As of 1 July 2023, not-for-profit (NFP) entities with an active Australian Business Number that self-assess as income tax exempt are required to lodge a self-review return, starting with the 2023-24 income year.
We previously reported on this change in May 2023 and urged NFPs to review their activities and the basis for their self‑assessment and to prepare for the new reporting requirement.
The Australian Taxation Office (ATO) has released a guide for completing an NFP self-review return, allowing NFPs to begin an early review of their eligibility for income tax exemption in preparation for when the self-review return becomes available.
The self-review return will be available from 1 July to 31 October 2024. NFPs and authorised tax agents will be able to access the self-review return from the ATO's online services for business and online services for agents, respectively.
What to expect from the guide
The self-review return guide mirrors the structure of the self-review return, outlining the questions that will appear on the self-review return when it becomes available.
The guide also provides information on who does and does not need to complete a self-review return. Charities registered with the Australian Charities and Not-for-profits Commission (ACNC) will not be required to submit a self‑review return.
The three primary steps NFPs will be required to complete are:
- organisation details
- income tax self-assessment
- summary and declaration.
The guide also covers further questions NFPs may, depending on the organisation's main purpose, have to answer relating to:
- prohibiting the distribution of income or assets to members
- existing, operating and incurring expenditure in Australia
- charitable purposes.
Conclusion
It is important to be aware of these new requirements as a failure to submit a self-review return may result in the loss of income tax exemption and may also attract penalties. NFP entities should take time to familiarise themselves with the self-review return and their reporting obligations to ensure their income tax exemption.
The ATO has also invited feedback on the guide's web page, which users can provide by clicking the 'Report webpage issue' button located on the right-hand side of the web page.
Cooper Grace Ward is a leading Australian law firm based in Brisbane.
This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.
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