Is Your Not-for-Profit Ready for the ATO’s New Reporting Rules?

Is Your Not-for-Profit Ready for the ATO’s New Reporting Rules?

Running a not-for-profit (NFP) is about creating meaningful impact. But without the right compliance measures in place, even the most purpose-driven organisations can face unexpected tax consequences. As of the 2023–24 income year, new ATO requirements have introduced a vital annual step for many NFPs: the NFP self-review return. If your organisation is tax exempt and has an ABN, this change affects you.

Let’s break down what you need to know, what to do, and how to stay compliant with confidence.

What Every NFP Needs to Know

The new annual NFP self-review return is mandatory for non-charitable NFPs with an ABN. This return tells the ATO whether your organisation still qualifies to self-assess as income tax exempt.

Here’s what the process involves:

Three Key Sections in the Return

1. Organisation Details
  Basic information about your entity, including structure and registration.
2. Income Tax Self-Assessment
  Confirmation of your eligibility to remain income tax exempt.
3. Summary and Declaration
  Final review and agreement to the accuracy of your submission.

One critical question in the return asks:

“Does the organisation have and follow clauses in its governing documents that prohibit the distribution of income or assets to members while it is operating and winding up?”

Your answer impacts your tax status.

Stay Exempt: Update Your Governing Documents

Your governing documents serve as the foundation of your NFP. To continue self-assessing as tax exempt, they must contain specific clauses:

Required Clauses Include:

- A prohibition on the distribution of income or assets to members during operation and at winding up.
- A requirement that surplus assets are transferred to another NFP with similar objectives upon dissolution.

If these clauses are missing, you still have time.

✅ The ATO is offering a transitional window until 30 June 2025
During this period, your NFP can continue self-assessing as income tax exempt only if no income or assets have been distributed to members. After this deadline, compliance is non-negotiable.

Expert Insight: Governance Is a Strategic Advantage

At Aero Accounting Group, we’ve worked with many not-for-profit organisations navigating regulatory changes. Here’s what we’ve seen make the biggest difference:

1. Annual Reviews Lead to Stronger Governance
  Use your Annual General Meeting (AGM) as a touchpoint to review governing documents. Align them with ATO requirements and ensure they reflect current operations.
2. Proactive Compliance Avoids Risk
  Waiting too long to update governing documents could expose your NFP to tax liabilities. Taking action now means your operations continue uninterrupted.
3. Internal Controls Matter
  Ensure your organisation has clear guidelines to prevent unauthorised distributions to members. Reimbursements and wages are fine, but there must be a strong paper trail.

Keep Your NFP Tax Exempt and Future-Ready

The ATO is tightening its oversight, and the new self-review return is a clear signal. Compliance now goes beyond good practice—it’s essential for staying tax exempt.

If your organisation:

- Has an ABN
- Is non-charitable
- Self-assesses as tax exempt

Then it’s time to:

- Lodge your NFP self-review return annually
- Review and update your governing documents
- Implement internal controls to prevent improper distributions

Partner with Aero Accounting Group

Understanding the fine print of tax exemption requirements is challenging. That’s where we come in. Aero Accounting Group helps not-for-profit organisations stay compliant, strengthen governance, and focus on their mission with confidence.

📞 Book a consultation today to review your governing documents, streamline your compliance processes, and submit your self-review return with assurance.

We’re here to support your organisation every step of the way—because purpose-driven work deserves precise guidance.

Need help?

Not sure if your current accountant is a good long-term fit? Contact us at Aero Accounting Group today and we’ll help you minimise your taxes and maximise your profits