NFP self-review return and population update
Two annual NFP self-review return (SRR) lodgment cycles have now been completed, and lodgment rates have improved compared to the same time in 2024.
We continue to see shifts in the tax status of the NFP population, including NFPs registering as a charity or lodging income tax returns, as they are not eligible to self-assess as income tax exempt.
Engagement campaigns to prompt lodgment have had immediate responses, with an uplift in lodgments received following the campaigns.
The automated self-serve phone service continues to be a preferred lodgment channel.
Some of the compliance risks identified include:
- entities failing to lodge the return annually
- incorrect tax status, for example NFPs remaining as self-assessing when they are ineligible for income tax exemption
- registration details for Australian business numbers (ABN) that have not been updated and are incorrect, hindering digital onboarding and online lodgment.
Targeted engagement campaigns will continue in 2026.
Public guidance and forward program
Draft Tax Determination TD 2025/D3 Income tax: when does a private or public ancillary fund 'provide' a 'benefit'? was released providing guidance on the meaning of a benefit for ancillary funds. Consultation is open to 30 January 2026.
The ATO view has not changed, and the intention is to provide improved clarity, with additional examples to support ancillary funds with compliance.
A refresh of Taxation Determination TD 93/190 Income tax: what is the scope of the exemption from income tax provided by subparagraph 23(g)(v) of the Income Tax Assessment Act 1936? is underway, with the update aiming to clarify the types of organisations considered to have community service purposes.
Members are invited to provide suggested examples for inclusion in the updated guidance.
The ATO will work with the Australian Charities and Not-for-profits Commission (ACNC) on contemporary examples and alignment to legislative requirements, as community service organisations can also be charitable.
New measures and shaping future NFP tax and super administration
We are in the early stages of working through implementation of government announced reforms to support doubling philanthropy by 2030 which includes the removal of $2 gift deduction threshold, renaming ancillary funds to giving funds, changes to minimum annual distribution rates and introducing smoothing provisions. These measures are not law yet and we will seek sector engagement as these measures progress.
Eligible NFPs have started to be deductible gift recipient (DGR) endorsed under the new community charity category. As the design of the annual return progresses in 2026, the group will be consulted for feedback and insights.
Legislation amended in September 2021 required non-government DGRs to be a registered charity from 14 December 2021. A 3-year transitional arrangement was available to eligible DGRs (in limited circumstances). This 3-year extension expires on 14 December 2025, and DGRs that have not registered as a charity will not be eligible for endorsement and will be revoked.
Insights from stakeholder interviews, desktop research and the July 2025 NFPSG workshop, is being consolidated to shape the NFP tax administration roadmap. We will continue to test and validate identified opportunities with members in 2026.
Cross agency briefing
Treasury
Treasury is working closely with the ACNC and ATO on the community charities DGR category. Treasury is the first stop for community charities, to submit a proposal for listing in a Ministerial Declaration. They then engage with the ACNC for charity registration and ATO for DGR endorsement. All 3 steps are required for DGR endorsement as a community charity.
It was observed that enabling community charities to apply for DGR endorsement via the ACNC registration form, with a link to ATO guidance, was an improvement that streamlined the process with the ATO and a good outcome.
The Treasury Laws Amendment, Strengthening Financial Systems Bill is not yet law and before parliament.
Post meeting update – The Bill passed in late 2025, which included:
- amendments to the ACNC’s secrecy provisions, more information on Protected ACNC informationExternal Link
- changes to ensure that when a director of a company registered with the ACNC notifies the Commissioner of the ACNC that they have ceased to be a responsible entity, that notification will also be taken to have been lodged with Australian Securities and Investments Commission that they have resigned as a director.
ACNC
The ACNC released details about their regulatory focusExternal Link areas for the next 12 months including record-keeping and risks associated with terrorist funding (help charities identify risks and practical mitigation steps).
Updates to the Commissioner's Interpretation Statement, Public Benevolent Institutions have been finalised and published to reflect the decision in Equality Australia Ltd v Commissioner of the Australian Charities and Not-for-profits Commission [2024] FCAFC 115.
Current focus is reviewing and updating the Commissioner's Interpretation Statement: Provision of Housing by CharitiesExternal Link and publishing 3 new de-identified registration decisionsExternal Link.
There are approximately 64,500 charities on the ACNC register, which is an increase from 2024. Charity applications from NFPs previously self-assessing as income tax exempt, make up a large proportion of new applications.
The ACNC is continuing to support newly registered charities with first-time reporting. A recent webinar for this cohort of charities had over 400 attendees.
Round table
NFP self-review return
The ATO noted supporting NFPs with lodgment obligations and improving SRR compliance will remain a key focus area for 2026 and we welcome suggestions from members on how to better support NFPs to meet their reporting obligations and improve the ABN registration process. Consultation with the sector will continue as this work progresses.
Members noted that additional guidance to help taxable NFPs will help support compliance for taxable NFPs.
