Most NFP organisations are exempt from income tax. However, this doesn’t mean that they aren’t a taxpayer (particularly GST, FBT and PAYG withholding) or that they aren’t subject to Australian Taxation Office (ATO) scrutiny. In fact, the extent of the tax concessions and exemptions available to NFPs, along with the number of Australians they employ, means that they are a key sector in the overall tax system.
At our NFP seminar earlier this month, we held a session with Jennifer Moltisanti, Assistant Commissioner, Not for profit Centre and Government Relations at the ATO to discuss how the ATO engages with the NFP sector and what NFP leaders need to be across.
We’ve provided some informative slides from the session on the following topics:
- An overview of the sector and key stats.
- How the ATO engages with the NFP sector to assist them to meet their obligations.
- A prototype of an ‘intelligence scan’ completed for School Building Funds.
- Tax measures impacting the sector including income tax transparency for NFP’s, DRG requirements, stimulus measures, digital programs and Mandatory Director IDs.
- ATO public advice and guidance.
Here are some audience questions asked during our recent NFP virtual seminar and answered by the ATO’s Jennifer Moltisanti around Director ID obligations for Not for Profits. You can also read more on this in our recent article Do Not for Profit Directors require a Mandatory ID number?
Q1. What obligations does a NFP have to ensure that their directors have a Director ID by the due date?
Response
While the obligation is the directors’ responsibility to comply, all entities that will need directors to have a Director ID (or those that manage their compliance obligations and affairs) should be encouraging existing directors to apply for their ID as soon as possible (so not to avoid a ‘last minute’ rush in November 2022).
In so far as first-time (new) director appointments, we encourage directors to apply prior to their appointment. For this cohort, we would encourage the Director ID application prior to, or at the same time they are providing their consent to be a director. Under section 201D of the Commonwealth Corporations Act 2001 a company is required to obtain a signed consent to act as director from all directors, before they are appointed.
| Type of entity |
What to look for |
Public company (listed and unlisted)
Any type of public company including a company limited by guarantee which is a common structure used for Not for Profit and charitable organisations. |
Australian company number (ACN)
‘Limited’ or ‘Ltd’ in name |
Proprietary (private) company
A proprietary company is the most common type of company. It is a common structure used for:
- small businesses
- a corporate trustee of a self-managed superannuation fund (SMSF). |
ACN
‘Proprietary Limited’ or ‘Pty Ltd’ in name |
Aboriginal and Torres Strait Islander corporations
An incorporated body designed to suit the needs of Aboriginal and Torres Strait Islander people. These corporations are registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 and regulated by the Office of the Registrar of Indigenous Corporations (ORIC). |
Indigenous corporation number (ICN)
Name will include one of the following:
- 'Aboriginal corporation’, ‘Torres Strait Islander corporation’ or a combination of both
- 'Indigenous corporation'
- 'registered native title body corporate' or 'RNTBC' |
Registered foreign company
Foreign companies that want to do business in Australia need to be registered under the Corporations Act 2001.
All the Directors of a registered foreign company, including those who reside overseas, will need a director ID. |
Australian registered body number (ARBN)
‘Limited’ or ‘Ltd’ in name
‘Proprietary Limited’ or ‘Pty Ltd’ in name |
Certain types of incorporated associations
An incorporated association is a common structure used for Not for Profit organisations like sporting clubs and community groups. These organisations are regulated by state and territory governments.
If an incorporated association trades outside the state or territory in which it is incorporated, it needs to be registered under the Corporations Act 2001 as an Australian registered body.
If your incorporated association is an Australian registered body, the directors of the association need a Director ID. |
‘Incorporated’ or ‘Inc’ in name
and
an Australian registered body number (ARBN) |
Registered charities
Some Not for Profit organisations choose to register as a charity with the Australian Charities and Not for Profits Commission (ACNC).
If your charity is a company, registered foreign company, registered Australian body or an Aboriginal and Torres Strait Islander corporation, the Directors of the entity need a Director ID. |
Any of the above. |
Q2. Does the new Director ID requirement apply to company secretaries or public officers?
Response
You don't need a Director ID if you're:
- a company secretary but not a Director
- a public officer
- acting as an external administrator of a company.
Please refer to the ABRS website for more.
Q3. Does a Board member of a NFP not registered with ASIC but only with the ACNC require a Director ID?
Q4: Does the Director ID application have to happen through ASIC even though NFPs are regulated by the ACNC?
Response
Director IDs are administered by the Australian Business Registry Services (ABRS) and not ASIC. Examples of the types of entities that will need directors to have a Director ID are provided in the table above in question one.
Q5. If your charity is not a company that is registered with ASIC or an incorporated/unincorporated association but incorporated by an Act of Parliament do directors need to have a director ID?
Response
Essentially, you need a Director ID if you’re an eligible officer of:
- a company, a registered Australian body or a registered foreign company under the Corporations Act 2001 (Corporations Act)
- an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).
If the entity you are enquiring about is regulated by either of the above Acts, directors are required to obtain a Director ID. See examples of those required in the table above. The ABRS website can also provide guidance.
Q6. How do we get our number?
Response
You need to apply for your own Director ID. The fastest way to do this is online using the myGovID app. The ABRS website explains the steps for both online and non-digital application. Learn how to apply for your Director Identification Number here.
