Organisations that used to self-assess their income tax exemption status must now remember to submit an annual self-review report (a return) to the Australian Taxation Office (ATO). This directive, announced in the 2021 Federal Budget. Impact organisations will include specific non-charitable entities (those not endorsed by Australian charities and Not-for-profits concession (ACNC)) – falling into eight distinct categories:
- Community services
- Sporting bodies
- Cultural organizations
- Educational institutions
- Health-related entities
- Employment-focused organizations
- Scientific bodies
- Resource development groups (e.g., agricultural, horticultural, industrial)
Important Dates
Commencing from the 2023–2024 income year, affected organizations must comply with the new rules. For June year-ends, the first affected year is the one ending on 30 June 2024. Meanwhile, organizations with December year-ends will initiate compliance for the year ending on 31 December 2023. The return forms will be accessible from 1 July 2024, with a lodgment deadline of 31 October 2024.
Entities already subject to income tax, such as certain membership organizations providing member benefits, maintain their existing obligation to lodge income tax returns.
The Filing Process
The filing process will occur through an online form accessible to entities or their tax agents. After the initial filing, subsequent returns will be pre-filled by the ATO, simplifying future submissions. Failure to comply may result in the loss of income tax exemption and potential financial penalties.
The ATO emphasizes that the return’s questions aim to guide organizations in evaluating their purpose and activities. While these requirements may represent a minor extension for some organizations already conducting routine self-review procedures, they may signify a significant governance advancement for others.
Please don’t hesitate to reach out to us for guidance or advice.
