Skip to main content

There have been changes to the administration of not-for-profit organisations that self-assess as income tax exempt.

If your not-for-profit organisation has charitable purposes, it cannot self-assess as income tax exempt.

In order for it to be eligible for income tax exemption, it may need to register as a charity with the Australian Charities and Not-for-profits Commission (ACNC) and be endorsed by the Australian Taxation Office (ATO).

You can find out more about income tax exemption for not-for-profits from the ATO.

Charitable not-for-profits

Charitable not-for-profit organisations with an Australian Business Number (ABN) must:

  • register as a charity with the ACNC, and
  • be formally endorsed by the ATO

to be income tax exempt.

If your organisation is charitable, but does not register as a charity with the ACNC, it will be taxable, as it will not be eligible to self-assess as income tax exempt. If your organisation is a taxable not-for-profit, you may need to lodge an annual income tax return (or notify the ATO if a return is not necessary).

This guidance will help you determine if your organisation can be registered as a charity with the ACNC.

Non charitable not-for profits

These changes mean non-charitable not-for-profits (NFPs) with an active Australian Business Number (ABN) are required to lodge an annual NFP self-review return in order to self-assess as eligible for income tax exemption.

This annual reporting requirement came into effect on 1 July 2023. The first NFP self-review return that non charitable not-for-profits will lodge covers the 2023-24 income year.

Eligibility for charity registration

To be eligible for charity registration, an organisation must:

Your organisation must also have an Australian Business Number (ABN) with the right ‘entity type’ (see our guidance about legal structures for more information).

Charitable purposes

The definition of 'charitable' covers 12 charitable purposes.

Please read through the list of purposes below and how they correspond to the common types of not-for-profit organisations to see if your organisation has a recognised charitable purpose.

The 12 charitable purposes set out in the Charities Act are:

  • advancing health
  • advancing education
  • advancing social or public welfare
  • advancing religion
  • advancing culture
  • promoting reconciliation, mutual respect and tolerance between groups of individuals that are in Australia
  • promoting or protecting human rights
  • advancing the security or safety of Australia or the Australian public
  • preventing or relieving the suffering of animals
  • advancing the natural environment
  • other similar purposes ‘beneficial to the general public’, and
  • promoting or opposing a change to any matter established by law, policy or practice in the Commonwealth, a state, a territory or another country (where that change furthers or opposes one or more of the purposes above).

If you are unsure if your organisation’s purposes align with one or more of these charitable purposes, you should examine its:

ATO organisation types and charity registration

The ATO recognises 8 categories of not-for-profit organisations that can self-assess eligibility for income tax exemption.

Some organisations that fall into these categories could also have a recognised charitable purpose and may be eligible to register as a charity with the ACNC. If an organisation is eligible for charity registration, it will be ineligible to self-assess income tax exemption, and will instead need to register with the ACNC and be endorsed by the ATO to be income tax exempt.

We have provided information about each of the ATO’s self-assessment categories and the potential for an organisation falling into one of these categories to also have a charitable purpose. Information about the categories more generally is available on the ATO’s website.

Click on the heading applicable to your organisation to understand if it may have a charitable purpose.

Some types of community organisations may have a charitable purpose, while others are generally not considered charitable.

Generally, traditional community service clubs, social clubs or associations with objectives that include encouraging social interaction do not meet the legal meaning of charity, as the purpose of social interaction is not generally recognised as a charitable purpose.

However, if your not-for-profit organisation has a purpose to provide social and recreational activities, as a means of supporting any of the following:

  • relieving poverty, distress or disadvantage of individuals or families
  • caring for, supporting and protecting children and young individuals
  • caring for the aged

your not-for-profit organisation may be eligible to register with the ACNC if it meets the legal meaning of charity and our requirements for registration.

For example, an organisation whose purpose is to provide social interaction for people living with dementia to improve quality of life and community participation may be eligible to be registered as a charity.

These types of community organisations are commonly registered with the subtype of ‘advancing social or public welfare’.

Other examples of charitable community organisations may include play group associations, senior citizens organisations, Justices of the Peace associations, Community Sheds, and industry ombudsmen.

Cultural organisations that meet the legal meaning of charity and the ACNC’s requirements for registration can apply to register as charities. Cultural organisations are commonly registered with the subtype of ‘advancing culture’.

Examples of cultural organisations that may be eligible for charity registration include not-for-profits whose purpose is:

  • the promotion of Australian Indigenous culture and customs
  • to promote fine arts or music
  • to promote theatre, ballet, and the opera
  • as a museum or library, or
  • as a foundation or trust supporting these purposes.

Cultural organisations should consider who benefits from their organisation. Registered charities must operate for the public benefit and must not provide independent private benefits (financial or in-kind) to their owners, members, or other individuals – while operating or when winding up – unless the private benefits are:

  • an essential means of, or unintended by-product of, achieving the charity’s purpose, or
  • genuine compensation for services provided to, or reasonable expenses incurred on behalf of, the charity.

For example, if a cultural organisation’s purpose is to provide opportunities to further the careers of a particular group of artists (such as selling members' artwork through a gallery operated by the organisation), it is unlikely to meet the public benefit requirement and so will not be eligible for registration with the ACNC.

Educational organisations that meet the legal meaning of charity and our requirements for registration may be eligible to register as charities with the ACNC. Educational organisations are commonly registered with the subtype of ‘advancing education’.

Educational organisations that have a purpose of advancing education include those that:

  • provide formal education (for example, non-government schools and universities)
  • provide vocational training
  • are Parents & Citizens Associations
  • conduct research directed to expanding human knowledge
  • provide educational prizes and scholarships.

Advancing education may include less formal education aimed at developing core life skills.

