The ATO has updated its guidance to assist not-for-profits (NFP) which aren’t charities with the new requirement to lodge NFP self-review returns.
Non-charitable NFP organisations with an active ABN are required to lodge an annual NFP self-review return to confirm their eligibility to self-assess as income tax exempt.
Normally, NFP self-review returns are due by 31 October each year. However, for the first lodgement year, NFPs have until 31 March 2025 to lodge for the 2023-24 income year.
In the return, the NFP is required to:
- Advise the type of exempt category the NFP is self-assessing against
- Consider the NFP’s purpose and activities against specific eligibility requirements under one of 8 income tax exempt categories
- Estimate the NFP’s gross revenue range as small, medium or large, to indicate the size of the organisation (this is the only financial-related question on the return).
The return includes 3 sections and the ATO indicates that it should only take approximately 10 minutes to complete.
If the outcome is that the NFP is taxable for the 2023-24 income year, the ATO will also provide transitional support such as providing a concessional due date for lodging the tax return, payment plans and remission of general interest charge and penalties.
Arts, music and cultural organisations
The ATO has included website guidance specific to NFPs that are arts, music and cultural organisations that self-assess as income tax exempt.
A cultural organisation can self-assess as exempt from tax if it meets a number of requirements, including that the main purpose for the organisation is either encouragement of art, literature or music, or musical purposes. Any other purpose must be incidental or secondary to this main purpose.
This could include:
- Art, which includes performing arts such as drama and dance, as well as visual arts such as painting, architecture and sculpture;
- Literature, which includes a wide range of written or printed works, such as works in different languages, on particular subjects or by particular authors;
- Music, which includes the performance of vocal or instrumental works, and covers various styles for example classical, jazz and liturgical.
However, if the NFP’s main purpose is to provide a social forum for members or to promote a national cultural heritage, it cannot self-assess as an income tax exempt cultural organisation.
To work out the NFP’s main purpose, you can look at the organisation’s constituent documents, activities, use of funds and history.