In July 2025, the Australian Government issued its response to the Senate Economics References Committee’s final report on Not-for-profit entities – Tax assessments. While the response stops short of major policy changes, it contains important clarifications that AuSAE members, especially those managing non-charitable NFPs, need to understand.
No New Requirement to Register with ACNC
A central concern in the sector was whether the recent requirement to lodge a self-review return implied a new obligation for NFPs with only charitable purposes to register with the ACNC. The Government clarified this is not the case:
- Only NFPs seeking income tax exemption as charities must be registered with the ACNC, a rule in place since 2012.
- Non-charitable NFPs can remain outside the ACNC framework but must still complete the ATO’s self-review return if they wish to claim income tax exemption.
What’s Changing (and What’s Not)
The self-review return requirement introduced in the 2021–22 Federal Budget and now administered by the ATO does not change the criteria for tax exemption. However, it formally documents a NFP’s self-assessment of its eligibility for income tax exemption.For many small, volunteer-led NFPs, this has introduced confusion and administrative burden. The Government’s response notes several mitigation strategies:
- The ATO is taking a practical compliance approach and will pre-populate future returns to reduce administrative effort.
- Entities without an ABN remain exempt from the requirement—reducing burden on some low-risk organisations.
What Didn’t Change (But Might Have Helped)
The Government declined to immediately adopt several committee recommendations that would have significantly reduced the compliance burden, including:
- Introducing a turnover threshold to exempt small, low-risk NFPs.
- Extending the March 31, 2025 deadline—though the ATO retains the power to offer deferrals.
- Moving administration to the ACNC—deemed likely to increase, rather than decrease, compliance requirements for non-charity NFPs.
A Need for Better Guidance and Engagement
The Committee called for improved ATO/ACNC guidance and more direct engagement with the sector. While the Government “noted” these suggestions, it placed responsibility on the ATO and ACNC as independent bodies to determine how best to support the sector.This leaves many AuSAE members, especially those in smaller associations and sporting bodies navigating the process with limited clarity and few concessions.
Looking Ahead
While no immediate relief is on offer, the Government’s response reinforces the importance of ongoing advocacy to ensure the voice of non-charitable NFPs is heard. AuSAE will continue to engage with Treasury, the ATO, and ACNC to reduce unnecessary burden and ensure guidance reflects the realities of small, volunteer-driven organisations.
