NFPs, Take Note: ATO Reporting Is Now Mandatory

If you're on the board of a community club, part of a volunteer-run group, or helping manage a not-for-profit (NFP) organisation, there are some important new ATO rules you need to know about. While many NFPs have traditionally enjoyed income tax exemptions, the way you maintain that status has now changed. From the 2023–24 financial year, non-charitable NFPs with an active ABN need to lodge an annual self-review return with the ATO to continue self-assessing as income tax exempt.

Yep, it’s now a yearly thing. And if you’re not across the new obligations... your NFP could end up needing to lodge a full tax return. Let’s break it down in plain English so you can stay on the ATO’s good side and keep your organisation focused on what really matters—your mission.

What's Changed?

Until now, non-charitable not-for-profits could self-assess as income tax exempt without telling the ATO. That meant if you met the criteria, you simply operated tax-free, no reporting required.

But starting from the 2023–24 income year, the ATO wants to see some documentation.

If your NFP is not a registered charity (registered with the Australian Charities and Not-for-profits Commission), and you self-assess as income tax exempt, you’re now required to complete and lodge an NFP self-review return annually through ATO Online Services.

This new return tells the ATO whether your organisation is eligible to keep its tax-free status. And yes, it’s mandatory.

Who Needs to Lodge?

This applies to:

• Non-charitable NFPs (such as sporting clubs, social groups, professional associations, and other community-based organisations)
• With an active ABN
• That want to self-assess as income tax exempt

If your NFP doesn’t lodge the return, it may be treated as a taxable entity... and that could mean income tax obligations, plus the requirement to lodge a full tax return.

Charities registered with the ACNC are exempt from this particular requirement as they already report via the ACNC.

What's in the NFP Self-Review Return?

The return has three simple sections:

1. Organisation details - Basic info like your ABN, entity type, and main activities.
2. Income tax self-assessment - This is where you confirm why your organisation believes it qualifies for income tax exemption.
3. Summary and declaration - You review your answers and declare everything’s accurate.

One critical question asks:
 “Does the organisation have and follow clauses in its governing documents that prohibit the distribution of income or assets to members while it is operating and winding up?”

This is a non-negotiable. The ATO wants reassurance that your NFP is genuinely not-for-profit - meaning members aren’t pocketing funds or assets during operations or when the organisation winds up.

What If Your Governing Documents Don't Have These Clauses?

 Here’s where it gets a bit tricky. If your governing documents don’t currently contain the required not-for-profit and winding-up clauses, you can still lodge the return for the 2023–24 year, as long as:

• You’ve not actually distributed income or assets to members, and
• You commit to updating your governing documents by 30 June 2025.

This is a transitional grace period. But come 1 July 2025, if your documents don’t include the right clauses, your NFP won’t be able to self-assess as tax exempt anymore.

That means you’ll be treated as a taxable entity—and that comes with extra reporting requirements, potential tax bills, and more red tape.

What Clauses Do You Need?

To meet the ATO’s requirements, your governing documents (such as your constitution or rules of association) must include two key clauses:

1. Not-for-profit clause - A clear statement that prohibits the distribution of income or assets to members during the life of the organisation.
2. Winding-up clause - A clause that ensures surplus assets are transferred to another not-for-profit with similar purposes if the organisation dissolves.

On top of that, your internal processes should back this up. That means ensuring:

• Members don’t receive organisation income, property or assets (unless it’s for genuine services rendered or expenses reimbursed).
• Proper policies are in place to prevent misuse of funds.

If you’re not sure whether your documents contain the right clauses—or they’re buried under legal jargon—get in touch with your accountant or advisor to review them.

Best Practice: Review Regularly

The ATO recommends reviewing your NFP’s governing documents at least once a year, or whenever your organisation undergoes significant changes in structure, purpose, or activities.

A great time to do this is during your Annual General Meeting. You’re already gathering the team, so why not make it part of the agenda? Staying on top of your documents is not only good governance... it shows you’re serious about running a compliant, community-focused organisation.

Being proactive helps avoid problems, ensures eligibility, and puts your NFP in a stronger position if the ATO ever comes knocking.

Key Dates to Remember

• Now: NFPs can lodge the 2023–24 self-review return via ATO Online Services
• 30 June 2025: Deadline to update governing documents with mandatory clauses
• 1 July 2025: NFPs without compliant documents won’t be eligible to self-assess as income tax exempt

Final Thoughts

For most grassroots not-for-profits, this change might feel like just another admin headache... but it’s actually a smart move to formalise your governance and stay future-ready.

Whether you’re managing a local footy club, supporting the arts, or running a community centre, staying compliant with these new rules means you can focus on what matters most—serving your community.

Just make sure you:

• Lodge your annual self-review return,
• Check your governing documents, and
• Act now if changes are needed.

Need a Hand?

If you're unsure whether your NFP is compliant, what clauses you need, or how to lodge the return properly, the Trekk Advisory team is here to help.

We work with not-for-profits of all shapes and sizes across Australia. Our advisers can help review your constitution, prepare your annual return, and make sure your organisation stays on the right side of the ATO without the stress.

Contact Trekk Advisory today and let’s make sure your NFP is set up for success.