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Not-for-profit Stewardship Group key messages 31 March 2022

Information about the key topics discussed at the Not-for-profit Stewardship Group meeting 31 March 2022.

Last updated 7 August 2022

Membership refresh

The Not-for-profit Stewardship Group (NFPSG) refresh has been completed with increased representation across the Not-for-profit (NFP) sector with:

  • the appointment of a new Co-chair, Krystian Seibert Industry Fellow, Centre for Social Impact, Swinburne University of Technology
  • 11 members re-appointed
  • 7 new members appointed
  • 5 existing members farewelled
  • Indigenous and Torres Strait Special Advisor role to be filled on a rotational basis by invitation.

Jennifer Moltisanti will meet with new members individually to introduce them to the NFPSG Charter and their role in the Stewardship Group.

NFP centre focus for 2022

Technical update

The ATO will review TR 2013/2 Income tax: school or college building funds in line with the Buddhist Society of Western Australia Inc v Commissioner of Taxation (No 2) decision.

  • A Decision Impact Statement and changes to TR 2013/2 will reflect the broad interpretation of the meaning of school.
  • School building fund applications that were unsuccessful will be reviewed to ensure the interpretation of the meaning of school is correctly applied.

Taxation Ruling TR 97/22 Income tax: exempt sporting clubs was withdrawn in October 2021 and replaced with Draft Taxation Ruling TR 2021/D6 Income Tax: games and sports exemption.

  • We received feedback on TR 2021/D6 until November 2021 when comments closed.
  • Feedback focussed on how the principles from TR 97/22 are applied to factual scenarios – principles remained largely unchanged.

New measures update

From 1 July 2023 NFPs with an active Australian business number (ABN) will need to lodge an annual self-review return to maintain eligibility to self-assess income tax exemption. The first self-review return period will be the 2023–24 income tax year.

The self-review return will be different to an income tax return. It will be based on the current self-review worksheet, which guides an NFP to consider eligibility criteria that needs to be met to self-assess as income tax exempt under existing tax law.

Between now and 2024 we will work closely with the sector to understand key issues and particular support needs of NFPs. This is to ensure these elements are considered and incorporated into the initial design of the self-review form and system. We want to ensure that the form is as simple, easy and quick to complete as possible.

We opened our consultation with NFPs, peak associations and intermediaries in March 2022, to hear about their experiences around self-assessing eligibility for income tax exemption.

We want to hear from NFPs operating across all eight self-assessment categories. Given the current nominations, we are particularly interested in additional participants who are involved in health, culture and resource development.

We encourage members to nominate their interest and suggest other NFPs and intermediaries to participate, by emailing contact details to link opens in a new window by 14 April 2022.

Thank you to all members who have already nominated to be a part of these discussions.

Treasury opened public consultation on the proposed new deductible gift recipient (DGR) general category for pastoral care services. This measure was announced in the 2021–22 mid-year economic and fiscal outlook. The ATO’s NFP centre is working with Treasury around administrative impacts and will participate in the consultation.

New community sheds DGR category

The community sheds DGR category became available from 1 October 2020.

We have seen an increase in number of applications received from NFPs that do not meet the definition of a community shed. The ATO will be developing additional guidance and support for applicants to mitigate this risk.

Data and analytics roadmap

The roadmap is a three-tier risk model developed by the NFP centre that:

  • features risk rules and models to identify populations with higher risk
  • ensures investment and resources are proportionate to risks
  • is looking to automate processes such as franking credit refunds and reduce manual processing which is resource intensive.

Risk rules and models for ancillary funds and annual minimum distributions are being tested to ensure accuracy.

For new measure risk rules, the ATO is looking at specific areas of risk to determine areas of focus.

Assurance program

The assurance program addresses risk and ensures NFPs have good governance in place. The ATO is developing:

  • self-review guidelines for NFPs and products for staff to undertake self-assessment reviews
  • standards to align NFP reporting with the reporting for other entity types
  • guidelines that improve the client experience, for example assisting organisations to determine if they meet the requirements of a new DGR category, before they invest the time to apply.

Refund of franking credits for not-for-profits

The project will deliver an improved pathway for how NFPs submit a refund of franking credit application with the ATO, and how these claims are then processed. It will also provide an assurance that entities claiming a refund of franking credit are entitled to claim them and that they are claiming the correct amount.

