One of the things that attracted me to join the ATO was the scope to engage with the community and work with others to support our country.
A reconciled country is close to my heart and I’m proud to be one of the SES Indigenous Champions in the ATO. Together, our role is to help represent and advocate for inclusion and diversity throughout our organisation.
There are many reasons why I took on this role. As the child of migrant parents, I know what it’s like to walk in 2 worlds and struggle with identity. I learnt from an early age how to become courageous and resilient, but my path was somewhat privileged. Having children and guiding them has only strengthened my resolve to advocate for what’s right and give voice where it’s needed. I’m a proud Australian, born on Kulin nation and committed to reconciliation.
Reconciliation means many things to each of us. For me it’s about truth, transparency, and integrity.
Reconciliation Action Plan
I see it as part of my purpose to help the ATO advance respect, inclusion, and create a safe workspace and for me this speaks to the heart of our Reconciliation Action Plan (RAP). Last week, led by our Commissioner Rob Heferen and our RAP Champion Second Commissioner Jeremy Hirschhorn, we met on Ngambri and Ngunnawal country to bring life to the ATO RAP.
I have accountability for several deliverables including collaborating with the Office of the Registrar of Indigenous Corporations (ORIC) and the Australian Charities and Not-for-profits Commission (ACNC) to inform and improve programs for Aboriginal and Torres Strait Islander not-for-profits, as well as maintain an Indigenous position on our NFP Stewardship Group. I’m very pleased we have Michael Manikas, CEO of the Dreaming Foundation, on our forum as it gives us an opportunity to inform our strategies including support for Indigenous NFPs.
Recently we recorded a webinarExternal Link on the new NFP reporting requirements together with ORIC CEO Tricia Stroud and our NFP Stewardship Group member Michael Manikas.
Consultation and design
Consultation and design are skills I practice daily, however, it’s not just about pretty pictures and fancy models. Put quite simply, user centred design starts with consideration of an issue and extends to understanding drivers before exploring solutions.
In the ATO, we rely on our consultative forums and broader networks for all parts of this process. We work with our stewardship group members to help shape and improve the taxpayer experience. An example that demonstrates our collaboration and design is the implementation of the NFP self-review return.
We’ve worked closely with our NFP sector networks and ATO stewardship groups in the design, development and testing of the return, public advice and guidance and transitional arrangements. This has included all current members of the NFP Stewardship Group.
Additionally, we worked with our extensive network of NFP advisors who we engaged to share key messages and identify ancillary issues impacting the effective implementation of the return. This has led to targeted implementation of additional support measures to assist NFPs in the 2023–24 transitional year.
Of note, the network helped us to identify NFP groups that do not meet the self-assessing income tax exempt criteria. These groups are now actively engaged with the ATO, and also the ACNC if they are charitable, to ensure they are meeting their required obligations.
We refresh our NFP Stewardship Group membership every 2 years to ensure we have strong sector representation. As well as the NFP Stewardship group, we remain connected to our broader network and include them in our messages to NFPs.
Working together
We work closely with the ACNC to administer and support the NFP sector. The ATO is responsible for the administration of all NFPs, including charities, in relation to their taxation and superannuation obligations, while the ACNC is responsible for the registration and regulation of charities. We each administer our respective laws and we look for opportunities to further support the sector and streamline the regulatory burden on taxpayers.
We have a Memorandum of Understanding that outlines our commitment to working together and we meet regularly through different forums. I’ve been attending and presenting at the ACNC Sector and Advisor forums since I commenced in this role. Similarly, the ACNC are standing members on our NFP Stewardship Group.
A significant part of our role is focussed on making sure only eligible NFPs access tax concessions which include income tax exemption, GST and FBT concessions. For this reason, the ATO relies on the appropriate registration of charities and the annual information statement charities lodge every year. A charity is not automatically income tax exempt, and it needs to be endorsed by the ATO to access tax charity concessions. This is a relatively simple process embedded in the charity registration process. When an NFP is registered as a charity, its application is transferred to the ATO seamlessly for endorsement of relevant tax concessions.
Most recently, the ACNC have reported an increase in charity registrations as a result of NFPs realising they’re not eligible to self-assess as income tax exempt. We’re working with the ACNC and the sector to smooth this increase in demand.
Transparency and integrity
Transparency and integrity are essential elements in a democratic society. As the key revenue agency for Australia, it’s imperative we can confidently assure the government and the Australian community that the NFP sector are meeting all their tax and super obligations. This should be no surprise and I’ve consistently shared our role with the sector.
The ATO will revoke entitlement to tax concessions including DGR endorsement and income tax exemption when we come to the view that an organisation does not meet the eligibility requirements set out in the tax law. If a charity is deregistered by the ACNC, the ATO will revoke its DGR status and any tax concessions as it no longer meets the requirements in the tax law.
