ACNC “Design”
Author: Jonathan Casson, Partner
21 December 2011
On 9 December the ACNC Taskforce issued a discussion paper entitled Australian Charities and Not For Profits Commission – Implementation Design.
The outline of the proposed “1-Stop Shop Regulator” was released on 9 December 2011. Three key aspects are introduced:
- Proportional reporting through a three tiered system based on charity revenue and DRG status;
- A “charity passport”; and
- A “fixed form” for financial information based on standard business reporting and standard charter of accounts. Annual reporting will be imposed upon a number of organisations that might not have reported previously and it will require an annual information statement and a financial report. All registered charities will have to provide annual information statements in an approved “fixed” form and financial information, including that narratives and updates of the charity taskforce activities. Annual financial reports must also be provided for medium and large category and DGR entities. Large entities will be required to provide audited financial reports.
Internet Access
From 1 July 2012 charities will be able to interact with the ACNC through its website. Online services will be provided from 1 July 2013. Activities with ACNC will be restricted to charities until further advised.
Charity Definition
From 1 July 2013 registered charities will be transitioned from the Australian Taxation Office will be reviewed to ensure they meet the statutory definition of “charity”. Clearly there is a potential for some organisations that currently are treated as charities to loose their charity status depending on the outcome of the inquiry relating to the definition of charity.
Initial Scope
The ACNC’s initial scope will cover only charities (including PBIs). This means that 56,000 charities in Australia are currently endorsed by the Australian Commission of Taxation will be subject to regulation under the ACNC. It is not clear how quickly (or even at all) NFP entities will be covered by the ACNC.
Core Role
From 1 July 2012 the ACNC will be responsible for determining the legal status of and registering new entities seeking charitable status. Existing charities that are already endorsed by the ATO will be automatically registered with the ACNC from 1 July 2012. They will not be required to re-register at that time. The ATO will transfer the basic charity information to the ACNC for those entities. All registered charities will be published in a list by the ACNC on 1 July 2012. However existing charities will be required to provide further information as at 1 July 2013 and a review will be undertaken in respect of such charities subject to the proposed new statutory definition of charity from that date.
Incorporated Associations
Incorporated Associations will be required to meet the regulatory requirements for the ACNC from 1 July 2012 and the definition of charities from 1 July 2013.
Australian Taxation Office
The Taxation Office will continue to retain responsibility for administering tax concessions for the NFP sector even though the ACNC determines the charitable status of such organisations. The idea is that there will be easy transfer of information between the two departments to allow the ATO to continue to manage the enforcement of the tax law and the determination of relevant tax concessions. This is an area which is clearly potentially one of disconnect and break down in communications and it is hoped that it does not degenerate into a “turf war” between the two regulatory bodies.
Regulatory Approach
The ACNC expresses that it will be guided by “well accepted regulatory principals of proportionality, transparency, fairness, timeliness and consistency.” Charities will be presumed to be acting honestly until shown otherwise. In cases of non compliance graduated powers will be used so that only in the case of deliberate wrong doing will the ACNC take specific action including self correction. In cases of deliberate wrong doing the ACNC will take more extreme measures.
Please do not hesitate to contact Jonathan Casson or Lena Banoob for further information.
Jonathan Casson
Partner
T: +61 2 9390 8316
E: jonathan.casson@holmanwebb.com.au
Lena Banoob
Senior Associate
T: +61 2 9390 8308
E: lena.banoob@holmanwebb.com.au