ATO Self-Assessment for nonprofit entities
If you are involved in the administration of one of the following entities, then there is a proposal to have your organisation file a self-assessment of your exempt tax status form annually with the ATO.
– sporting clubs
– art, literature or music clubs
– community service organisations (Service Clubs such as Rotary, Zonta, and others who provide or carry out activities, facilities or projects for the benefit or welfare of the community or any members who have a particular need by reason of youth, age, infirmity or disablement, poverty or social or economic circumstances)
– union or employer association
– medical benefit funds, or
– societies or associations established for the purpose of promoting the development of various Australian resources
As part of the 2021-22 federal budget, the government announced that it had provided $1.9 million capital funding in 2022-23 for the Australian Taxation Office (ATO) to build an online system to enhance the transparency of income tax exemptions claimed by exempt nonprofit entities.
The budget announcement noted that currently, non-charitable not for profit (NFP) entities can self-assess their eligibility for income tax exemptions without an obligation to report to the ATO.
This announcement appears connected to the Australian Charities and Not for profits Commission (ACNC) Review that recommended large nonprofit organisations (that are not charities) with a revenue of over $5 million register with the ACNC in order to access tax concessions (1)
The requirement comes into effect from 1 July 2023 and the ATO and will require nonprofits with an active ABN who self-assess as income tax exempt to submit a self-review return each year. The first return will need to be lodged for the 2023–24 income year from 1 July 2024. It will be an online annual self-review form with the information ordinarily used to self-assess eligibility for the exemption.
The ATO is currently seeking views from stakeholders about the implementation of the project.
To assist those who need to engage with the process of self-assessment of Div 50 nonprofit organisations ACPNS have published the following:
McGregor-Lowndes, M., (2022). A Primer on Reform of Tax Exempt Nonprofit Entities, Australian Centre for Philanthropy and Nonprofit Studies (ACPNS), QUT. Available at https://eprints.qut.edu.au/232181
And a two page executive summary is available here: