Not-for-profit Stewardship group key messages 30 November 2023

Membership updates

Jacky Rowbotham has retired from Treasury, and we welcome Emma Baudinette and Rachael McCririck.

Joe Zabar and Ross Joyce have resigned, and this will be Bridgid Cowling’s last meeting as the Tax Institute representative.

Morag Ingham from Findex will be joining as Chair of the (not-for-profit) NFP Technical Committee at the Tax Institute and Kaylene Hubbard from KPMG will join as a member from July 2023.

I thank all departing members for their commitment and contribution to the sector and for working with the ATO on many important NFP matters over the years.

There will be a membership refresh in 2024 with a similar format to the last refresh. Expressions of interest will be called in early 2024 and interested members will be provided the opportunity to re-apply for their position with the group.

Not-for-profit centre

New measures - Deductible gift recipient (DGR) Registers Reform

The Australian Taxation Office (ATO) administers 48 of 52 DGR categories set out in Division 30 of the Income Tax Assessment Act 1997. On 28 June 2023, the Treasury Laws Amendment (Refining and Improving our Tax System) Act 2023 became law. The amendments to the Income Tax Assessment Act 1997 transfer administrative responsibility of 4 unique DGR categories from other government departments to the ATO.

The changes take effect from 1 January 2024 and repeal provisions that require each of the 4 departments to maintain a separate register.

The new law contains transitional provisions to ensure organisations currently endorsed as DGRs under the 4 unique categories continue to be endorsed if they continue to meet eligibility criteria.

We have worked with each government department to ensure a smooth transition in administration.

Refreshed guidance on the eligibility requirements for the 4 unique categories will be available from 2 January 2024.

Technical updates

Approximately 25 pieces of technical guidance to be reviewed and planned for NFP.

One of the key pieces is the School Building Fund addendum to Taxation Ruling TR 2013/2 Income tax: school or college building funds.

Community sheds guide has been released but minimal feedback was received from the sector.

We are working towards a 2024 release for the updated Mutuality Guide focussing on simplified guidance and examples, for sporting organisations and other NFPs.

Treasury

Treasury’s focus recently includes:

• Work to ensure a smooth transfer of administrative responsibility of 4 unique DGR categories from 4 other government departments to the ATO. We worked to ensure as many Registers briefs as possible were progressed before 30 November to minimise backlogs and delays in Registers applications during the transition period.
• Progressing legislation
  • Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 containing amendments to the Australian Charities and Not-for-profits Commission (ACNC) Act to enact Area 2 reforms to the Secrecy provisions before Parliament on 30 November 2023.
  • Further policy work on the Area 3 secrecy provisions is ongoing within Treasury.
  • Remake of the Charities (State or Territory Government Entity) Instrument 2023 is out for consultation until 15 December 2023.
  • Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 containing the measure to facilitate certain community charities to achieve DGR status has passed through the house and is now before the senate.
  • The Ministerial Guidelines have yet to be put out for consultation, Treasury hopes to be able to publish those for feedback sometime in the new year.
• Engagement with the Blueprint Expert Reference Group (BERG) ahead of the issues papers release
  • While BERG’s work has a slightly different scope and aim to the Productivity Commission’s Inquiry into Philanthropy, Treasury is an observer on the BERG committee. Treasury is working closely with the Department of Social Services (DSS) to ensure that any government response to both measures is coherent and consistent across the 2 processes.
• Specific listings
  • Work continues on progressing proposals for specific listings ahead of the release of Mid-year economical and fiscal outlook.
  • Treasury is eager to see the findings of the review work the ATO is conducting in early 2024 to survey all organisations that are specifically listed, as visibility of these organisations and their activities is currently low.

ACNC

ACNC are aware of the current delay in processing charity registration applications, and we are working through the work on hand.

To address the delay staff are being upskilled, there is a focus on recruitment, and we are exploring the possibility of streamlining application assessment processes.

Work continues with peak bodies to explore streamlined processes, including bulk registration of applications in certain circumstances, to support the increase in applications expected from the self-assessing income tax exempt measure.

We are considering the possibility of capturing self-assessing income tax exempt measure information through the ACNC registration application to identify NFPs applying because of the measure.

Registration application changes are being made because of the DGR reforms involving the 4 registers coming into effect from 1 January 2024.

First de-identified registration decision has been published:

• Background and context - ACNC Secrecy Reforms ProjectExternal Link
• De-identified Reasons For Registration Decision – Proprietary Company Limited By Shares (Pty Ltd)External Link decision.

We are working on an interactive online self-assessment tool that has been user tested through our consultation forums for review and feedback.

Multi factor authentication for the ACNC charity portal is progressing and will start to be enabled in 2024.

The 2023 Annual Information Statement is now available to charities including new questions on related party transactionsExternal Link.

ACNC webinar on Related Party Transactions and the Annual Information StatementExternal Link is available.

