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Deakin tax tool to help NFPs cope with ATO’s ‘ticking time bomb’

Technology

New reporting requirements threaten the tax-exempt status of thousands of NFPs without accounting experience, Deakin University says.

By Christine Chen 11 minute read

Deakin University has developed an online tax tool to help thousands of not-for-profit organisations at risk of losing their tax-exempt status due to ATO changes they describe as a “ticking time bomb”.

The people behind the tool said the ATO's reporting requirements for NFPs to retain their income tax exemptions were set to come into effect in July but many lacked the accounting know-how and resources to comply.

Cameron MacRae, COO of Australian Neighbourhood Houses and Centres and a Deakin law student, called it a “ticking time bomb” for NFPs.

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“Each of these community organisations rely on an income tax exemption to be financially viable and deliver their important work,” he said.

ATO announced the reforms in 2021, mandating all non-charitable NFPs with ABNs to lodge an annual self-review return to obtain or retain their income tax exemption. An estimated 157,100 NFPs will be affected across the country.

However, MacRae said most of his organisation's 1,100 members, including men’s and women’s sheds and community learning centres, had founding documents that were out of date and would fail to meet requirements under the new obligations.

"Many are run by a team of volunteers with little to no legal or accounting experience," he added. 

In partnership with Deakin University, Australian Neighbourhood Houses and Centres created a diagnostic tool to help NFPs understand the changes and determine how to secure or retain a tax exemption.

“It is critical that we can provide appropriate support to these groups as they grapple with the administrative reforms, because if we don’t, the potential losses are huge.”

It has since been rolled out to more than 1,000 organisations associated with Neighbourhood Houses nationwide.

Deakin said it also had plans to adapt the tool for other bodies preparing for the changes and was in talks with local councils and industry associations.

Jenni Lightowlers, executive dean for Deakin’s Faculty of Business and Law, said the tool “empowered” NFPs.

“We want to work with our community to solve real-world problems … there are thousands of community groups that will be grappling with these changes,” she said.

“Their tax-exempt status, and ultimately their future, is under threat if they don’t get this right. We want to empower them to develop a strong and sustainable path forward in a way that feels manageable.”

Christine Chen

Christine Chen

AUTHOR

Christine Chen is a graduate journalist at Accountants Daily and Accounting Times, the leading sources of news, insight, and educational content for professionals in the accounting sector.

Previously, Christine has written for City Hub, the South Sydney Herald and Honi Soit. She has also produced online content for LegalVision and completed internships at EY and Deloitte.

Christine has a commerce degree from the University of Western Australia and is studying a Juris Doctor degree at the University of Sydney. 

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