Establishment of the Australian Charities and Not-for-profits Commission (ACNC)
Stemming from the recent Treasury scoping study, the government
has announced the establishment of the Australian Charities and
Not-for-profits Commission (ACNC).
ACNC will commence operations from 1 July 2012. Based on the
Assistant Treasurer's media release it will:
- Initially be responsible for determining the legal status of groups seeking charitable, public benevolent institutions and other NFP benefits on behalf of all Commonwealth agencies. However, the Commissioner of Taxation will retain responsibility for the administering of tax concessions.
- Implement – "report-once, use often" reporting framework
- Provide education and support to the sector on technical matters
- Establish a public information portal by 1 July 2013
- Have its own fully independent Commissioner, reportable directly to Parliament via the Assistant Treasurer
- An implementation Taskforce will be established from 1 July 2011 with consultation with various stakeholders. The head of this taskforce is expected to become the ACNC Commissioner
- An advisory board of legal accounting and NFP sector experts will be set up to provide advice to the ACNC
- The Australian Taxation Office will provide corporate support to ACNC including human resources and IT support.
- The Government will provide $53.6 million over four yearsto fund ACNC
Those familiar with the recent Senate Sub Committee and
Productivity Commission Reports and the Treasury Scoping Study, may
note that the ACNC has a narrower focus than perhaps first
anticipated.
However, the Assistant Treasurer has announced that the Government
will undertake further reviews into the NFP sector's regulation
including:
- Reviews of companies limited by guarantee
- Fundraising and
- Governance
Importantly, the Government will commence negotiations with the
States and Territories on national regulation and the new
regulator.
We anticipate that over the next few months more detail will be
released on the structure and form the Commission will take. This
is a welcomed step by providing the Sector with a clearer
understanding of the Government's approach to national
regulation. We are pleased to see that a separate Commission will
be established and that education and technical support has been
included in the initial brief of the Commission.
As always the devil is in the detail and we will keep you up to
date as the Taskforce tackles the establishment of the
Commission.
Targeting of not-for-profit concessions
As indicated in the weeks before the Budget, the Government has
announced reform in relation to the use of tax concessions by
businesses run by NFP entities.
These reforms will focus on unrelated commercial activities with
income tax being levied on any profits retained in those commercial
activities. In addition, unrelated commercial activities will not
be able to access FBT and GST concessions.
The Assistant Treasurer has confirmed that these reforms will not
affect charitable operations which are conducted commercially such
as "not for profit hospitals, op shops, NFP child care centres
and businesses whose purpose is to provide meaningful employment to
disabled persons." The National Rental Affordability Schemes,
Registered Clubs and the principle of mutuality will not be
affected.
These new arrangements will commence on 1 July 2011 and initially
affect only new unrelated commercial activities which commence
after 7.30pm(AEST) on 10 May 2011. A consultation process will be
undertaken in relation to existing commercial activities "with
the intention of phasing these out over time"
We support the Government's view that tax concessions should be
used for charitable purposes. However, given the current
environment and the challenges faced by the Sector we are
disappointed with the removal of the concessions where these
activities whilst unrelated, ultimately support charitable
missions.
We also anticipate that these measures may ultimately lead to
greater complexity and compliance burden for the sector.
Introduction of a Statutory Definition of Charity
ACNC will develop a statutory definition of Charity applicable
to all Commonwealth agencies from 1 July 2013.
This definition will be based on the 2001 Charity inquiry and the
recent case law in this area. $2.9m over four years will be
provided to ACNC for the development of this definition, implement
system changes and more importantly a reassessment of the
charitable status of entities.
The introduction of a statutory definition is of concern and it is
important that there is consultation with all relevant stakeholder
in the development of this definition.
These are major changes which will affect all Not for Profit
organisations whether large or small and Moore Stephens will be
taking an active role in guiding our clients through this new phase
for the Sector.
Please contact your Moore Stephens relationship partner for a
detailed explanation of how any of these matters and other Budget
measures may apply to you.
This publication is issued by Moore Stephens Australia Pty Limited ACN 062 181 846 (Moore Stephens Australia) exclusively for the general information of clients and staff of Moore Stephens Australia and the clients and staff of all affiliated independent accounting firms (and their related service entities) licensed to operate under the name Moore Stephens within Australia (Australian Member). The material contained in this publication is in the nature of general comment and information only and is not advice. The material should not be relied upon. Moore Stephens Australia, any Australian Member, any related entity of those persons, or any of their officers employees or representatives, will not be liable for any loss or damage arising out of or in connection with the material contained in this publication. Copyright © 2009 Moore Stephens Australia Pty Limited. All rights reserved.