Opposition pushes for Senate inquiry into NFP tax changes

The new rules, which came into effect in July, require NFPs with an Australian business number (ABN) to lodge an annual “self-review” tax return or risk losing their income tax exemption, unless they become a charity.

Many NFPs rushed to seek charity status to avoid having to lodge the new forms, sparking a three-month backlog with the Australian Charities and Not-for-profits Commission (ACNC) earlier this year.

Despite widespread confusion and angst, particularly among smaller community groups and NFPs, the Australian Taxation Office (ATO) recently doubled down and said it had no plans to simplify the changes, which will affect more than 155,000 NFPs.

Senator Smith told the Community Advocate he planned to move the motion calling for an inquiry because of concerns raised by community organisations and NFPs across Australia over the regulatory burden the ATO self-assessment requirements are placing on them.

“­The Coalition recognises the impact Labor’s poor implementation of these reporting requirements is having, and how it is sapping the energy and motivation of many community volunteers,” said Senator Smith.

“Running a small community organisation should be encouraged through minimal administrative burden – and it is clear that the way this reporting requirement is being implemented is having the opposite effect.

“I call on Labor and the crossbench to do the right thing by the not-for-profit and community sector at this critical time, and open this up to the Parliamentary scrutiny it deserves.”

The move to hold an inquiry follows Senator Smith’s demand last month in the Senate for the Albanese government and its agencies to hand over a trove of documents relating to the ATO self-reporting rollout.

He set a September 10 deadline for the release of the materials, which span Charities Minister Andrew Leigh, the Australian Charities and Not-for-profits Commission, Treasury and the ATO, but the government recently indicated it is still searching for relevant documents and it is not expected to fulfil the parliamentary order until mid-October.

ATO assistant commissioner Jennifer Moltisanti last week acknowledged sector disquiet with the changes and the way they have been communicated but ruled out simplifying the new requirements for non-charitable NFPs.

“I’ve heard rumblings of ‘pockets of confusion’ which are exacerbated by misunderstandings,” she said.

Ms Moltisanti said a return should take “only take a few minutes to complete.”

“There’s not much more we can simplify.”

More information

Tax office rules out simplifying new self-reporting rules

NFP tax shift under the microscope

Tax changes for NFPs causing confusion

ATO not-for-profit tax strategy questioned