Some other types of educational organisations, such as spiritual teaching or the promotion of a point of view, are not included in the charitable purpose of ‘advancing education’.

Examples of employment organisations include:

  • trade unions
  • employee or employer associations registered or recognised under the Fair Work (Registered Organisations) Act 2009 or an Australian law relating to the settlement of industrial disputes.

Trade unions and employer associations cannot be registered charities. This is because they do not have charitable purposes for the public benefit, as benefits they provide are for members rather than the general public.

Hospitals (and other healthcare providers) that meet the legal meaning of charity and our requirements for registration can apply for charity registration with the ACNC. Health organisations are commonly registered with the subtype of ‘advancing health’.

Certain types of health organisations are not considered to be charities. These include:

Not-for-profit resource development organisations that have a purpose of ‘advancing industry, innovation or agriculture’ – and that meet the legal meaning of charity and our requirements for registrationcan be registered as charities with the ACNC. Resource development organisations are commonly registered with the subtype of ‘other similar purposes beneficial to the general public’.

Resource development organisations should consider who benefits from their organisation. Registered charities are prohibited from providing private benefits (financial or in kind) to their owners, members or other individuals – both while operating and when winding up – unless the private benefits are:

  • an essential means, or unintended by-product, of achieving the charity’s purpose, or
  • genuine compensation for services provided to, or reasonable expenses incurred on behalf of, the charity.

For example, if a resource development organisation primarily operates to promote the business interests of its members, it is unlikely to meet the public benefit requirement of being a registered charity and so will not be eligible to register.

Scientific organisations that meet the legal meaning of charity and our requirements for registration can be registered as charities with the ACNC. Scientific organisations are commonly registered with the subtype of ‘advancing education’.

Examples of scientific organisations include institutions, associations or research funds that are established and operated primarily to advance science – for example, through research, exploration and teaching.

Although other sporting and recreation clubs make a valuable contribution to our community, as a matter of law, their purposes are generally not recognised as charitable and so are not eligible to register as a charity.

A not-for-profit organisation that conducts sporting activities solely to support:

  • relieving poverty, distress or disadvantage of individuals or families
  • caring for the aged
  • caring for and supporting individuals with disabilities

may be eligible to be a registered charity if it meets the legal meaning of charity and our requirements for registration. Organisations with a purpose of relieving disadvantage or providing care for the aged, children or individuals with disabilities are commonly registered with the subtype of ‘advancing social or public welfare’.

For example, an organisation whose purpose is to support people living with disability to participate in sport and improve their quality of life may be eligible to register as a charity.

Charity registration

The ACNC website has more information to help organisations work out if they may be eligible to apply for charity registration, including guidance on:

If you believe your not-for-profit is eligible for registration as a charity, follow our instructions to apply online.

Bulk registration

The ACNC has developed a bulk registration process, which will only be available to eligible applicants.

If you are a peak body for a group of similar organisations that may need to register with the ACNC, please contact us by email at registration@acnc.gov.au to discuss the bulk registration process and your eligibility.

If your organisation is a member of a group of similar organisations, please contact your peak body to discuss if bulk registration is an option for you, or how else they can offer you support with the registration process.

Choosing a date of registration for your organisation

When you apply for charity registration with the ACNC, you will be asked the date from which you wish to register. The ACNC can only register an organisation on or after the latest of these dates:

  • the organisation’s establishment date
  • the date on which the organisation’s ABN was made active
  • the date on which it meets the requirements to be registered as a charity
  • 3 December 2012 (the date that the ACNC was established).

If you want to backdate your organisation’s charity registration, you will need to demonstrate that it was eligible for registration from that time.

Organisations that have been self-assessing for income tax exemption up until now may have been operating for many years. The ATO intends on taking a practical compliance approach, focusing its resources on ensuring organisations are assessing their income tax exemption correctly from 1 July 2023 onwards.

However, the ATO may take compliance action if it identifies deliberate tax evasion or fraudulent behaviour prior to the 2023-24 income year.

Tips for completing a registration application

It is vital any registration application your organisation submits to the ACNC is properly completed. A properly completed registration application is critical to a timely assessment.

Each year, the ACNC receives thousands of applications for charity registration. There are common reasons why we reject some of them as incomplete.

Governing document (constitution or rules)

Your organisation’s governing document must include all required information, such as its:

Organisations applying for charity registration must not submit a draft governing document to the ACNC.

If you do not have a governing document, or you need to update your organisation’s governing document, you can use a template and can adapt it to suit its circumstances. The ACNC has templates available for charitable unincorporated associations and companies limited by guarantee.

If your organisation is an incorporated association, you can use the model rules provided by your regulator (for example, your state Fair Trading or Consumer Affairs).

In your governing document, you need to outline your organisation’s purposes.

When you are creating or updating your governing document, you can refer to our example charitable purpose clauses. You can also find example not-for-profit and winding up clauses in our not-for-profit guidance.

Your governing document should reflect your organisation’s legal structure. Please check that the same structure is showing for your ABN on ABN Lookup.

Charity application form

You need to list the correct number of Responsible People (your organisation may call them board or committee members). You can find the required number of Responsible People in your governing document. You will need to provide the details of each Responsible Person.

Choose the charity subtype that matches the objects in your governing document. You can choose more than one subtype if that matches your organisation’s objects and activities. We have included common subtypes for each of the ATO’s income tax exempt categories in the above guidance.

You will also need to provide details of how your organisation manages conflicts of interest, and how its Responsible People responsibly manage the organisation’s finances.

Be consistent in how you answer questions on the registration form. For example, answers to questions in the section on tax and deductible gift recipient status (DGR) must be consistent with responses across the rest of the form (for example, whether your organisation operates overseas).

Was this page useful?
Why?
Why not?