Is your non-charitable NFP ready for new reporting rules?

Non-charitable NFPs with an active ABN must now lodge an annual self-review return to notify the Australian Tax Office of their eligibility to self-assess as income tax exempt. This year’s deadline for lodging the NFP self-review return has been extended this year until 31 March 2025.

There’s a new requirement for non-charitable not-for-profits (NFPs) with an active ABN to lodge an annual NFP self-review return to notify of their eligibility to self-assess as income tax exempt. "Eligibility for tax exemption hasn’t changed,” said ATO Assistant Commissioner Jennifer Moltisanti. “What’s changed is that NFPs which self-assess as income tax exempt are now required to notify the ATO of their eligibility for an income tax exemption each year.”

This new reporting requirement is designed to enhance transparency and integrity in the system, by ensuring only eligible NFPs access income tax exemption.

“Board members and directors of NFPs have a responsibility to ensure they are meeting their NFP’s obligations,” said Moltisanti. “We have lots of helpful information on the ATO website at ato.gov.au/nfptaxexempt.”

“My number one tip is not to wait – get started now, so you aren’t rushing to lodge at the last minute.”

Who needs to lodge the self-review return?

Non-charitable NFPs with an active ABN which self-assess as income tax exempt need to complete the NFP self-review return. In the return they will answer a few questions about their organisation’s activities and governance and identify which of the eight income tax exempt categories applies to them.

There are eight categories of NFP which can self-assess as income tax exempt, outlined in Division 50 of the Income Tax Assessment Act 1997. These are:

• community service
• sporting
• cultural
• educational
• health
• employment
• scientific
• resource development

Charitable NFPs which are registered with the Australian Charities and Not-for-profits Commission (ACNC) don’t need to lodge a NFP self-review return. This is because they are not eligible to self-assess their tax exemption and are instead required to apply to the ATO to be endorsed as income tax exempt.

Taxable NFPS also don’t need to lodge the NFP self-review return and will continue to lodge their income tax returns as normal.

Lodging the self-review return

NFPs can lodge their NFP self-review return either through Online services for business or with the ATO’s self-help phone service on 13 72 26. Alternatively they can get a tax agent to lodge the return on their behalf in online services for agents.

“The NFP self-review return is designed to be straightforward and should take around 10 minutes to complete once they are prepared to lodge,” said Moltisanti.

The deadline for lodging the NFP self-review return is 31 October each year. However, the ATO is providing transitional support for this first year, allowing NFPs to lodge up to 31 March 2025 without penalties. NFPs don’t need to contact the ATO to request this extra time. Penalties may apply if they fail to lodge by 31 March 2025.

Tips to help NFPs lodge

To prepare for a smooth lodgement through the ATO’s Online services for business, NFPs should make sure their ABN details are up to date.

“Start by checking that your NFP’s address, associate and authorised contacts are accurate so you can access the ATO’s Online services for business or you can engage a registered tax agent,” said Moltisanti. “If your registration details need to be updated, you can find out how to update them on the ATO website at notify us of changes.”

Some NFPs may not know or can’t contact the person who was their prior associate. These NFPs will need to update their ABN details by posting the ATO a paper form. This could take up to 12 weeks to process, so it’s important to get started well in advance of the 31 March lodgement due date.

Once the NFP’s ABN details are up to date, they’ll need to use the ATO’s Relationship Authorisation Manager (RAM) to link the myGovID of the person lodging the NFP self-review return to the ABN of their NFP. Then they can log in to the ATO’s Online services for business and complete the return.

Another way NFPs can lodge the return is with the ATO’s self-help phone service.

“For a smooth phone lodgement, we recommend you review the questions you will need to answer before you call. You can preview them on the ATO website at How to prepare an NFP self-review return,” said Jennifer.

“When you call, you’ll need your NFP’s ABN and a reference number from any correspondence the ATO has sent your NFP, so it’s important to have that with you,” said Moltisanti. “If you are prepared, it’s a quick and easy process to lodge the NFP self-review return by answering questions when prompted.”

Once they’ve lodged by phone or online, NFPs will receive a confirmation message and should keep a copy for their records.

Charitable NFPs

“We know that some NFPs have been taking a closer look at their structure and are wondering if they should register as charitable,” said Moltisanti.

“There has been no change to the requirement for NFPs with only charitable purposes to register with the Australian Charities and Not-for-profits Commission (ACNC) and apply to the ATO to be endorsed as income tax exempt.”

If you aren’t sure if your NFP is charitable, you can find more information on the ATO website. You can also view a recording of a joint webinar with the ATO and ACNC, What if I am charitable – what do I do?, that charitable organisations can watch for additional support.

The ACNC has more detailed information available at acnc.gov.au/selfassessing.

Support is available

“The ATO is here to ensure affected NFPs have the support and information they need to lodge,” said Moltisanti. “The best place to start is on the ATO’s website at ato.gov.au/nfptaxexempt.”

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