Member comments

Members noted several issues around the changes to self-assessment of income tax exemption including:

  • Small NFPs are concerned about ramifications and being penalised for a potential mistake in making a self-assessment for prior years. The sector is nervous that a retrospective compliance approach will be taken.
  • Some peak associations and NFPs across the sector are known to be writing to Government ministers to note their concerns.
  • A significant engagement with NFPs in the sector is needed to address concern and fears and raise awareness of the new obligation to report.
  • The ATO needs to work closely and consult the sector on the design of the system.
  • Querying if the requirement for a small NFP to submit tax information, when they may not even have an ABN, will in-fact achieve the intended outcome of enhancing trust and confidence.

The ATO noted:

  • We are analysing the characteristics of the population to develop a tailored support and engagement strategy.
  • We understand that NFPs may have made an initial self-assessment many years ago. However, as circumstances and activities of the not-for-profit may change over time, this initial assessment should not be relied upon indefinitely. Eligibility to self-assess income tax exemption should be reviewed by an NFP on an annual basis.
  • The self-review return will only be required to be submitted by NFPs that have an ABN. It is not the same as an income tax return and will be based on existing guidance that NFPs currently use to self-assess their eligibility for income tax exemption.
  • We want to engage and work with the sector to identify concerns and how these may be addressed. Our initial consultation opened in March, to hear about the key issues needing to be considered in the design of the self-review system. We will establish a working group that enables us to refine our approach together and develop practical guidance to support not-for-profits.
  • The intention is to work with the sector to make the reporting requirement as seamless as possible, and where possible leverage technologies such as pre-fill that make it quicker and more automated for not-for-profits to complete.

Director ID

On 31 March 2022 the director ID online application process went live with phone and paper applications available for those unable to apply online.

Directors that are appointed:

  • on or before 31 October 2021, must apply by 30 November 2022
  • from 1 November 2021 to 4 April 2022, must apply within 28 days of their appointment
  • on or after 5 April 2022, must have a director ID before they are appointed as a Director.

Since November 2021, 386,000 director IDs have been issued.


We need to reach 2.7 million existing directors and the 300,000 new directors appointed annually.

There are some challenges noting that:

  • directors who have a different professional name should apply using their legal name, exactly as it appears in documentation
  • a director ID is not searchable, so no personal data is publicly visible
  • a director can still be appointed via Australian Securities and Investments Commission (ASIC) and apply by paper or phone for a director ID
  • we are looking into how it can be made easier to verify an identity where a person has different names.

Member comments

Members noted:

  • Directors are appointed at Annual General Meetings (AGM), and often will not be registered with a director ID at the time they are appointed. There is concern that, even if they have applied for a director ID extension, they will have committed a criminal offence and places them in breach of the law at the conclusion of the meeting. More guidance is required.
  • The need to consider how the director ID interacts with Australian Charities and Not-for-profits Commission (ACNC) registration, as responsible persons are updated via ACNC and not ASIC.

The ATO noted:

  • The intent of the director ID is for a more transparent system especially in relation to phoenixing activities.
  • Further consideration will be given to the situation where a director is appointed at an AGM but does not have a director ID. We will work with members to look at examples and develop administrative guidance.
  • Guidance will be available shortly to outline the approach for spontaneous nominations, including an assurance there is no adverse consequences for not having a director ID before being appointed.
  • The ATO will work with the ACNC to consider the interrelation of the director ID with ACNC responsible person updates.

Treasury update

There are two public consultations currently open:

Treasury noted that consultations will likely be impacted by caretaker conventions.

Member comments

Community foundations have been working with the government to progress the specific listing of up to 28 entities, who are affiliated with the peak body Community Foundations Australia. The specific listing was announced at the 2022–23 Budget, with effect from 1 July 2022 to 30 June 2027. Treasury’s role in progressing the reform was acknowledged.

Australian Charities and Not-for-profits Commission

The enhanced Charity RegisterExternal Link was launched on 1 March 2022. Since the launch, searches of the Charity Register have increased.

