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The ATO’s new self-review return – Are you a Charity?

NFPs that meet the definition of charity cannot self-assess their entitlement to income tax exemption.

The Australian Taxation Office (ATO) has recently sent notifications to all NFP entities with an active ABN and which are not registered charities regarding lodgement of an annual self-review return.

The first return is for the year ended 30 June 2024 and will be due for lodgement on 31 October 2024.  NFPs that meet the definition of charity should not complete the self-review return, but should register as a charity with the Australian Charities and Not-for-profits Commission (ACNC).

NFP Purpose

The return requires the NFP to select its main purpose.  The available categories are:

  • Community service
  • Cultural
  • Educational
  • Employment
  • Government
  • Health- hospital
  • Health – private health insurer
  • Resource development
  • Scientific – research fund
  • Scientific -other
  • Sporting

Charitable purpose

A charity is a NFP organisation that only has charitable purposes for the public benefit.  A charity cannot self-assess its entitlement to the income tax exemption.  To be income tax exempt, it must be registered with the ACNC.

The difficulty that NFPs will find is that a number of the above categories include purposes that are charitable.  For example, there is substantial overlap between the definition of charity and the categories of community service, cultural, education and science.  It will be reasonably rare that an organisation will be able to self-assess its entitlement to income tax exemption under any of these categories.  They will invariably also fit within the definition of charity and should be registering with the ACNC.

How we can assist

If you are unsure whether your organisation is a charity and should be registered with the ACNC, please contact us.  We can provide a review of your organisation to determine its tax status.  If the organisation is a charity, we can advise on the ACNC requirements for registration and prepare and lodge the ACNC charity application for you.