Compliance Requirements for Community Childcare Centres and Not-for-Profit Organisations in Australia

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Community childcare centres and not-for-profit (NFP) organisations play a vital role in supporting Australian families and vulnerable groups. However, alongside their mission-driven work comes a range of legal, financial, and reporting obligations that must be met to stay compliant with Australian law.

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At Trinity Accounting Practice, we specialise in supporting not-for-profit entities and early childhood centres to navigate the complex compliance landscape—so you can focus on delivering quality care and services to your community.

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This guide outlines everything you need to know about compliance for childcare and NFP organisations, including tax returns, GST, audits, financial reporting, ACNC registration, and more.

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Table of Contents

• What is a Community Childcare Centre or Not-for-Profit Organisation?
• Do You Need to Register with the ACNC?
• Are You Exempt from Income Tax?
• Understanding GST and BAS Requirements
• Lodging Annual Tax Returns: Form 105
• NSW Incorporated Association Tier System
• Audit Requirements and Thresholds
• Record-Keeping and Financial Statements
• Constitution and Governance Rules
• Grants, Funding, and Compliance Risks
• ACNC Obligations: Annual Information Statement
• When to Engage an Accountant
• How Trinity Accounting Practice Can Help

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What is a Community Childcare Centre or Not-for-Profit Organisation?

A community childcare centre typically provides early learning services that are community-managed and non-profit in nature. Similarly, a not-for-profit organisation is established to serve a community, educational, religious, or charitable purpose, without distributing profits to members.

In Australia, these organisations are often set up as:

• Incorporated associations (regulated under state law, such as NSW Fair Trading)
• Companies limited by guarantee (under the Corporations Act 2001)
• Charities (registered with the ACNC)
• Co-operatives or trusts

Their legal structure determines how they must report, what tax obligations apply, and whether they qualify for specific exemptions or concessions.

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Do You Need to Register with the ACNC?

The Australian Charities and Not-for-profits Commission (ACNC) is the national regulator for charities. If your organisation has a charitable purpose (such as providing education, advancing health, or relieving disadvantage), you may be eligible—and in many cases, strongly advised—to register with the ACNC.

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Benefits of ACNC Registration:

• Access to income tax exemption, GST concessions, and FBT rebates
• Enhanced public trust through charity status
• Eligibility for certain government and philanthropic grants

To register, your organisation must meet governance standards, have a valid constitution, and operate for a charitable purpose.

👉 More info: www.acnc.gov.au

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Are You Exempt from Income Tax?

One of the biggest misconceptions among not-for-profit organisations is the belief that they are automatically exempt from income tax. This is not always the case.

Income Tax Exemption Options:

• Registered charities are automatically exempt once registered with the ACNC and endorsed by the ATO.
• Other NFPs (e.g., childcare centres not registered as charities) may self-assess their eligibility based on ATO guidelines.

To self-assess, your organisation must:

• Operate solely for a not-for-profit purpose
• Have a constitution with a not-for-profit and winding-up clause
• Satisfy one of the ATO’s exemption categories (e.g., community service, educational, cultural)

If your organisation is not exempt, it must lodge income tax returns annually and may be subject to tax.

👉 ATO resource: Income tax exemption for NFPs

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Understanding GST and BAS Requirements

If your community childcare centre or NFP has a turnover of $150,000 or more, you must register for GST. Even if your turnover is below the threshold, voluntary registration is possible and can allow you to claim GST credits.

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Once registered for GST, you must:

• Lodge Business Activity Statements (BAS)
• Charge GST on eligible supplies
• Keep accurate records of purchases and income

BAS may be required monthly, quarterly, or annually depending on your ATO settings. Late or inaccurate lodgements can result in ATO penalties.

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Lodging Annual Tax Returns: Form 105

If your organisation is not registered as a charity and is not income tax-exempt, you must lodge a tax return each year. Most not-for-profit companies use Form 105 – Return for NFP Organisations.

Form 105 requires:

• Revenue and expenses
• Asset and liability balances
• Details of members and governance

Failure to lodge can trigger ATO scrutiny, fines, and even loss of tax concessions.