From 1 July 2022, registered large charities will need to report the aggregate amount of key management personnel remunerationExternal Link in the Annual Information Statement and financial report where:

  • they have more than one remunerated key management person
  • services are provided by a separate management entity.

Reporting on related party transactions will commence on 1 July 2023. The related party disclosures measure is intended to align registered charities to the Australian Accounting Standard AASB 124 Related Party DisclosuresThis link will download a file under section 334 of the Corporations Act 2001. The ACNC is seeking feedback from the sector on guidance to support implementation of the measure.

Member comments

There is concern regarding the implementation of reporting requirements for key personnel remuneration and related party transactions – in particular the disclosure risk for individual management payments.

Existing guidance for key personnel is too general and the sector needs more specific examples to make obligations clear.

Most charities outsource accounting and management functions.

Round table discussion

Members were invited to share areas of focus and emerging issues facing the NFP sector.

Regulatory environment

The recently released Global Philanthropy Environment Index: Global Philanthropy IndicesExternal Link provides a comprehensive analysis of the macro environment. The report indicates Australia is tracking well with a good framework in place and collaboration between government and stakeholders.

Australia’s system is operating well at a macro level, but there are issues that need to be addressed at a micro level including:

  • The number of announced reforms that are yet to be enacted are accumulating.
  • There are limited resources to direct to these reforms – including new taxation arrangements and ACNC Review 2018 measures. With so much happening across the sector, the approach for how these new measures will be implemented is key.
  • Systemic issues should be considered, this could include the nature and effectiveness of the DGR framework.

The Tax Institute noted that a recent focus has been on state-based issues including the need for increased harmonisation between states, ACNC and ATO around the definition of a charity. The draft Victoria ruling on land tax highlighted inconsistent definitions and approaches by each State Revenue Office and the need to standardise regulations for NFPs.

Philanthropy Australia is providing papers and advice to State Revenue Officers, Treasury and Prime Minister and Cabinet around strategies and planning for philanthropy.

  • Advocating for a national strategy for philanthropy, aimed at doubling giving in Australia which can change the lives of millions of people. This could have impacts for the administration of tax concessions, super and workplace giving programs.
  • The Australian top 250 people rich list represents $550 billion in wealth and drawing on this rising wealth is especially important given current economic challenges.

HWL Ebsworth are contributing to a proposal to Government on tax reforms for NFPs. This includes how shares may be donated to DGRs.

The response to the situation in Ukraine has shown DGR general categories needs review. For example, Department of Foreign Affairs and Trade announced four eastern European countries as developing for the purposes of the Overseas Aid Deductible Gift Scheme. This seemingly by-passed the use of the Developed Country Funds category.

Banks and financial institutions continue to insist on verifying Directors from the ASIC register and not the ACNC Charity Register, for registered charities that are structured as companies.

Community Council for Australia, an independent member-based organisation dedicated to NFPs, noted several issues discussed at their forums including:

  • uncertainty around government funding and difficulty in planning for ongoing commitments
  • the punitive approach of Fair Work Australia in enforcing awards with the Fair Work Ombudsman naming and shaming charities that seek advice on applying awards
  • the industry or occupation awards system is convoluted and complex – a receptionist for a small NFP is paid under the vehicle assembler’s award due to the nature of the industry the NFP operates under
  • disappointment with budget tax incentives of a 20% offset for training expenses for business but not for NFPs which ignores 20% of the workforce
  • the election presents a challenge for the sector around the role of NFPs. Would be great to see more messaging for the sector, about what needs to be considered during elections given the ACNC guidelines.

Engaging and consulting the sector

Engagement forums, such as the stewardship group, are important for the future health of the system. The role of the ATO and ACNC in working with the sector is critical. Many other jurisdictions struggle with these types of forums.

Members noted the refreshed stewardship group will be well placed to develop brave new ideas and pitch system changes for the future, such as commercial incorporation for NFPs. Key issues include:

  • the need for harmonisation
  • establishing a single source for fundraising requirements
  • more effective first contact with the ATO
  • the need for more communication to allay fears and concerns
  • consideration of an NFP amnesty to clear up issues and reduce angst for existing NFPs.

