NFPs May Need To Register For Income Tax Exempt Status

There have been changes to the administration of not-for-profit organisations that self-assess as income tax exempt.

Key changes

  • If your not-for-profit organisation has charitable purposes, it cannot self-assess as income tax exempt.
  • In order for it to be eligible for income tax exemption, it may need to register as a charity with the Australian Charities and Not-for-profits Commission (ACNC) and be endorsed by the Australian Taxation Office (ATO).

Action steps for charitable Not-For-Profits

  1. Check Your Status: Ensure your organization is classified under charitable purposes as defined by the Charities Act.
  2. Register with ACNC: If you haven’t already, apply for charity registration with the ACNC, ensuring your organization meets all eligibility criteria.
  3. Secure ATO Endorsement: Following your ACNC registration, obtain formal income tax exemption endorsement from the ATO.

Eligibility breakdown

To be eligible for charity registration, an organisation must:

  • be not-for-profit
  • have only charitable purposes that are for the public benefit
  • not have any disqualifying purposes (which are engaging in, or promoting activities that are unlawful or contrary to public policy; and promoting or opposing a political party of candidate for political office)
  • not be an individual, a political party or a government entity (for example, government departments, local government authorities and entities that are under government control)
  • comply with the ACNC Governance Standards
  • comply with the ACNC External Conduct Standards (if operating overseas).

Your organisation must also have an Australian Business Number (ABN) with the right ‘entity type’.

Understanding your charitable purpose

The Charities Act specifies 12 charitable purposes. These range from advancing health, education, and religion to promoting environmental conservation. Identifying your organization’s core purpose is essential in aligning with the new regulations.

Why this matters

Ensuring your organization is correctly registered and endorsed is more than just compliance. It’s about securing your right to operate effectively and continue making a meaningful impact without the burden of income tax. These changes aim to bring more clarity and security to the sector, enhancing public trust in our work.

How wwenandco can help

At W Wen & Co, we understand these changes might seem daunting. That’s why we’re here to guide you through every step of the registration and endorsement process. Our expert team can help demystify the requirements and ensure your organization meets all necessary criteria.

Need Assistance? Don’t navigate these changes alone. Contact us at 02 9871 3429, and let’s ensure your organization continues to thrive under the new regulations.

Stay Informed: For more detailed information about these changes and how they may affect your not-for-profit, please visit the Australian Charities and not-for-profits Commission website.

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