Are you sure?
The recent introduction of the requirement for Not-for-profits (NFPs) to lodge a self -review return with the ATO has led to many of them learning that they are not in fact eligible for income tax exemption but are taxable and liable to pay tax (and may have been for some time).
Not-for-profits (NFP) are eligible to access income tax exemption where:
- the NFP has only charitable purposes, is a registered charity with the Australian Charities and Not-for-Profits Commission (ACNC) and endorsed by the ATO as income tax exempt, and
- the NFP falls under one of the eight categories of income tax exempt entities in tax law.
In some circumstances, it is not clear whether an NFP is eligible for registration by the ACNC as a charity or not. If not eligible, it is sometimes complex to assess whether the NFP falls into one of the eight categories of income tax exempt entities or not. Some NFP’s are not income tax exempt but may have capacity to rely upon the principle of mutuality to reduce their taxable income. How to apply this principle of mutuality is also complex. I can help your NFP navigate and understand how all of this applies to your NFP.