From 1 July 2023, non-charitable Not-For-Profits (NFPs) with an active ABN need to lodge an annual self-review return to confirm their eligibility to self-assess as income tax exempt.
You do not need complete the return if your NFP is one of the following:
- A certain type of Government entity
- Registered with the Australian Charities and Not-For-Profit Commission (ACNC)
- Taxable NFP
- NFP sub-entity for GST purposes
There are three steps to completing the self-review return.
Step 1: Organisation details
This includes the estimated annual gross revenue for the organisation:-
- Small: $0 – $150,000
- Medium: Over $150,000 – $3,000,000
- Large: Over $3,000,000
Step 2: Income tax self-assessment
You must choose from one of the categories listed below that best reflects the main purpose of the organisation. This may require a review of your governing documents, activities, use of funds and history. Any other purpose of the organisation must be incidental, ancillary or secondary to the main purpose.
If you do not fit into one of these categories your organisation does not meet the requirements to self-review as income tax exempt.
- Community service
- Cultural
- Educational
- Employment
- Government and NFP sub-entities
- Health – hospital
- Health – private health insurer
- Resource development
- Scientific – other
- Scientific – research fund
- Sporting
Your governing documents must also have and follow clauses that prohibit the distribution of income or assets to members while it is operating and winding up.
Step 3: Summary and declaration
The summary shows the answers you gave to the questions in Steps 1 and 2. Based on your answers, your taxable status will be either Income Tax Exempt or Taxable.
The first self-review return is due to be lodged during the period 1 July, 2024 to 31 March, 2025. This is regardless of whether your financial reporting period ends on 30 June, 2024. If you operate on an alternative financial year, you can still lodge your self-review return as the information mainly requires consideration of your NFPs activities and its governing documents.
More information can be found at the Australian Taxation Office website – NFP self-review return requirement or please contact the experts at Accru today.
