NFPs with only charitable purposes that meet the legal definition of a charity must be registered with the Australian Charities and Not-for-profits Commission (ACNC) and be endorsed by the ATO to be income tax exempt.
If your NFP is not a charity, it may be eligible to self-assess its entitlement to income tax exemption. Non-charitable NFPs do not need to be registered with the ACNC or be endorsed by us to be exempt.
There are 8 categories of income tax exempt entities that can self-assess eligibility for income tax exemption, outlined in Division 50 of the Income Tax Assessment Act 1997 (ITAA 1997). NFPs self-assessing eligibility for income tax exemption must meet certain requirements to be exempt.
For many of the exempt entity types, your organisation must be NFP and also meet the following conditions:
- pass one of 3 tests
- comply with all the substantive requirements in its governing rules condition
- apply its income and assets condition solely for the purpose it was established for.
Reporting requirements to self-assess
From 1 July 2023, non-charitable NFPs with an active Australian business number (ABN) self-assessing as income tax exempt need to lodge an annual NFP self-review return.
The first NFP self-review return must be lodged for the 2023–24 income year. NFPs can use the questions in our self-review guide to review the organisation's tax status, and prepare their answers before lodging the NFP-self-review return.
The NFP self-review return can be lodged using ATO online services, see When the first NFP self-review return is due for more information on accessing and lodging the return.
For more information, see Reporting requirements to self-assess income tax exemption.