New income tax reporting requirements for not for profits

New income tax reporting requirements will come into play in 2023 and affect up to 140,000 organisations. Is yours one of them? 

From July next year there will be different income tax rules for not for profits that self-assess income tax exemptions.

Assistant commissioner for the Not For Profit Centre at the Australian Taxation Office (ATO) Jennifer Moltisanti said currently approximately 140,000 organisations do self-assessments, but that these rules will change. 

From July next year not for profits will have to fill out a worksheet to prove income tax exemption status, as not all not for profits are exempt; non-profit clubs, societies and associations will be affected.

The easiest way to avoid the paperwork hurdle, she suggests, is to register as a charity with the Australian Charities and Not for profit Commission (ACNC).

“Our research has indicated that few not for profits are aware of the worksheets or the need to self-assess eligibility. Our research has [also] confirmed that many organisations assume they’re automatically exempt because they are not for profit,” she said.

“While the new reporting requirements come into effect from 1 July 2023, the first lodgments are expected to occur from 1 July 2024. 

“We’re currently developing the administrative infrastructure to make lodgments quick, easy and simple. 

“This will include how the form is designed, collected and used. We anticipate developing new guidance that will provide clear examples of reporting requirements and transitional arrangements that may need to be put in place.”