Sporting clubs, community service organisations and charities are in the ATO’s sights - does your sporting club or community service organisation need to lodge an ATO annual return by 1 October 2024?
Not-for-profits (NFPs) entities with an ABN which are eligible to self-assess as income tax exempt will be required to submit an annual self-review return with the ATO, commencing from the 2024 income year. The 2024 annual self-review return must be lodged by 31 October 2024.
The new reporting regime was introduced to enhance integrity in the tax system and ensure that only eligible NFPs are entitled to income tax exemption.
What NFPs are required to lodge an annual self-review return?
The new reporting requirements apply to non-charitable NFP entities with an ABN that fall under one of 8 self-assessing income tax exempt categories:
community service
sporting
cultural
educational
employment
health
resource development
scientific
Generally, a self-assessing entity must have rules in its constitution or governing document stating that it is not carried on for the purpose of profit or gain of its individual members.
What NFPs are NOT required to lodge an annual self-review return?
NFPs that have registered with the Australian Charities and Not-for-profits Commission (ACNC) and endorsed by the ATO as income tax exempt are not required to lodge an annual self-review return.
If a NFP has charitable purposes, it cannot self-assess as income tax exempt. The NFP must register as a charity with the ACNC and be endorsed by the ATO as income tax exempt.
How does the self-review return process work?
The self-review return must be lodged on an annual basis through ATO online services for businesses. Registered tax agents can lodge the self-review return on behalf of clients through the ATO online services for agents.
The self-review return will include questions based on the current self-review worksheets used by non-charitable NFP to assess their tax-exempt status. When the self-review return is lodged, NFP entities will receive a summary of the entity's eligibility for income tax exemption.
What if the NFP is not eligible for self-assessment?
If the NFP is ineligible for an income tax exemption under the self-assessment criteria, and is not a registered charity, the NFP will be required to lodge a tax return, and may have to pay income tax.
What if the NFP does not lodge on time?
If the NFP does not lodge on time, it may become ineligible for an income tax exemption, and may be liable to penalties imposed by the ATO.
If you or your client requires assistance with their compliance requirements, please contact Rachel Vijayaraj or Imogen Delangre.
The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.
contact
rachel vijayaraj
Partner
E rlv@bwslawyers.com.au
P 02 9394 1049
imogen delangre
Law Graduate
E imd@bwslawyers.com.au
P 02 9394 1055