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The Tax Office has experienced a surge in requests for private rulings by non-charitable NFPs as the new reporting changes approach.
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NFPs urged to check guidance before applying for private rulings
07 June 2024
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The ATO is asking non-charitable NFPs to check the ATO’s public guidance to address their questions about their new reporting obligations before seeking a private ruling.
In a recent update, ATO assistant commissioner Jennifer Moltisanti reminded NFPs and practitioners that from 1 July, non-charitable NFPs with an ABN are required to lodge an NFP self-review return.
With less than 30 days until tax time, Moltisanti said many NFPs are actively reviewing their eligibility to self-assess as income tax exempt.
“Equally, many tax practitioners are advising NFP clients on their eligibility,” she said.
“As a result, we're experiencing an increase in the number of applications for private rulings from NFPs.”
Moltisanti said the ATO understands that most NFPs are eager to do the right thing and that private rulings are a useful way to obtain the ATO’s view about a complex set of circumstances or an unsettled area of tax law.
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“Our tax laws can be hard to decipher and, in trying to do the right thing, some NFPs may consider applying for a private ruling to get greater certainty on their tax status,” she said.
“However, I urge all NFPs and sector stakeholders to check if our publicly available guidance addresses your questions first.
“This is because seeking a private ruling may not necessarily be the most efficient way of obtaining the guidance you need. It can take a significant amount of time and be resource intensive, particularly if we need to request additional information from you so we can form an ATO view of the NFP's circumstances.”
Moltisanti said that for most NFPs, the ATO’s updated guidance should answer their questions, saving them from accessing other sources for assistance.
“You can rely on our public advice and guidance to give you the certainty you need to meet your obligations,” she said.
The ATO will publish further guidance on its website over the coming weeks, including practical examples of who is and isn’t eligible for the income tax exemption.
For NFPs that already have a private ruling, Moltisanti said there is a common misconception that a time extension must be requested if the end date is approaching.
“This isn’t the case. If your NFP’s circumstances have not materially changed from the circumstances outlined in your initial private ruling, you do not need to apply for an extension,” she said.
The ATO said it’s important to note that the life of a private ruling cannot be extended and that any new request will be treated as a fresh application.
“If your NFP was eligible to self-assess as income tax exempt prior to the new reporting requirements, it will remain eligible. This is because the eligibility requirements to self-assess as income tax exempt have not changed – the reporting of eligibility has,” the Tax Office said.
“However, if your NFP is dealing with new complex circumstances or unsettled areas of tax law, it remains your right to apply for a private ruling.”
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