The ATO advised that approving BAS agents to provide services to support lodgment for the SRR is for the Tax Practitioners Board (TPB) to consider, and discussions with them are continuing.
If the community is concerned about NFPs not operating for purpose they can make a tip-off about community members who gain an unfair advantage by intentionally doing the wrong thing
Public guidance
The ATO has several guidance products listed for a review in the forward work program. Members are encouraged to continue sharing topics that require more clarity or additional guidance.
Members noted the NFP sector has unique challenges, and guidance should be tailored and simple, rather than overly complex. Tools and worksheets that support users to work through calculations and outcomes are particularly useful.
The ATO discussed the issues faced when considering which languages to prioritise. The increasing prevalence of AI translation tools requires a careful balance between producing translations and understanding taxpayer use of auto translation tools.
While not specific to the NFP sector, the ATO is piloting additional support for Culturally and Linguistically Diverse taxpayers in small business, and a similar approach is also offered to Aboriginal and Torres Strait Islander communities through the Reach Out program.
Useful links include:
- Information in your language
- Contact us Translating and Interpreting Service.
NFPSG effectiveness
A member commented that in his experience, and as a member of a few different groups over many years, the NFPSG is the most effective and outcomes focused group he has been part of.
Compliance landscape
The ATO shared insights from the 2025 GST NFP Risk Assessment, including:
- identified key risk areas impacting the NFP sector
- treatment strategies to address GST compliance and improve sector understanding.
The current compliance landscape for NFPs was discussed, including key priorities and focus areas under the 2026 Compliance Program:
- Key and emerging risks impacting the sector include, not operating for purpose – NFPs not operating for purpose means they are not meeting the legislative requirements to maintain their NFP status, including access to income tax exemption and other concessions.
- Not meeting obligations – while most NFPs are income tax exempt they must comply with all tax and employer obligations, including annual lodgments.
- Fraud and evasion – NFP income tax exempt vehicles are attractive to fraudsters who deliberately establish their own NFPs, or misuse vulnerable NFPs, to gain a tax advantage or financial benefit. The benefit can be to the broader group, an individual in the NFP or related parties.
Payday Super
From 1 July 2026 an employer must pay an employees’ super guarantee (SG) on payday.
SG payments must be paid to an employees’ super fund at the same time as paying qualifying earnings (QE), on payday, and received by the super fund within 7 business days.
Employers need to report both qualifying earnings and super liability through Single Touch Payroll.
The payment deadline is extended for the first eligible SG contribution you are making:
- for a new employee
- to a new complying super fund for an existing employee, after you have stopped making contributions to another super fund.
In these situations, the contribution must be received by the super fund within 20 business days after the relevant QE day. A QE day is the day you pay your SG employees, that is, payday.
Small Business Superannuation Clearing House will no longer be available to existing users, from 1 July 2026.
For more information visit About Payday Super.
Attendees
|
Organisation |
Attendee |
|---|---|
|
ATO |
Rowan Fox (Co-chair), Small Business |
|
ATO |
Tom Wheeler, Small Business |
|
Arnold Bloch Leibler |
Jessica Wills |
|
Australian Charities and Not-for-profits Commission |
Cate Bennett |
|
Charitas Law |
Jae Yang |
|
Charities and Not-for-profits Committee, Law Council of Australia |
Seak-King Huang |
|
Giuntabell |
Nunzio Giunta |
|
HWL Ebsworth |
Timothy Stokes (Co-chair) |
|
Institute of Certified Bookkeepers |
Rob Marshall |
|
Justice Connect |
Geraldine Menere |
|
KPMG |
Kaylene Hubbard |
|
Not for Profit Accounting Specialists |
Ellie Patterson |
|
Philanthropy Australia |
Krystian Seibert |
|
Queensland Muslims Inc |
Habib Jamal |
|
Saward Dawson |
Cathy Braun |
|
SW Accountants and Advisors |
Stephen O’Flynn |
|
The Salvation Army Australia |
John McIntosh |
|
The Tax Institute |
Morag Ingham |
|
Treasury |
Peter Robjent |
|
University of South Australia |
Kristian Thoroughgood |
|
World Vision Australia |
Ben Scuteri |
Guests
|
Organisation |
Attendee |
|---|---|
|
ATO |
Dora Jain, Small Business |
|
ATO |
Fran Gobel, Small Business |
|
ATO |
Gary Issar, Small Business |
|
ATO |
Glenn Cooper, Private Wealth |
|
ATO |
Marisa Hewitt, Small Business |
|
ATO |
Matthew Faltas, Small Business |
|
ATO |
Richard Robinson, Small Business |
|
ATO |
Sourina Simmalavong, Small Business |
|
ATO |
Usha Narain, Superannuation and Employer Obligations |
Apologies
|
Organisation |
Member |
|---|---|
|
Clubs Australia |
Simon Sawday |