12 Mar Date for Declaring Basis for Tax Exempt Status to the ATO Looms
Those Australian not-for-profit entities that have been self-assessing their Commonwealth income tax status as exempt need to start declaring the basis of this assessment to the Australian Taxation Office (‘ATO’) in an online form due by 31 March 2025.
Previously not-for-profit entities with an Australian Business Number could assess themselves as not being liable to pay income tax without needing to declare the basis for that assessment to the ATO. However, simply being not-for-profit under your constituting documents does not itself confer tax exempt status. To be exempt from income tax, not-for-profit entities must fall within one of the categories listed in the Income Tax Assessment Act 1997 (Cth).
Not-for-profit entities therefore need to turn their mind to whether they continue to fit within the eight existing self-assessing exempt categories or alternatively, whether they are eligible to apply for charity status with the Australian Charities and Not-for-profits Commission (‘ACNC’).
The eight tax exempt categories are:
• Community service organisations;
• Cultural organisations;
• Educational organisations;
• Health organisations;
• Employment organisations;
• Resource development organisations;
• Scientific organisations; and
• Sporting organisations.
If an entity meets the conditions of one of the eight exempt categories but otherwise is eligible to be a charity, it must make an application to the ACNC in order to be tax exempt.
It is important that not-for-profits that are not currently registered as a charity give close consideration to whether they are eligible under one of the eight categories, or whether they are eligible to be registered as a charity with the ACNC. Failing to meet these requirements could subject the entity to backdated and ongoing liability to pay income tax.
Please contact us if you require assistance with assessing the application of the new declaration requirements to your circumstances, or with the making of an application to the ACNC for charity status.
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