After the recent Federal Court decision Buddhist Society of Western Australia Inc v Commissioner of Taxation (No 2) around school building funds, members noted:

  • interest in consulting on a re-draft of TR 2013/2 Income tax: school or college building funds
  • the ATO needs to clarify arrangements for recently disallowed school building funds and advise the sector if these decisions will be reviewed.

Australian Federation of Disability Organisations has a reach of 4–5 million individuals and appreciates the ATO NFP team’s circulation of key updates and practical examples that make it easier to share relevant tax and super information with this network.

Current sentiment across the sector can be distilled into one word, fatigue. This is not just because of COVID-19 impacts, but also requirements generated out of the Aged Care Royal Commission, ACNC governance standard changes, tax and DGR measures, and National Disability Insurance Scheme quality standards. Government bodies need to be mindful when consulting to ensure the process is necessary, meaningful and that language is considered and clear.

HWL Ebsworth noted they worked closely with the ATO NFP Team, who were extremely helpful to address NFP legal matters, during the implementation of JobKeeper economic stimulus measures.

New measures

Legal firms and peak associations are working to identify clients impacted by the self-assessed exemption measure, to:

  • raise awareness and participation in ATO consultation
  • look at whether they can continue to self-assess as income tax exempt
  • determine understanding and sentiments of the sector
  • ascertain areas that need additional explanation and guidance, for example, web-content for Community Service Organisation category requires clarification around interrelation with case law.

ATO will need to undertake significant engagement and communication with the sector to implement the self-assessed income tax exemption measure. The more communication the better. A focus needs to be on allaying fear of those coming into the system for the first time, as many will not be used to interacting with the ATO on a regular basis.

Racing South Australia is a large sporting association and member organisations will be affected by self-assessing income tax exemption measure.

Mental health continues to be a significant issue for the sector noting:

  • additional funding has been granted to enable more intensive support for community sheds who advance mental health and relieve social isolation
  • the newly announced general DGR category for pastoral care will be important for post pandemic pressures in coming years. This information has been shared with schools and it is expected that they will engage the ATO directly about implementation and endorsement.

Emerging risks, issues and trends

There are instances of non-compliance being observed after moves of financial professionals into the NFP sector. Many moving into the sector lack appropriate level of expertise in fringe benefits tax (FBT) and salary packaging requirements and are not getting the fundamentals right. This will have ramifications over the next 12–19 months, and is an area requiring more education and support to ensure compliance.

The sector needs more certainty about how to apply FBT for initiatives that are aimed at engaging staff who work remotely and helping them to connect with each other. This often involves third parties, that is, gym access, catering, yoga classes. There is uncertainty about how to structure these, for example as salary or as a fringe benefit, and is a significant issue particularly for bigger charities.

Employee complaints of unpaid super have triggered an increase in ATO Super Guarantee Charge Reviews across the sector, from small to very large NFPs.

The Australian Institute of Company Directors’ Not-for-profit Governance and Performance Study 2021 PDF 746KBExternal Link found mergers are at the lowest level since the study started.

  • The focus has been on making it through COVID-19, rather than thinking about longer term issues such as wind-up responsibilities. However, this trend appears to be changing.
  • Justice Connect are seeing an increase in queries around NFP mergers and wind-ups, including establishing Memorandums of Understanding for working with other organisations.

The director community is looking at how to embed an appropriate level of support and care for vulnerable people, because of the Royal Commission into Aged Care Quality and Safety.

NSW clubs have made significant donations to support flood zone relief, with many clubs in these affected areas out of operation.

Many disabled Australians aged 16 to 65 years old want to work and despite government efforts the rate of employment for the disabled has not changed in the past 30 years. A common reason is concern about attendance, but research indicates disabled people have better attendance than able bodied workers. More funds and training programs are needed to increase employer awareness on employing disabled workers.

High net worth individuals want to donate significant amounts of money for multiple projects, but stoppers include:

  • no single DGR category for their projects
  • a need to establish multiple DGR entities
  • applying through specific listing in tax law which is a time-consuming process – an opportunity may be to consider an introduction of a new DGR category which aggregates several existing DGR categories for large donations.

