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Elevating Not-for-Profits: ATO's Vision for 2024 and How Your Organization Can Thrive

On this page:

  • New reporting requirements for self-assessing income tax exempt NFPs

  • ATO public relations pack

  • Deductible gift recipient reforms and integrity

  • Shaping the tax system

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This month, Assistant Commissioner Jennifer Moltisanti from ATO has provided insights into key activities for the upcoming year.

In May, the Not-for-profit (NFP) Centre transitioned from the ATO’s Private Wealth business line to the ATO’s Small Business line, providing the ATO a valuable opportunity to collaborate with another key business sector boasting an extensive market reach. Australia hosts over 4.5 million small businesses, collectively employing nearly 7 million individuals.

Recently, the Small Business Executive hosted a Leadership Conference in partnership with the ATO, themed 'United through Community.' This theme resonates strongly with many ATO members in the NFP Centre, reflecting their daily dedication to supporting NFP and government clients and stakeholders. The conference featured activities centred around priorities, challenges, and opportunities. As a culmination, each Assistant Commissioner in Small Business was tasked with affirming a commitment made during the conference.

Jennifer commitment was as follows: ‘NFPs are here to stay! In fact, they'll become more prominent within the community. As a steward of the sector, she will drive integrity and transparency so there is continued confidence NFPs are supported, and only those entitled access concessions. Success will be measured by 3 indicators:

  1. Appropriate visibility of the self-assessing income tax exempt (SAITE) population – aspiring to 95% lodgement by 2026.

  2. A strong, data-driven, assurance program.

  3. ATO advocacy and influence on policy settings reflects community expectations.'

After the conference, Jennifer Moltisanti convened with her directors to ascertain their capacity and capability in meeting expectations. As they outlined their program of work, it became apparent that 2024 is poised to be a pivotal year marked by the convergence of numerous significant activities. The key activities are summarized below.

New reporting requirements for self-assessing income tax exempt NFPs

The focus is squarely on the latest reporting obligations affecting Not-for-Profits (NFPs) that self-assess for income tax exemption. As many readers know, non-charitable NFPs with an active Australian business number (ABN) are now required to lodge an annual NFP self-review return to access income tax exemption. Lodgements are required to be made from the 2023–24 income year onward.

The inquiries within the NFP self-review return have been solidified, and the ATO will make them public once the accompanying guidance is approved. Jennifer and her team of directors are gearing up to elucidate these changes and assist NFPs in transitioning to the new requirements. You can expect comprehensive explanations at conferences and webinars led by them, as they guide NFPs through the intricacies of these changes.

ATO also recently issued a public relations pack comprising:

  • key messages sector stakeholders and tax professionals can issue through their own channels

  • imagery that can be re-used to support messages released on socials, such as Facebook and LinkedIn.

Deductible gift recipient reforms and integrity

In 2017 the government announced 4 deductible gift recipient (DGR) reform measures, to strengthen governance arrangements and reduce administrative complexity. From 1 January 2024, the administration of 4 DGR categories from other government departments will transfer to the ATO.

From this date ATO will administer:

  1. environmental organisations

  2. harm prevention charities

  3. cultural organisations

  4. overseas aid organisations.

This change is intended to make all DGR categories consistent in administration, reduce red tape, and simplify the application process for organisations seeking DGR status. And Jennifer reported that the machinery of government changes has been finalised. ATO will shortly publish updated guidance on their website outlining the transitional arrangements as well as ongoing requirements. Linked to the DGR reforms is the ATO's responsibility to ensure that DGR-endorsed organizations fulfil their obligations. These organizations must allocate income and assets exclusively for the purposes for which they are endorsed and operate in alignment with their governing documents. The ATO emphasizes this as a pivotal area of scrutiny and includes the review of DGR-endorsed organizations as an integral component of its broader compliance program. In December, the ATO will initiate a review of the Deductible Gift Recipient (DGR) status for the 234 organizations outlined in the tax law. This examination will be conducted utilizing regulatory powers granted under section 353-20 of the Taxation Administration Act 1953 to assess the DGR status of these entities. The reviews will focus on proof of activity, purpose and use of donations and will initially prioritise listed DGR organisations that aren't registered with the Australian Charities and Not-for-profits Commission (ACNC), and ACNC registered charities that have not reported donations, followed by the remainder of the population.

Shaping the tax system

The ATO is gearing up for an exciting year ahead, filled with numerous opportunities to enhance transparency and integrity within the Not-for-Profit (NFP) sector. On November 30, the NFP Stewardship Group is convening in Melbourne. Comprising members who collectively offer insights and stewardship of the system and sector, this meeting is a pivotal event.

The agenda is currently in its finalization stages, and the ATO has extended an invitation to the Blueprint Expert Reference Group to join. This reference group is actively advancing the development of the Not-for-profit Sector Development Blueprint. Envisioned as a forward-looking document, the NFP Blueprint aims to ensure that the NFP and charity sector is well-prepared for the future, capable of independently charting its course to support Australians in need both now and in the years to come.


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