Public Advice and Guidance

TR 2013/2 review update – Income tax: school or college building funds (PDF 164KB)This link will download a file

Update on the School Building Fund addendum to Taxation Ruling TR 2013/2 Income tax: school or college building funds to account for the outcome of the Buddhist Society case:

• ‘School’ will have its ordinary meaning – removing different assessment of recreational and vocational education.
• Updating the language around the term ‘substantially used’ as a school.
• Discussions on the changes progressing with the public advice and guidance unit.
• Aim is to clarify the Commissioner of Taxation’s view and hoping addendum can be finalised early in the new calendar year.
• We will keep the group updated on the progress.

The Blueprint Expert Reference Group presentation

In the 2022–23 October Budget the government announced the measure to develop the NFP Sector Development Blueprint (the NFP Blueprint) and doubling philanthropic giving by 2030.

To deliver the measure the DSS is working with the Community Services Advisory Group (CSAG) to develop the NFP Blueprint.

The Productivity Commission will review the current framework to incentivise philanthropy in the NFP sector.

The development of the NFP Blueprint is expected to provide a roadmap for government reforms and sector led initiatives to boost the sector’s capacity to support and reconnect Australian communities.

The Productivity Commission has been tasked with delivering an inquiry into philanthropy by May 2024.

Development of the NFP Blueprint will complement other strategies and government policy development processes related to the NFP sector. A well-functioning Australia needs a strong NFP sector.

The NFP Blueprint Issues Paper provides you with information on the background and the purpose of the NFP Blueprint and asks specific questions for you to respond to.

Visit the BERG site on dss.gov.au at The Blueprint Expert Reference Group (BERG)External Link for updates.

New ato.gov.au

The ato.gov.au website has been in place for nearly a decade and is coming to the end of its service life.

Research, user consultation and concept testing has supported the development of the new, updated website.

Testing during Private Beta with external participants was very positive and supportive of the work undertaken on the updated website design.

Public Beta commenced early November 2023. Users have been able to access the Beta website by clicking the link in the banner at the top of ato.gov.au

In late November 2023, the new, updated ato.gov.au will become the ‘default’ website when a user navigates to ato.gov.au. Users can still access the legacy website via a link in the banner on the top of the page.

Your feedback is welcome during Public Beta. The feedback survey is in the banner at the top of new, updated ato.gov.au

The new website will have improved navigation, a refreshed design and enhanced search. Audience segments will be reduced from 6 to 3, Individuals and Families, Business and Organisations and Tax and Super Professionals.

Web content, tools and calculators, Quick codes (QCs), redirects, how user's login to portals and location of the search bar will all remain the same.

Enhancing transparency of income tax exemption

Members were provided a myGovID and Relationship Authorisation Manager (RAM) walk-through by the ATO Digital Experience team.

It is important have up-to-date details and notify us of changes before accessing Online services for business. This is to ensure the correct people are authorised to access government online services on behalf of NFPs. See Set up myGovID and RAM for more information.

Critical updates

How to prepare a NFP self-review return questions were published to assist NFPs with preparing their answers before the return is available on 1 July 2024.

Updating Australian business number registration details including address, associates and authorised contacts remains a key message for NFPs, and we are exploring options to streamline this process for NFPs. Guidance on notifying us of your changes to your not for profit will be updated.

Members were provided the opportunity to review the content and language in correspondence that will be issued to NFPs regarding their new reporting obligation. Insights received around draft correspondence and suggested inclusions will be incorporated into revised drafts or be considered for new public guidance and fact sheet resources.

Other business

Significant NFP reporting obligations and DGR reforms were introduced in 2023 to:

• establish sector visibility across the community
• maintain system integrity
• support a level playing field.

Members worked across several working groups to shape new public advice and guidance products. Members contributed valuable insights on the development of a new NFP self-review return and reporting framework for NFPs who self-assess as income tax exempt.

Key highlights included:

• input and feedback on the design of the return questions and administrative pathways for implementation of the NFP self-review return – member feedback supported a streamlined, effective and easy-to-use return that has tested well
• the review of public advice and guidance products including the development of the new NFP self-review return reporting page, return guide webpage, and contemporary examples of grants and sponsorships for NFPs
• input on Treasury consultations on new legislation and key changes impacting the NFP sector to help shape the implementation of legislative and administrative changes
• collaboration on strategies throughout the implementation of DGR reforms
• the cascading of messages to ensure NFPs are informed and supported.

Focus for 2024:

• 2024 will see the most significant change to the sector since the introduction of the ACNC in 2012.
• From the 2023–24 income year, non-charitable NFPs with an active ABN who self-assess as income tax exempt will be required to lodge an annual NFP self-review return to self-assess as income tax exempt. The first return for the 2023–24 income year is due from 1 July 2024.
• Working collaboratively with members, broader networks and peak bodies to digitally onboard NFPs so they can meet the new reporting obligations will be a major focus including
  • the review of public advice and guidance to ensure products are fit for purpose, input has already been requested on TR 2013/2 Income tax: school or college building funds and at least 25 products have been identified for review in 2024
  • the cascading of key messages potentially via joint webinars, podcasts and social media posts – the group’s co-chair will facilitate a Tax Institute session with Jennifer Moltisanti in March
  • the development of the NFP roadmap given the government’s announcement on doubling philanthropic giving by 2030, and the Productivity Commission’s review of philanthropy policy settings.

Attendees

Guest attendees

Apologies