Five more sleeps to go. Is it just me or does time fly by way too quickly?
As I put the Christmas tree up this year, I reflected on the journey my tree has had. It started 34 years ago with some tinsel and 2 glittery baubles I made with my and my husband’s names on them. My sister then asked me to make a bauble with her name, and then my brother and my mum asked for their own baubles, and so on … until it became family tradition. Now anyone who celebrates Christmas Eve with us gets a bauble with their name on it to hang on the tree. Nowadays, the tree is full of named baubles from all over the world. Family from Italy, the UK and South Africa are all included on the tree, which is a lovely reminder of connections. We reserve the top of the tree for my beautiful sister who left us way too early. She always burns brightly on the tree and in our hearts. For this reason, someone will always try and sneak their bauble up the tree to be near to her.
My journey in public sector administration has followed a similar trajectory to my tree. It began about the same time; and throughout the years, the people I’ve engaged with have made a lasting connection. It’s these connections that help us bring our best selves to work and contribute to the community.
I’m counting on all my connections to help us in 2024, as it will be a significant year for our sector. The vast majority of not-for-profits will, for the first time ever, be required to lodge an annual return. If you belong to a club, association, or community service organisation, or if you know a not-for-profit, ask them if they’re aware of the new reporting requirements and point them in my direction. Alert them to our NFP newsroom or my LinkedInExternal Link for the latest news.
New reporting requirements for self-assessing income tax exempt NFPs
The guide to completing the new NFP self-review return is now available on the ATO website.
There are 3 steps to take when completing the NFP self-review return:
Step 2: income tax self-assessment
Step 3: summary and declaration
If you’re a not-for-profit that self-assesses as income tax exempt, you can conduct an early review of your eligibility using the newly published guide. It will help you get your answers ready in preparation for lodgment that will begin from July 2024. The page includes the same questions and help text that will appear on the NFP self-review return when it becomes available to lodge in Online Services, from 1 July 2024.
Our focus in 2024 will be to reach as many not-for-profits as we can to ensure they understand the new reporting requirements and are prepared to lodge their first annual return. We’ve already reached out to sporting clubs and community service organisations; 2 of the largest groups affected by the new requirements.
Deductible Gift Recipient (DGR) integrity
As announced last month, we’ve begun our review of the DGR status of the 234 organisations specifically listed in the tax law using regulatory powers provided under Section 353-20 of the Taxation Administration Act 1953. The team is currently profiling the organisations to identify potential areas of risk and to prioritise organisations into 3 groups:
- DGRs not registered with the ACNC
- ACNC registered DGRs where profiling indicates the organisation
- doesn’t receive donations
- has had a change in purpose
- isn’t meeting ACNC reporting obligations.
- ACNC registered DGRs where profiling indicates overall compliance with DGR requirements.
While only a small sample of profiles have been completed, we’ve already identified potential issues including change in purpose and entities no longer operating.
We’ll be writing to specifically listed organisations in the new year. DGRs can prepare for our engagement with a good governance approach. It’s important to review:
- your constitution or governing documents to ensure they reflect the purposes of the organisation, including ensuring all contact details are up to date
- any significant transactions with a tax or superannuation impact and ensure they’ve have been dealt with appropriately
- what controls you’ve put in place to mitigate risks and concerns we’ve communicated to market
- that your financials are being used for your organisation’s principal purposes.
Deductible Gift Recipient administration
As the year comes to an end, we’re ready to administer the 4 unique Deductible Gift Recipient (DGR) categories transferring to the ATO from other government departments. We already administer 48 of the 52 DGR general categories set out in Division 30 of the Income Tax Assessment Act 1997.
The law underpinning the DGR registers reform measure comes into effect from 1 January 2024. This means that from 2 January, the NFP team in Paramatta will assess DGR eligibility for all DGR categories including:
- cultural organisations
- environmental organisations
- harm prevention charities
- developing country relief funds or organisations.
The new law contains transitional provisions to ensure organisations already endorsed as DGRs under one of the 4 unique DGR categories remain endorsed if they continue to meet eligibility criteria.
The transitional provisions also apply to those organisations that have lodged an application with one of the 4 government departments and haven’t been notified of an outcome of their request by 31 December 2023. These applications will transfer to the ATO for finalisation in early 2024.
Our web guidance will help you identify if the transitional provisions apply to your organisation from 1 January 2024.
Office closure over Christmas
Our annual end-of-year closure starts at noon on Friday 22 December and we re-open at 8:00 am local time on Tuesday 2 January 2024. This period is referred to as Shutdown. If a disaster occurs during Shutdown, our Business Continuity Management team will update the Natural disaster support page on our website to ensure guidance material is available for the general community.
DGR applications can’t be processed during Shutdown due to the unavailability of ATO systems. However, once approved they can be backdated if applicable. General guidance can be viewed at Running Australian disaster relief funds and Helping in a disaster on ato.gov.au.
As this is my last blog for the year, I’d like to extend my sincerest best wishes to you and your families for the holiday season. We are a country of great diversity and I know Christmas will be celebrated in many ways. While it’s a time of celebration, this year has also been difficult for many, and we’ve seen an increase in people needing support from not-for-profits. So this year, I encourage you to check in with ‘your’ community and support them where you can.
I’d like to acknowledge and thank my wonderful team, my ATO and ACNC colleagues and the NFP Stewardship Group members for their continued support and contributions throughout the year. A special shout out to all not-for-profit organisations, and all the volunteers who donate their time.
Wishing everyone all the very best for the new year and I look forward to working with you in 2024.
Take care and stay safe
Jennifer