Non-charitable not-for-profit (NFP) organisations with an active Australian business number (ABN) have until 31 March 2025 to lodge the annual NFP self-review return for the 2023–24 income year.
Your NFP must lodge the return to notify us of its eligibility to self-assess as income tax exempt.
Before lodging the return, review the NFP self-review return question guide to prepare your answers to the return questions. It will help you to identify the category that best reflects the main purpose and activities of your NFP. You will need to select the exempt category your NFP is self-assessing against when you lodge.
Your NFP can establish its main purpose by reviewing your governing documents, activities, and distribution of income and assets.
Previously, we've taken a closer look at categories for community service NFPs, sporting organisations and arts, music or cultural organisations. Today we're covering three more exempt categories: educational, employment and resource development.
Education
If your main purpose is to provide education to the public or a section of the public, then you fall into the education category. Examples of this includes public educational institutions such as universities or colleges managed by public bodies, grammar schools, primary and secondary schools run by religious bodies, and not-for-profit business colleges.
Colleges run for the profit of private owners, associations operated for their members’ professional benefit, and promotional and lobbying groups are not considered public educational institutions.
Resource development
If your NFP is a not-for-profit society or association that was established to promote the development of Australian resources, aviation and tourism, it might fall into the resource development category and may be able to self-assess as income tax exempt.
Employment
If your NFP is an employment organisation, such as a trade union or an employee or employer association registered or recognised under the Fair Work (Registered Organisations) Act 2009, it might fall into the employment category.
Brief
On 03/02/2025, the Australian Taxation Office (ATO) issued an update regarding Lodging the NFP self-review return under the correct self-assessing category. The update outlines three exempt categories: educational, employment, and resource development, providing examples of organisations that may fall into these categories.
Highlights content goes here...
Purpose
Non-charitable not-for-profit (NFP) organisations with an active Australian business number (ABN) are required to lodge an annual NFP self-review return for the 2023-24 income year by 31 March 2025. The purpose of this update is to inform NFPs about their eligibility to self-assess as income tax exempt and to guide them in selecting the correct exempt category that reflects their main purpose and activities.
This requirement applies to all NFPs with an active ABN, regardless of their size or complexity. It is essential for these organisations to review their governing documents, activities, and distribution of income and assets to determine which exempt category they fall under.
Effects on Industry
The update has significant implications for the not-for-profit sector in Australia. NFPs that fail to lodge the self-review return by 31 March 2025 may be considered non-compliant with tax laws, potentially leading to penalties or even revocation of their ABN. This could have far-reaching consequences, including loss of charitable status, reduced public trust, and financial repercussions.
Conversely, NFPs that successfully complete the self-review return will gain clarity on their tax-exempt status, enabling them to focus on their core activities without unnecessary administrative burdens. This can lead to increased efficiency, improved governance, and enhanced reputation within the sector.
Relevant Stakeholders
The update primarily affects non-charitable not-for-profit organisations with an active ABN in Australia. However, it also has implications for government agencies responsible for regulating and monitoring NFPs, such as the Australian Taxation Office (ATO) and state/territory revenue authorities.
Additionally, the following stakeholders are indirectly affected:
- NFP employees, volunteers, and supporters who rely on these organisations to deliver essential services
- Donors and grant-makers who provide funding to NFPs
- Government agencies responsible for education, employment, and resource development policies
Next Steps
To comply with this update, NFPs must:
- Lodge the annual NFP self-review return by 31 March 2025.
- Review their governing documents, activities, and distribution of income and assets to determine which exempt category they fall under.
- Select the correct exempt category when lodging the self-review return.
It is essential for NFPs to consult with tax professionals or seek guidance from the ATO if they are unsure about their eligibility or obligations.
Any Other Relevant Information
The update provides an opportunity for NFPs to reassess their main purpose and activities, ensuring alignment with their governing documents. This can lead to improved governance, increased transparency, and enhanced public trust.
Furthermore, the update highlights the importance of self-review and reporting by NFPs, enabling them to demonstrate their compliance with tax laws and maintain their charitable status.
