New Requirements for Not-For-Profits who Self Assess for Income Tax Exemption!

Changes to ATO reporting requirements are introducing new obligations for many not-for-profits.

From 1 July 2023, certain organisations must complete an annual self-review to confirm their eligibility for income tax exemption. Understanding these requirements is important to maintain compliance and avoid risk.

This guide explains the new NFP self-review ATO requirement and what your organisation needs to do.

What is changing?

Non-charitable not-for-profits that self-assess as income tax exempt are now required to lodge an annual self-review form with the ATO.

This applies to organisations with an active Australian Business Number (ABN).

Previously, many of these organisations were not required to formally report their exemption status each year.

Why this change has been introduced

The ATO has introduced this requirement to improve transparency and consistency across the sector.

The goal is to:

• confirm that organisations remain eligible for tax exemption
• increase accountability
• strengthen trust in the not-for-profit sector

While this adds an additional step, it also provides greater clarity around your organisation’s status.

Who is affected?

This requirement applies to not-for-profits that are:

• not registered charities
• self-assessing as income tax exempt
• operating with an active ABN

Many organisations across sectors will be impacted, including those in:

• community services
• sporting organisations
• cultural groups
• education and research
• health and employment services

For many, this will be the first time reporting directly to the ATO in this way.

What the self-review involves

The annual self-review requires organisations to confirm that they still meet the criteria for income tax exemption.

This includes reviewing:

• your organisation’s purpose and activities
• how income is applied
• whether you meet the relevant exemption category

Accurate financial records are essential to support this assessment.

How this affects your reporting obligations

The self-review becomes part of your annual compliance process.

This means:

• an additional lodgement requirement each year
• greater need for accurate and up-to-date records
• clear documentation of your activities and purpose

Consistent compliance and reporting processes help ensure this is managed efficiently.

Common challenges for NFPs

Organisations may face challenges such as:

• uncertainty about eligibility criteria
• limited experience with ATO reporting
• incomplete or inconsistent financial records
• unclear documentation of activities

These challenges are often addressed through clearer systems and regular review.

What good looks like

A well-prepared organisation should have:

• clear understanding of its tax exemption category
• accurate and up-to-date financial records
• documentation supporting its purpose and activities
• a structured annual compliance process

This supports both the self-review and broader governance requirements.

When to review your position

It may be time to review your tax exemption status if:

• you are unsure which category applies to your organisation
• your activities or structure have changed
• financial records are not consistently maintained
• you have not previously reported to the ATO

A structured review can help confirm your position and identify any gaps.

Start a conversation

The new NFP self-review requirement adds another layer to compliance, but with the right systems in place it can be managed efficiently.

Hopscotch Accounting supports not-for-profits with compliance reviews, financial reporting, and processes that align with ATO requirements.

Start a conversation to ensure your organisation is prepared for the new self-review obligations.

FAQ’s