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The Tax Office has cleared up some misconceptions around the new reporting obligations for not-for-profits with the 31 March deadline fast approaching.
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ATO reminds NFPs on looming deadline for self-review return
05 February 2025
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7 minute read
The ATO has reminded not-for-profit (NFP) organisations with an active Australian business number (ABN) that self-assess as income tax exempt that they will soon need to lodge an annual NFP self-review return. This applies from the 2023–24 income year onwards.
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In a recent update, the Tax Office sought to clear up some of the misconceptions surrounding both NFPs and the new reporting obligations.
For example, the ATO said there is still a common myth that all NFPs are income tax exempt.
"This is not true. Some NFPs are income tax exempt and some are taxable. The tax law sets out the types of NFPs, and the conditions that they must meet, in order to be exempt from income tax," it said.
NFPs with only charitable purposes that meet the legal definition of a charity must be registered with the Australian Charities and Not-for-profits Commission (ACNC) and be endorsed by the ATO to be income tax exempt.
"The other type of exempt entity is a non-charitable organisation that meets the requirements to self-assess as income tax exempt," the ATO said.
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"If these NFPs have an active ABN, they must lodge the NFP self-review return to notify us of their eligibility to self-assess as income tax exempt."
Organisations that don't meet the requirements for income tax exemption are taxable NFPs and must lodge an income tax return or notify the ATO of non-lodgment advice.
The ATO said there was a myth circulating that if someone is unsure whether their NFP is charitable, they would not need to lodge.
"If you’re unsure if your NFP is charitable or not, you still need to complete the self-review return. You can lodge the return by selecting ‘Yes’ or ‘Unsure’ when answering the charitable purposes question."
"We may contact you to provide guidance to help determine your charitable status."
The ATO also advised NFPs planning to lodge in online services for business that anyone with authorisation to access the NFP self-review return in online services can lodge.
Access can be set up by the NFP's associate who is the principal authority, and they can grant access to others as required, the ATO said.
"To set up these authorisations, your NFP's associate will need to ensure the NFP's registration and contact details are current or notify us of changes," the ATO said.
"[They will also need to] set up their myID if they haven't already and link their myID to the NFP's ABN in RAM," the Tax Office said.
"If you've engaged a registered tax agent, they can also prepare and lodge the return on your behalf in Online services for agents."
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