men’s and women’s sheds and community learning centres, had founding documents that were out of date and would fail to meet requirements under the new obligations.
"Many are run by a team of volunteers with little to no legal or accounting experience," he added.
But ATO second commissioner Jeremy Hirschhorn urged calm among NFPs. “My first piece of advice would be not to panic, to be calm and to approach this calmly,” Hirschhorn said.
“The second piece of advice I would give is to go to our website and to read materials because there are some very good guidance materials on our website.”
“And the third piece of advice that I would give is if your charity is still worried about meeting these obligations, you should not be a stranger, you should contact the Tax Office and talk through the situation – we will of course, be understanding to those who honestly engage.”
He said the ATO’s focus would be on education and support instead of enforcement during a new regime.
“At the start of every regime, but particularly a regime which affects the charity sector, is around education and support, not around enforcement,” he said.
“The Tax Commissioner is in the business of collecting tax. He's not in the business of collecting penalties.”
When asked by Smith how long NFPs could rely on the ATO’s leniency, Hirschhorn said “for a reasonable time”.
“The obligation starts on the first of July. And of course, we will see how things go. We'll see how the sector copes. We'll see what education and advice and support we need to do.”
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