NFP self-review return done? March 31 Deadline approaches

NFP self-review return done? March 31 Deadline approaches.  

      The ATO is reminding not-for-profits (NFPs) of the imminent 31 March 2025 deadline for non-charitable NFPs that need to self-assess as income tax exempt to lodge their NFP self-review return for the 2023-24 income year. Non-charitable NFPs can self-assess their income tax exemption if they have purposes that fit within one of the 8 categories in Division 50 of the ITAA 1997. While eligibility requirements haven’t changed for the income tax exemption, lodgment of the annual NFP self-review return will be the first time NFPs need to notify the ATO of their eligibility. NFPs that self-assess as income tax exempt are required to maintain governing documents (e.g. the rules or articles of association, constitution, rule book, deed of trust) to satisfy their operation as an NFP. The governing documents should evidence that the NFP is prevented from distributing profits or assets for the benefit of members or other private persons (unless it is for reimbursement for services provided or of expenses incurred on behalf of the organisation). Where the governing documents do not currently contain these clauses, organisations will have until 30 June 2025 to update the documents accordingly. They will still be able to self-assess as income tax exemption for the 2024 income year they have not distributed to any assets or income to members. The ATO has updated its website guidance with common myths and misconceptions about NFPs:

1. All NFPs are income tax exempt – Only NFPs that meet the definition of a charity registered with ACNC and endorsed by the ATO, and non-charitable organisations that meet the requirements to self-assess, are exempt from income tax.
2. There is only one way to lodge the NFP self-review return – there are three ways to lodge the self-review return, via the online portal, via the ATO phone service, and registered tax agents can lodge on behalf of entities online.
3. Anyone can lodge the NFP self-review return online – Anyone that has been given authorisation to access the NFP self-review return in Online Services can lodge.
4. If you’re unsure whether the NFP has charitable purposes, then you don’t need to lodge – Where clients are not sure if the NFP is charitable, they still need to complete the self-review return and select ‘Yes’ or ‘Unsure’ when answering the charitable purposes question.

The ATO has also updated its website guidance on the exempt categories of education, employment and resource development NFPs.  

Any concerns?

  If you have any concerns about the impact of the above please contact us here. Note: The information contained in this update has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs.  You should seek advice before making any decision regarding any information, strategies or products mentioned to consider whether that is appropriate to your own objectives, financial situation and needs.