I’m aware some NFPs and their advocates think the new NFP self-review return is an unnecessary impost. I’ve also read some media articles that suggest ‘this measure is creating a lot of extra work and raising concerns for many while providing very limited if any tangible benefit.’ This is simply untrue, as the return is only asking NFPs to notify us of their eligibility to self-assess as income tax exempt. NFPs have always had to undertake this review, however, this year marks the first year of an annual reporting cycle. Conversely, I note many have embraced the new reporting requirements with one commentator publishing:
The process of self-assessing for income tax exemption should serve as a wake-up call for NFPs that have strayed too far from their original mission. It’s not just a box-ticking exercise, it’s a reminder of the responsibility that NFPs have to remain true to their purpose, not only in the eyes of regulators but also in the eyes of the people and communities they exist to serve.
The new NFP self-review return has been implemented to obtain appropriate sector transparency and integrity. The return is:
- getting NFPs to update their details in the ABR and ATO systems – an obligation many NFPs have neglected
- generating ABN cancellations on the basis that the NFP organisation has ceased operations and no longer exists
- driving an increase in charities endorsed by the ATO to access tax concessions - this is resulting in the correct transparency and integrity intended by law.
NFP self-review return
I’ve regularly reminded the sector that the NFP self-review return should be seen as an opportunity to review and reset. Many NFPs agree and I know many more are engaging.
At the time of writing, we’ve had around 10,000 lodgments and climbing, and hundreds of other NFPs signal they are either charitable or taxable. We’ve responded to thousands of enquiries through our dedicated NFP advice service on 1300 130 248 assisting NFPs who need help in updating their details and understanding the requirements for income tax exemption.
Similarly, hundreds of referrals received through my office have been effectively resolved to ensure taxpayers understand and are supported to meet their obligations.
Additionally, we continue tailored support with ongoing face-to-face and virtual presentations. This has included far-reaching presentations with NFPs, peak associations and members, government departments and other stakeholders including culturally and linguistically diverse communities. In September I will be visiting South Australia to deliver 2 sessions with the Multicultural Communities Council of SA.
My commitment to the sector stands:
- we’re here to help
- if you’ve made a mistake, don’t panic, we can work it out
- get on board and lodge your NFP self-review return now.
Updates to our Public Advice and Guidance – School Building Funds
While our public advice and guidance has been dominated by the new reporting requirements, we have been making other important updates.
In 2021, the Federal Court handed down their decision in The Buddhist Society of Western Australia Inc v Commissioner of Taxation (No 2) [2021] FCA 1363 ('the decision'). In short, the Court held that:
- we applied an artificial restriction on the ordinary meaning of 'school';
- the overall purpose (or purposes) for which the building is ‘established and maintained’ and the importance of each of the activities carried out to that purpose should be considered in determining whether a building is 'used, or to be used as a school'; and
- where there is a mix of school and non-school activities, any connection the non-school activities may have to the school activities carried out, and the extent to which both activities contribute to the purpose (or purposes) for which the building is ‘established and maintained’ should be taken into account.
In 2023, we released our decision impact statement about the decision and started reviewing its impact on our advice and guidance products, including Taxation Ruling TR 2013/2 Income tax: school or college building funds ('TR'). As part of our review process, we drafted an addendum to our TR to ensure it accurately reflects the Court's decision and consulted on our proposed updates with interested members of the NFP Stewardship Group. The updates to our Ruling and website content are live now - be sure to check them out!
Importantly, as the changes to our Ruling have been made through an addendum, we are limited to updating the aspects of our Ruling that are inconsistent with the decision and removing references to non-existent guidance products. For this reason, the majority of our TR remains the same. We’ve also made updates to our website content to provide greater clarity, and better align with the decision and our Ruling.
Closing thoughts
As Tax Time 2024 draws quickly to a close, I’m reminded I have yet to lodge my own tax return. Like every year, I have lodgment scheduled for October.
From an integrity perspective the ATO expects all its employees to lead by example, so I’ll be lodging by the due date as I do every year. Will you?
Don’t be left behind – and don’t let your NFP be left behind either. If you’re a non-charitable NFP with an active Australian business number (ABN), lodge your annual NFP self-review return now to confirm your eligibility to self-assess as income tax exempt by 31 March 2025. If you find you are taxable, you have until 15 May 2025 to lodge an income tax return or non-lodgment advice.
The NFP self-review return can be lodged in Online services for business or alternatively, a registered tax agent can lodge in Online services for agents on behalf of an NFP. You can also lodge using our self-help phone service on 13 72 26. Find out more about all three options at How to access and lodge the NFP self-review return.
Take care and stay safe,
Jennifer