Changes To Australian Tax Laws May Affect your Club and Association This Tax Season

Changes to Australian tax law mean that many clubs and associations may need to start lodging NFP Self-Reviews to maintain their income tax-exempt status.  

According to the announcement from Jennifer Moltisanti, Assistant Commissioner with the ATO, not-for-profits that have a registered Australian Business Number (ABN) and are not a registered charity with the Australian Charities and Not-for-profits Commission (ACNC) will be affected by the change in the law. 

Affected clubs and associations will need to lodge an annual NFP Self-Review in order to prove that they do, in fact, fit into one of the eight income tax-exempt categories. The eight tax-exempt categories are: 

1. Community service organisations
2. Cultural organisations
3. Educational organisations
4. Employment organisations
5. Health organisations
6. Resource development organisations
7. Scientific organisations
8. Sporting organisations
    

For more information on these eight categories, please see Types of income tax exempt organisations. 

So, from tax time 2024-25, not-for-profits may need to lodge an NFP Self-Review to prove they fit into one of the above categories and remain tax-exempt. 

There are four distinct categories of not-for-profits that will be exempt from completing an NFP Self-Reviews. They are as follows: 

• Not-for-profits with a “charitable purpose that are either registered or required to be registered with the ACNC.”
   
• “Certain types of government entities”
   
• Not-for-profits who are already paying income tax
   
• Not-for-profits who do not have an active Australian Business Number (ABN)

The ATO website warns Not-for-Profits not to abandon their ABNs in an attempt to avoid completing NFP Self-Reviews, as there are several important benefits to having an ABN. 

These benefits include but are not limited to registering for other tax obligations such as GST, receiving grant funding and setting up business accounts at banks for your not-for-profit. 

Disclaimer

This is not legal advice; the Member Jungle team and I are not legal or tax experts or professionals. This is just us flagging an upcoming change to the law that will likely affect your club. Please seek legal and financial advice from qualified professionals. 

If you want to know more about how to complete an NFP Self-Review, please see the ATO page How to prepare a NFP self-review return. 

For everything else club and membership management related, stay with Member Jungle.