This year thousands of Australian not-for-profits are at risk of losing their tax-exempt status due to government mandated administrative reforms. But a new solution created by Deakin University is coming to the rescue.
Deakin has teamed up with Neighbourhood Houses to develop a simple online tool that can help not-for-profits (NFPs) better understand the administrative changes and determine how to secure or retain a tax exemption if they are eligible.
Cameron MacRae is the Chief Operating Officer of the Australian Neighbourhood Houses and Centres Association, which represents more than 1000 Neighbourhood Houses Australia-wide – including many men’s and women’s sheds and community learning centres – that in turn support thousands more community groups.
‘Each of these community organisations rely on an income tax exemption to be financially viable and deliver their important work, and many are run by a team of volunteers with little to no legal or accounting experience,’ MacRae said.
‘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.’
The Australian Tax Office (ATO) reforms were first announced in 2021, designed to enhance trust and confidence in the sector by ensuring only eligible NFPs access income tax exemptions, and that NFPs operate on a level playing field.
From July 2024, non-charitable NFPs with an active Australian business number (ABN) – about 157,100 organisations by ATO estimates – will be required to lodge an annual self-review return to access an income tax exemption.
An important part of this will be for NFPs to ensure that their constitutions or rules are up to date, their statement of purpose is compliant, and their policies fulfill relevant obligations. Otherwise, they may determine that registering as a charity is instead the best way forward, which requires its own set of criteria to be managed.
MacRae – who is currently studying for a Juris Doctor at Deakin Law School – said he approached Deakin for help after realising that the changes were a ticking time bomb for his member organisations, as well as non-profits around Australia, if they didn’t have the skills or understanding to address them properly.
He has been running weekly forums for Neighbourhood Houses to help guide this work, but hopes the Deakin developed online tool will drive greater buy-in from a wider group of members, who will be able to use the tool to get a better insight into their organisation’s individual requirements.
‘Most of our members have written up their founding documents decades ago and haven’t revisited them since. Almost all the documents we review do not meet the requirements set out under the new obligations, so it’s critical we act fast,’ he said.
Deakin’s Executive Dean for the Faculty of Business and Law Professor Jenni Lightowlers said the project was a high-impact example of the university’s commitment to community service.
‘Deakin isn’t just a one-way institution; we listen to our students and learn from them too. We want to work with our community to solve real-world problems,’ Professor Lightowlers said.
‘We’re always asking how we can make a difference, how we can use our expertise to make a meaningful change in the world. So, when Cameron approached us with this problem, it offered the perfect opportunity to put our values into practice.
‘There are thousands of community groups that will be grappling with these changes. 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.’
