SKY UPDATE| NOT-FOR-PROFIT REPORTING REQUIREMENTS TO SELF-ASSESS INCOME TAX EXEMPTION
Back in September 2022 we wrote about 2022 Federal Budget announcement that will require not-for-profit entities that self-assess as eligible for an Income Tax exemption, to lodge an annual self-review return with the ATO from the 2023/24 year.
This regime covers all not-for-profits, other than charities registered with the ACNC, who self-assess as Income Tax exempt under Division 50 of the Income Tax Assessment Act 1997.
This includes community service, cultural (art/literature/music), educational, health, employment, resource development, scientific and sporting organisations.
The annual self-review return for the 2023/24 year can be lodged using ATO online services. A registered tax agent can also lodge the annual self-review return on behalf of a NFP.
The self-review return will:
- include questions like those provided in the current self-review worksheets; and
- guide NFPs to consider their purpose and activities against specific eligibility requirements.
The self-review return will not include any financial questions about the organisation other than their income range.
NFPs will receive a notification that summarises their self-assessed eligibility for income tax exemption once the self-review return is lodged.
Following the first (2023/24) lodgement, NFPs will be able to annually confirm/update information on a pre-populated self-review return.
Failing to complete the annual self-review return could cause a NFP to become ineligible for an income tax exemption and penalties may also be imposed.
The first annual self-review form will become available in July 2024 and must be completed by 31 October 2024.
Whilst the time to submit the annual self-review is some time away, those who are involved in not-for-profits are encouraged to take steps to get up to speed with the latest guidance to ensure that they are correctly self-assessing for the exemption, and to be well positioned to complete the annual self-review.
If you require advice on the tax-exempt status of a not-for-profit that you are involved in, please get in touch.
Sky Accountants Ballarat
Phone: 03 5332 8855
Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia
Postal Address: PO Box 2234, Bakery Hill, Victoria 3354
Sky Accountants Gisborne & Macedon Ranges
Phone: 03 5428 1400
Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia
Postal Address: PO Box 270 Gisborne Victoria 3437