From 1 July 2023, not-for-profits (NFPs) in Australia that are not a registered charity with the Australian Charities and Not-for-Profits Commission (“ACNC”) have a new reporting requirement to fulfill each year. 

The reporting requirement, which was introduced in the 2021–22 Federal Budget, impacts approximately 150,000 non-charitable NFPs across the country – ranging from community services to educational institutions, sporting clubs, health organisations, and more. 

According to the Australian Tax Office (ATO), the change has been implemented to improve transparency and integrity within the not-for-profit system, and ensure only eligible NFPs benefit from income tax exemptions.

Most non-charitable NFPs with an active Australian Business Number (ABN) will now need to lodge a “self-review return” between July and October every year. The self-review return prompts your organisation to assess whether it is eligible against the conditions that apply for income tax concessions. 

As highlighted by the ATO Assistant Commissioner, there are steps that non-charitable NFPs can take now to prepare. 

These include the following:

  1. Confirm if you are required to complete the annual self-review return or if you are exempt. Exempt entities include registered charities, certain government entities, taxable NFPs, and others. 
  2. Review your organisation’s details on the Australian Business Register or via Online services using your myGovID. If they are inaccurate, you will need to update them or ask your registered agent (such as RSM) to do it for you.  
  3. Understand the type of NFP your organisation is by reviewing its purpose and governing documents against the ATO’s categories.
  4. Link your myGovID to your organisation’s ABN using the Relationship Authorisation Manager. 

Step 4 ensures you can use the ATO's Online services for business which is a tool for those who wish to manage their own annual reporting. Because this is a new requirement, the ATO has provided a transitional arrangement for NFPs that are unable to lodge online this year. Instead, they can do so using an interactive voice response phone service.

Engaging your tax agent to manage reporting for you

There are penalties for failing to lodge the self-review return, so it’s important for organisations to keep up with their reporting requirements each year.

Keep in mind that your organisation’s registered tax agent can lodge the self-review return on your behalf. This includes estimating gross revenue, identifying the relevant category for your organisation, and answering other tax-related questions to confirm your taxable status.  

At RSM, we are taking active steps to ensure:

  • clients who are required to report are fully aware of the new obligations
  • the self-review return is completed within the required timeframe
  • clients are kept up-to-date on any changes associated with the new mandate.

If you are unsure what the changes mean or have any questions regarding the new self-review requirement, we encourage you to reach out to your local RSM office