What your organisation needs to know
The ATO requires many not-for-profit (NFP) organisations to lodge an annual NFP self-review return to confirm their eligibility to self-assess for income tax exemption. This requirement applies to non-charitable NFPs that have an active Australian Business Number (ABN) and self-assess as income tax exempt. The current lodgment cycle covers the 2025–26 income year, with returns due by 31 October 2026 for organisations with a standard 30 June year end.
Who needs to lodge
If your NFP:
- Is not a registered charity with the ACNC (and endorsed by the ATO as income tax exempt)
- Has an active ABN
- Self-assesses as income tax exempt under one of the recognised categories (such as community service, cultural, educational, employment, health, resource development, scientific or sporting purposes)
then you must lodge the NFP self-review return each year. Charities registered with the ACNC do not complete this return; their tax status is managed through ACNC endorsement and the Annual Information Statement.
What the return involves
The self-review return is designed to help your organisation formally assess whether it still meets the rules for income tax exemption. It includes:
- Confirmation of basic organisational details
- A self-assessment against income tax exempt criteria
- Confirmation that your governing documents contain the required clauses (see below)
- A summary and declaration confirming your organisation’s status
The questions are structured so your board or committee can discuss and confirm whether your activities, and your governing documents, align with your stated purpose.
Governing document requirements
This is a newer requirement that catches many long-established organisations by surprise. To self-assess as income tax exempt, your governing documents (constitution, rules, or trust deed) must contain:
- A not-for-profit clause, prohibiting the distribution of income or assets to members while the organisation is operating, and
- A dissolution clause, requiring any remaining assets on winding up to be transferred to another organisation with similar purposes, rather than to members
The ATO originally required these clauses to be in place by 30 June 2025, then extended this deadline to 30 June 2026 for organisations that had not distributed income or assets to members. That extended deadline has now passed. If your organisation answers “no” to this question on its self-review return, it will lose its income tax exempt status and become a taxable entity, and the ATO will follow up to determine whether exemption can be reinstated. If you have not checked your governing documents against this requirement, this should be treated as a priority action, not something to leave until your next AGM.
When it is due
For NFPs with a standard 30 June year end, the self-review return must be lodged by 31 October each year. Organisations with an ATO-approved substituted accounting period have different due dates based on their balance date. Even organisations that have ceased operating during the year must still complete the return.
How to lodge
The return can be lodged using:
- Online services for business via your authorised digital access (myID and Relationship Authorisation Manager)
- The ATO’s automated phone service on 13 72 26
- A registered tax agent acting on your behalf
The ATO also provides guidance, webinars and question guides to help organisations prepare and lodge accurately.
What happens if you lodge late or don’t lodge
The ATO has generally taken a supportive approach where an organisation can show genuine effort to comply, such as attempting to lodge, setting up myID, or engaging a tax agent, and has held off penalties in those cases.
However, organisations that fail to lodge across multiple years face escalated action. The ATO will review the income tax exempt status of NFPs with a pattern of non-lodgment, and an organisation found ineligible becomes a taxable NFP required to lodge standard income tax returns. The real risk of non-compliance is not just a late lodgment penalty, it is the potential loss of income tax exempt status altogether.
Why this matters
This requirement reinforces the need for NFPs to regularly review their purpose, activities and governing documents against tax exemption criteria. It also complements other governance obligations you may have, including proper record-keeping and board oversight. With the governing document deadline now passed and the 2025–26 return due by 31 October 2026, now is the time to confirm both your eligibility and your paperwork are in order.
What to do now
With the governing document deadline behind us and the 2025–26 return due 31 October 2026, don’t wait for your next board or committee meeting to check compliance. As a priority:
- Pull out your constitution or trust deed and check it against the not-for-profit and dissolution clause requirements above
- If you’re unsure whether your clauses meet the mark, or unsure which self-assessing category applies, talk to your Synectic adviser before you lodge
- If your organisation’s ABN details or authorised contacts have changed, update these now, outdated details are a common cause of lodgment delays
Getting this right now avoids a much bigger conversation later, one about reinstating lost tax exempt status.