Australian Council for International Development noted:

  • There is an overwhelming amount of work involved in the NFP sector – who are trying to hold the line to get across increasing detail versus proactively advocating to government
  • Covid has affected international programs with an impact on donations
  • Approximately 30 members are currently focused on responding to the situation in Ukraine – the government has provided some targeted help and have matched funding
  • 15 member NFPs in the emergency action alliance launched collaborative fundraising.

Chartered Accountants Australia and New Zealand (CAANZ) noted:

  • its members contribute on average 2–3 hours a week of unpaid to do NFP related work
  • members are passionate about working with charities and contributing to their communities but are sensitive to minor changes that adds to administration burden
  • many NFPs are affected by the floods and need support.

The ATO noted:

  • The level of fatigue experienced in the sector is front of mind for our own staff. We want to strike the right balance and provide support for our teams and the sector where possible.
  • NFP wind-up issues are in focus and will be discussed further with members.
  • NFPs who are experiencing economic impacts should reach out to the ATO for assistance.
  • ATO consultations have clear intent with consideration given to ask only purposeful questions of participants.
  • The April NFPS Newsroom edition of Straight from the source will address issues raised by the NFPSG members, including the self-assessment exemption.

Retaining the workforce

COVID-19 has had very different impacts and outcomes across the range of NFP organisations.

Attracting and sustaining appropriate staffing levels remains the biggest ongoing issue for sporting, hospitality and local labour workforces.

With the large personnel turnover due to COVID-19 the key challenges include:

  • difficulty generating interest in hospitality due to COVID-19 lockdown impacts
  • existing staff needing to self-isolate
  • limited migrants and a lack of skilled workers
  • disadvantaged individuals with limited knowledge for how to apply for available jobs – there are over 1000 jobs advertised across the sector that cannot be filled
  • integrating new workers that are not based ‘on the ground’ in the charity environment and are working from home.

The main issues NFPs are currently seeking support with include worker burnout across the sector and dealing with COVID-19 requirements (extra cleaning, replacing and training new employees and returning to the office testing requirements).


The Salvation Army’s target of raising $10 million for flood affected victims has been exceeded and will continue to grow. The Salvation Army works closely with people who have been directly affected by these events and provides support directly where it is needed.

Justice Connect provides free information and training for NFP sector with 350 resources on the available through their website. This includes a DGR self-assessment application and governance health check.


Attendees list




Louise Clarke (Co-chair), Private Wealth


Jennifer Moltisanti, Private Wealth

Arnold Bloch Leibler

Joey Borensztajn

Australian Charities and Not-for-profits Commission

Anna Longley

Australian Council for International Development

Jocelyn Condon

Australian Federation of Disability Organisations

Ross Joyce

Australian Institute of Company Directors

Phil Butler

Centre for Social Impact, Swinburne University of Technology

Krystian Seibert (Co-chair)

Charities and Not-for-profits Committee, Law Council of Australia

Seak-King Huang

Charity Law Association of Australia and New Zealand

Jennifer Batrouney

Chartered Accountants Australia and New Zealand

Susan Franks

Clubs Australia

Simon Sawday

Community Council for Australia

David Crosbie

CPA Australia

Ram Subramanian


Nunzio Giunta

HWL Ebsworth

Timothy Stokes

Joe Zabar Consulting

Joe Zabar

Judy Sullivan Consulting

Judy Sullivan

Justice Connect

Sue Woodward

Prolegis Lawyers

Anne Robinson

Prolegis Lawyers

Jae Yang

The Salvation Army Australia

John McIntosh

The Tax Institute

Simon Bowden


Karen Dunn

University of NSW Business School

Fiona Martin

Guest attendees

Guest list




Claudio Borrillo, Private Wealth


Frances Gobel, Private Wealth


Gary Issar, Private Wealth


John Churchill, Tax Counsel Network


Joy Tillman, Private Wealth


Len Hertzman, Tax Counsel Network


Marisa Hewitt, Private Wealth


Martin Jacobs, Australian Business Registry Services


Nella Di Bendedetto, Private Wealth


Reveka Kotsiaris, Enterprise Strategy and Design


Sheridan Harvey, Policy, Analysis and Legislation


Tammy Gardner, Australian Business Registry Services


Apologies list



The Tax Institute

Bridgid Cowling


Jacky Rowbotham

Worlds Vision Australia

Ben Scuteri