Ensuring that you review your governing documents before 31 March, will make lodging your NFP self-review return as smooth as possible. NFPs that self-assess as income tax exempt are required to maintain governing documents to satisfy their operation as an NFP. Checking these documents remain current is an important step in reviewing your NFPs entitlement.
Governing documents are the formal documents that set out your organisation's purpose, character and the way the NFP is governed, operates and makes decisions. To get ready for the annual reporting, your organisation needs to review its main purpose and activities and make sure your governing documents have appropriate clauses to reflect its NFP character.
Governing documents may be called other things, such as:
rules or articles of association
constitution
rule book
deed of trust.
We will accept your organisation as an NFP if your governing documents prevent you from distributing profits or assets for the benefit of specific people – both while it operates and when it winds up. Governing documents must include rules that ensure members and other private persons do not receive the property or assets of the organisation, other than as reimbursement for services provided or for expenses incurred on behalf of the organisation.
If your NFP doesn’t have these types of clauses in its governing documents, it can still self-assess as income tax exempt for the 2023–24 income year provided it has not distributed any assets or income to members. However, it has until 30 June 2025 to update its governing documents. Failure to do so will mean that it cannot self-assess as income tax exempt from 1 July 2024.
If you need more help with getting ready to lodge, including how to prepare your governing documents, you can visit our website for updated information about the NFP self-review return.
