Following is a list of frequently asked questions regarding community radio stations that may need to register as charities with the ACNC in response to ATO changes to the way not-for-profits self-assess as income tax exempt.
Our station is not a charity and has never paid income tax before, why do we need to now?
The ATO has introduced changes to the way not-for-profits self-assess as income tax exempt. These changes affect thousands of not-for-profits around the country.
A not-for-profit that meets the legal definition of a “charity” cannot self-assess as income tax exempt through the ATO’s new self-reporting tool.
The ACNC has advised the CBAA that community radio stations have “charitable purposes,” and already up to 60% of community radio stations are registered charities.
The CBAA recommends joining our streamlined ACNC registration process as the best way forward to secure a long-term income tax exemption.
What is the deadline to apply?
The ATO’s not-for-profit self-review is due on October 31st 2024, with an extension to March 31st 2025, if needed. No application is required for this extension.
However, the CBAA will be submitting applications on behalf of stations starting in September, with support for stations to update their constitution as required and submit applications as soon as possible.
Have other radio stations self-assessed and been knocked back?
The self-reporting system is new, we are not aware of any stations that have attempted to use this system yet, however, the ACNC have said that community radio stations are charitable and therefore under the ATO’s self-assessment tool community radio stations will be taxable if they do not register with the ACNC.
My football club is not required to register with the ACNC, why does my station?
The ATO’s administrative changes to self-assess eligibility for income tax exemptions apply to non-charitable not-for-profits. Social groups and sporting organisations are the most common types of not-for-profits that are eligible for an income tax exemption using the self-assessment tool.
As community radio stations meet the legal definition of a charity, we are required to register with the ACNC to access an income tax exemption.
If we register, can we start offering tax deductible donation receipts?
To offer donors tax deductible gift receipts, your station will need to apply for Deductible Gift Receipt status (DGR). This is an additional hurdle that can only be pursued after your station is a registered charity.
If your station would like to seek DGR in future, the model constitutional changes provided include additional clauses to ensure your constitution is DGR ready.
If the change is only administrative, was our station required to pay income tax in previous years? Do we need to review past finances to pay income tax?
No. The ATO has recognised that many not-for-profits have made genuine errors when they incorrectly self-assessed as income tax exempt in the past. They have stated their compliance approach will be to focus resources on the 23/24 financial year to ensure not-for-profits get it right going forward.
What is the difference between the income tax exemption changes and our regular BAS reporting?
Your regular BAS reporting covers GST related transactions and tax withheld from wages if that applies to you. The income tax exemption is a separate matter.
Does our station need to continue reporting BAS statements once we become a charity?
Yes. If you are registered for GST and/or pay wages, you will still have to prepare a BAS.
Our financial year runs January to December, when does the ATO’s changes to self-reporting apply to me?
Substituted accounting periods (SAPs) apply to organisations that have a different financial reporting period to the standard tax year of 1 July to 30 June. Some that report under a SAP may not have their SAP approved by the ATO.
If your station has an ATO approved SAP, you can find the deadline for self-review on the ATO website.
However, the CBAA recommends joining our streamlined charity application now, as we will provide support and ease the process well before the deadline for stations.
How does registering as a charity affect sponsorship?
Becoming a charity doesn't affect your sponsorship income, it's a legitimate source of revenue for community radio stations, whether you're a registered charity or not.
However, stations that do not register as charities will be categorised as taxable not-for-profits through the ATO’s NFP self-review return. Stations will be required to submit an annual tax return and you may be required to pay income tax.