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  • Straight from the Source - June 2023

    This year’s theme for National Reconciliation Week is 'Be a Voice for Generations'. It honours the work of previous generations who fought for justice in Australia and calls on us to work together to continue the reconciliation journey.

    I was recently appointed as an ATO Diversity Champion for Aboriginal and Torres Strait Islander people. This means I will add my voice to further drive inclusion in the ATO. How we use our voice is so important.

    I’m often told I’m too loud, too strong-minded, too Jennifer! As a first generation Australian, I was excluded and made to feel inferior. I fought to be heard. Many discussions can be messy, wicked even; but they must be had.

    Joining the public service was an intentional choice and I have lent my voice to various organisations and causes. None more important than for reconciliation and not-for-profit endeavours.

    A case for change in the NFP sector

    From the 2023–24 income year, non-charitable NFPs that self-assess as income tax exempt are required to lodge an annual return with the ATO. This is the most significant change to the sector since the introduction of the Australian Charities and not-for-profits Commission (ACNC) in 2012.

    About 70% of not-for-profits with an active ABN self-assess income tax exemption. While most get it right, we know that some organisations inaccurately self-assess income tax exemption for a range of reasons. This can be due to common misunderstandings such as:

    • believing exemption is automatic for entities that operate on a not-for-profit basis
    • not being aware of the existing need to self-assess income tax exemption, or that their purposes and activities must align to the requirements
    • never formally self-reviewing eligibility to income tax exemption, or not regularly reviewing this status.

    The community expects the ATO to be sure that not-for-profits correctly access income tax concessions. Regular reporting will provide reliable data and confidence that only those entitled to tax exemptions and concessions are accessing them. The new reporting obligations have been introduced to:

    • improve visibility of the sector
    • maintain system integrity, and
    • support a level playing field.

    How self-review will work at a glance

    Our focus is on making the self-review return simple, quick and automated, using existing online and secure platforms.

    We expect the self-review return will have about 10–15 questions which will be primarily yes-no style questions with linked information available.

    The first return will be due between 1 July 2024 and 31 October 2024.

    While the lodgment of the return will fall within Tax Time, it’s not an income tax return.

    Completing the return will result in one of three likely outcomes:

    1. You self-assess as eligible for income tax exemption, as your purposes fit within one of the eight types of entities in Division 50 of the Income Tax Assessment Act 1997 (ITAA 1997) and you meet all requirements. You will need to complete a self-review each year to self-assess your entitlement to income tax exemption.
    2. You find you are a taxable not-for profit as you do not meet the requirements of one of the eight types of entities, nor are you charitable. Each year you will need to work out your taxable income. If your taxable income is $416 or less you do not need to lodge a tax return and can notify us of a return not necessary. If your taxable income is greater than $416 you will need to lodge a tax return.
    3. You may discover you are a charity and will need to consider registration with the ACNC before you can apply to the ATO for endorsement as an income tax exempt charity. If registered as a charity you will need to meet ongoing obligations with the ACNC including lodgment of an annual information statement and complying with governance standards. If you decide not to register as a charity, you are a taxable not-for-profit.

    Consultation and design

    We’re taking a user-centred approach in designing and implementing the new reporting requirement, it is an active consultation matter on

    Ongoing consultation and user testing includes not-for-profits, tax professionals, legal advisors and peak representative bodies. The NFP Stewardship Group is our key consultative forum, and we are also speaking with a healthy not-for-profit network.

    The draft questions for the return are currently being user tested. We're working toward having the questions published on our website in October 2023.

    The annual return goes live in July 2024 and publishing the questions in advance means that organisations have time to review their status, adjust their governance and make important decisions.

    This also means that not-for-profits who are currently categorised as self-assessing income tax exempt will have almost 12 months to implement any necessary changes before the first return is due on 31 October 2024.

    Public Advice and Guidance

    As I've said many times, we’ll support the sector in meeting these new reporting obligations. Our public advice and guidance will be tailored through easy-to-understand refreshed web content, fact sheets and frequently asked questions.

    We have commenced peak representative body presentations and are planning town hall events, live and recorded webinars and podcasts as well as ‘How to’ information and demonstration videos.

    On 21 June 2023, we’ll be at the Tax Institute’s Not-for-profit Tax Intensive to talk about the new reporting requirements.

    We’ll preview the types of questions to expect on the new return, when these changes come into effect and transitional arrangements to support the sector.

    Preparing for the change

    We’re encouraging early adoption of the system and invite you to update your contact details and review your entitlement.

    There are 4 easy steps you can take:

    1. Update your contact details with the ATO. It’s also an ABN registration requirement to keep your contact details up to date. We use these details to send important information about your tax and super obligations.
    2. Complete our worksheets to review your eligibility for an income tax exemption. You can access our worksheets at Self-assessment.
    3. Find out about income tax exemption and taxable not-for profits by visiting Does my not-for-profit need to pay income tax.
    4. Stay informed by subscribing to our monthly newsletter at

    Change by its very nature requires that we do things differently. Change can also increase fear of the unknown.

    If you’re concerned about your status as a not-for profit given the new reporting obligations, contact us early and make yourself be heard.

    My supportive team can point you in the right direction and help you address your concerns. You can contact the team on 1300 130 248 (8.00 am to 6.00 pm Monday to Friday).

    Not-for-profits represent an incredibly diverse spectrum of cultures, purposes and people – all with distinct voices. A special shout out to our Indigenous not-for-profits as I really want to hear how we can support you.

    This year’s theme for National Reconciliation Week is so important. It’s an opportunity to be a voice for generations, work together and continue the reconciliation journey.

    Take care and stay safe


    Last modified: 05 Jun 2023QC 72759