A new federal regulator for not-for-profit organisations
What charities are getting for Christmas this year is a new federal regulator and some extra compliance obligations.
If you work in the not-for-profit sector, especially within a charity, you have a busy December ahead, learning how the newly established Australian Charities and Not-for-profit Commission (ACNC) will affect your reporting and governance systems and impact your access to Commonwealth tax concessions and benefits.
The recent passing of the Australian Charities and Not-for-profit Commission Bill 2012 and Australian Charities and Not-for-profit Commission (Consequential and Transitional) Bill 2012 established the ACNC with a charter of reducing the regulatory burden on the not-for-profit sector.
However, its mandate is also to strengthen the sector’s transparency, governance and accountability, and provide the public with information on the sector, which means new obligations for reporting and record keeping and ensuring particular standards of governance and conduct.
The launch phase of the ACNC this December, requires charities to register with the ACNC to gain or maintain access to Commonwealth tax concessions and other government benefits.
South Australian reforms
Here in South Australia, our state was the first to fall into line with the ACNC, with the government set to make amendments to its incorporated associations and charitable collections legislation to harmonise reporting requirements and authorise charities to collect charitable donations in SA once they have formally registered with the ACNC.
South Australia’s Deputy Premier and Attorney-General, John Rau has welcomed this, saying “Once the reform process is complete we will look at our legislation and harmonise reporting processes for small, medium and large organisations within the framework of the new ACNC Act”.
What registered charities need to know about reporting…
One of the new elements under the ACNC which registered charities will need to be ready to comply with is the reporting obligations. Below is a snapshot of the reporting requirements that apply to registered charities:
- Charities registered with the ACNC are required to provide Annual Information Statements, containing a charity’s operations and finances from the 2012-2013 financial year and will need to be lodged by most charities with the ACNC by 31 December 2013. Financial Reports are required to be provided from the 2013-2014 financial year, with the first report due by 31 December 2014. Auditing and review of the financial reports will be based on revenue.
- Reporting requirements are proportional to the size of the registered charity and the system is based on a revenue threshold, with 3 tiers for small, medium and large charities: Small Registered Entities – Annual revenue less than $250,000; Medium Registered Entities – Annual revenue of more than $250,000 but less than $1 million; Large Registered Entities – Annual revenue of $1 million or more.
- Medium entities can choose to either have their financial reports audited or reviewed, whereas large entities will be required to have their financial reports audited.
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This article is posted in Adelaide, South Australia by Tri-meridian Corporate & Commercial Law and is intended to be used as a guide only. It is not, and is not intended to be, advice on any specific matter. We do not accept responsibility for any acts or omissions resulting from reliance upon the content of this article. Before acting on the basis of any material in this article, we recommend that you consult your professional adviser.