At a glance
- The ATO has increased its focus on ensuring not-for-profits remain compliant.
- Failure to submit a self-review return each year could have “catastrophic” consequences for many NFPs, an expert says.
- Managing deadlines, verifying registration requirements, ensuring payroll obligations are met, and reviewing documents are just some of the ways accountants, BAS agents and bookkeepers can serve their NFP clients.
From local sporting clubs to cultural groups and community organisations, not-for-profits (NFPs) are essential to Australian society.
In fact, more than 300,000 NFP organisations positively impact Australian life, according to the Department of Social Services.
For accountants, working with NFPs can be rewarding, but presents unique compliance challenges.
The ATO has stepped up its focus on NFP compliance, introducing new measures in 2023, including the need for NFPs to lodge an annual NFP self-review return. Last year, to support these often-stretched organisations, it extended the deadline from 31 October 2024 to 31 March 2025 (though it will revert to 31 October going forward).
All NFP boards and committees must prioritise this annual reporting requirement to ensure they remain compliant.
“Failure to do so could result in their organisation losing its tax-exempt status, which would be catastrophic for many organisations,” says Georgie Rogers, Tax Principal at MGI Joyce Dickson, a member firm of MGI Australasia.
Certified practicing accountant Coco Hou says managing deadlines, verifying registration requirements, ensuring accurate reporting and maintaining governance is paramount.
Partner, Platinum Accounting Australia
“We want to protect NFPs from potential penalties while also strengthening their ability to make a meaningful impact in their communities.”
Here are some key ways to help your NFP clients remain compliant:
1. Stay ahead of the 31 March 2025 deadline
The NFP self-review return is an annual reporting requirement for non-charitable NFPs with an active ABN.
“Missing this deadline can lead to penalties, which can place unnecessary financial strain on the organisation,” says Hou. “As professionals, it’s our role to remind NFPs of this requirement and assist them in completing their returns accurately and on time.”
If NFPs are not covered by a state or national representative body, they need to register their own ABN.
2. Check the tax status
NFP companies with a taxable income over $416 must file an income tax return.
For non-company NFP entities, the ATO requires an income tax return regardless of income, while taxable NFP companies with income under $416 must submit a non-lodgment advice. The ATO has more information on definitions.
Tax returns and non-lodgment advice forms are due by 15 May each year.
3. Stay on top of GST and BAS requirements
While most NFPs are exempt from income tax, they must comply with other tax obligations, such as GST registration.
NFPs must register for GST if their annual turnover (not profit) is $150,000 or more, though those below this threshold may also benefit from registration.
“When calculating whether an NFP has reached the registration threshold, some supplies may be excluded,” says Rogers.
Once registered for GST, the NFP must submit BAS statements monthly, quarterly or annually.
“Understanding GST reporting and BAS preparation is crucial for accurate lodgements. Errors can lead to financial losses and compliance risks, so attention to detail is essential,” says Hou.
She adds that all accountants and bookkeepers providing BAS services must register with the Tax Practitioners Board (TPB).
“This ensures you’re operating within the law and providing a compliant service.”
4. Register staff for PAYG withholding and super payments
NFPs, like any other organisation, must comply with payroll regulations, including PAYG withholding, superannuation contributions and Single Touch Payroll (STP) reporting for paid staff (not volunteers).
“Failure to comply with employment tax obligations can incur heavy penalties from the ATO,” says Rogers.
“Payroll mistakes are common but avoidable,” adds Hou. “Ensuring that these obligations are met correctly will protect NFPs from penalties and help maintain trust with employees.”
5. Ensure NFP directors have a director ID
Directors of NFPs registered with the Australian Securities and Investment Commission (ASIC) must have a Director ID.
This is a relatively new legal requirement that’s often overlooked, says Hou.
“Many NFP directors may be unaware of this requirement, so providing guidance on how to apply is a valuable service.”
6. Review governing documents
As part of their self-review return, NFPs must provide governing documents that accurately reflect their current purpose and activities and prove that they operate on a not-for-profit basis.
These documents may be rules, articles of association, a constitution or trust deeds. They must contain clauses prohibiting the distribution of income or assets to members, and clearly state objects or purposes that align with one of the tax-exemption categories, says Rogers.
“NFPs should also ensure that their activities and expenditures align with their stated objectives,” she adds.
Hou says NFPs should review and update these documents regularly.
“This ensures the organisation remains compliant and also helps in securing funding and maintaining credibility with stakeholders.”
“NFPs should ensure that their activities and expenditures align with their stated objectives.”
Georgie Rogers, Tax Principal, MGI Joyce Dickson
7. Register for fringe benefits tax
If NFPs provide fringe benefits, they must be registered for Fringe Benefits Tax (FBT) and submit a return. This also ensures they don’t miss out on FBT concessions they may be eligible for.
Rogers adds that many NFPs will still qualify for an FBT rebate or exemption on benefits provided up to specified annual caps.
“These FBT exemptions can help NFPs incentivise employees with benefits paid from their pre-tax salary,” she adds.
8. Comply with financial oversight
Most NFPs are also required to comply with some level of financial oversight, depending on their annual turnover, says Rogers.
“Small associations may only require their accounts to be reviewed, whereas larger organisations may need to appoint an auditor to review their accounts annually.”
The IPA will hold a remote seminar titled The Financial Reporting Landscape for Charities and Not-for-Profit Organisations in 2025 on 26 March. More information here.
