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  • Straight from the source – June 2021

    The end of the financial year is upon us. For many it is a time to balance the books, for others it is a time to review and reset.

    As I pen this blog on the evening of 1 June, I am mindful that winter is upon us (at least in the Southern Hemisphere) and it is my son’s birthday.

    Last year, my son turned nineteen. We were in the height of the pandemic and family gatherings restricted to twenty. One year later, we are in our fourth lockdown in Victoria and family gatherings restricted to zero. I mention this without judgment, and merely as a fact to share my current context; a context within which governments, individuals, businesses and not-for-profits are all navigating as best we can.

    Throughout this financial year, not-for-profits have continued to check in with us, many to validate stimulus support or to confirm tax concessions and endorsement eligibility. Through the thousands of enquiries we facilitate, there is a key sentiment that is continually reinforced – the significant role not-for-profits play in the community.

    Last night I was speaking to my girlfriend who works in a public primary school in Victoria to see how she was going. She mentioned that some families are doing it really tough, especially where the parents have been stood down from their jobs. She also mentioned that the support the school families receive from not-for-profits by way of financial assistance and food parcels was very welcome, timely and humbling. This is especially the case for families who wouldn’t normally need this assistance and find themselves in a vulnerable position.

    In recognition of the important role they have in our community, not-for-profits can access significant concessions. For this reason, a high level of confidence in the integrity of the system is critical. As part of good governance practices, not-for-profits are required to self-review their entitlement to income tax exemptions on an annual basis.

    As part of the 2021–22 Budget, the government announced reform to the administration of not-for-profit entities that self-assess their eligibility for an income tax exemption. The measure is designed to ensure only eligible not-for-profits access an income tax exemption, that not-for-profit and for-profit entities operate on a level playing field and trust and confidence in the sector is enhanced.

    From 1 July 2023, NFPs with an active ABN will be required to lodge an annual self-review return in order to access an income tax exemption. They will submit information ordinarily used to self-assess their eligibility with the ATO. In subsequent years, not-for-profits will confirm or amend information provided to them on a pre-filled self-review return.

    The shift to assurance has been welcomed by the sector and we look forward to working with not-for-profits to help make it easy to meet their tax and super obligations. One of my colleagues, Frank Hinoporos from Hall and Wilcox, commented that “The best governed not-for-profit organisations are constantly testing and challenging their self-assessed tax exemption”. Frank added that “It has always been the case that an organisation's eligibility to rely on a self-assessed basis for income tax exemption, must be evaluated by its board annually”, and that “…reporting can foster better governance practices.”

    We are committed to working collaboratively with industry representatives and stakeholders to co-design and give life to this important change that will increase trust and confidence in the sector.

    Over the last few weeks, you may have seen our advertising campaign promoting an increased awareness of the tools, services and support the ATO offers to assist not-for-profits review their organisation and get help with their obligations. It drives traffic to our Getting help page – ato.gov.au/NFPhelp

    I encourage you to take a look and share with your networks.

    On a final note, and before I light the candles on my son’s birthday cake, I hope that the circuit breaker lockdown in Victoria is lifted as soon as practicable and that we build a sustainable future.

    I also hope that as the financial year draws to an end, not-for-profits take the opportunity to review their purpose and their entitlement to endorsement and concessions.

    We remain ready to support not-for-profits in doing what they do best – supporting the community.

    Find out more

    • See what tools we have to help your not-for-profit at Getting help.
    • Access online services for business and find out more at ato.gov.au/osb.
    • We’re here to help. Check out our essentials if you need assistance this tax time.
    Last modified: 03 Jun 2021QC 65808