At Trinity Accounting Practice, we can review your structure and help you determine whether a tax return is required, and assist with preparing Form 105 accurately.

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NSW Incorporated Association Tier System

In NSW, incorporated associations are governed by the Associations Incorporation Act 2009. Organisations are classified into Tier 1 or Tier 2 based on their annual revenue or total assets.

Tier 1:

• Revenue over $250,000 OR assets over $500,000
• Must submit audited financial statements to NSW Fair Trading

Tier 2:

• Below both thresholds
• May submit a simpler financial summary
• Audit may not be required unless mandated by funding bodies or your constitution

Confirming your organisation’s tier is crucial to ensure compliance with financial reporting rules.

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Audit Requirements and Thresholds

Even if your organisation is not legally required to be audited under Tier 2 classification, audits may still be required for:

• Government grants or funding agreements
• ACNC registration obligations
• Constitutional rules

Trinity Accounting can liaise with your auditor or recommend a registered auditor to ensure your organisation meets its obligations.

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Record-Keeping and Financial Statements

All not-for-profits and childcare centres must maintain:

• Accurate financial records
• Bank statements and reconciliations
• Receipts and invoices for income and expenses
• Minutes of committee meetings
• Records of funding or grants

You must keep these records for at least 5 years, and they must be available for inspection by members or regulators.

We recommend using software such as Xero for efficient and compliant bookkeeping. Trinity Accounting is a certified Xero Advisor.

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Constitution and Governance Rules

A compliant constitution is essential for NFPs and community childcare centres. Your governing document must:

• Clearly state the organisation’s not-for-profit purpose
• Include a proper winding-up clause
• Outline member rights, meetings, and governance structure

Outdated or missing clauses can lead to funding rejection, loss of ACNC status, or ineligibility for tax concessions.

Trinity Accounting can review or help you amend your constitution to ensure it meets legal and regulatory standards.

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Grants, Funding, and Compliance Risks

Many childcare centres and not-for-profits receive funding from:

• NSW Department of Education
• Local councils
• Commonwealth grants
• Philanthropic foundations

Each funding body may impose specific financial reporting, acquittal, or audit requirements. These must be met to avoid loss of funding or legal issues.

We help clients prepare compliant reports and funding acquittals on time, ensuring accountability and future eligibility.

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ACNC Obligations: Annual Information Statement

If your organisation is registered with the ACNC, you must lodge an Annual Information Statement (AIS) every year. Depending on your revenue, you may also need to lodge:

• Reviewed or audited financial statements (if medium or large charity)
• Changes to responsible persons (e.g., board or committee)
• Updated address and governing document (if amended)

Late lodgement of the AIS may attract penalties and cause your charity status to lapse.

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When to Engage an Accountant

Compliance can be complex and time-consuming—especially when your focus is on delivering essential community services. Working with a qualified accountant ensures:

• You remain compliant with Fair Trading, ACNC, and ATO rules
• Your financials are accurate and audit-ready
• You are claiming every available tax concession
• Your governing document is legally sound

Trinity Accounting Practice supports dozens of not-for-profit and childcare organisations across NSW with everything from bookkeeping and BAS to audits and grant acquittals.

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How Trinity Accounting Practice Can Help

At Trinity Accounting Practice, we understand the unique needs of not-for-profits and community childcare centres. Our team provides:

• BAS preparation and lodgement
• Bookkeeping and Xero setup
• Tax return preparation (Form 105)
• ACNC and ATO compliance support
• Constitution review and updates
• Tier classification and audit readiness
• Grant acquittal reports and financial statements
• Strategic advice and governance support

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With weekend and after-hours appointments available, we work around your schedule to provide practical, personal support.

📍 Visit us at 159 Stoney Creek Road Beverly Hills NSW 2209
☎️ Call 02 9543 6804
🌐 www.trinitygroup.com.au
📅 Book a meeting: https://calendly.com/ramy-hanna

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Conclusion
Running a community childcare centre or not-for-profit organisation is incredibly rewarding—but it comes with serious compliance responsibilities. Trinity Accounting Practice is here to help you meet your obligations with confidence so you can focus on what really matters: serving your community.

Need help staying compliant? Book a free consultation with our team today.

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