Not for Profit Sector- Special Budget Update

MA
Moore Australia

Contributor

Moore Australia logo
Moore Australia part of a global network of offices, providing auditing and financial reporting services, advising local, national and international clients in the public and private sectors. Moore Australia generates annual revenues in the region of $80m. Moore Australia is part of the Moore Global network and has 14 offices with over 450 people nationwide. Moore Australia has extensive experience in state and local government, biotechnology, energy mining and renewables, health and aged care, education, manufacturing, not for profit, property and construction, retail and tourism and hospitality and has a strong presence in the following service lines: Asia Desk, Audit & Assurance, Business Advisory, Taxation, Corporate Finance, Governance and Risk Advisory.
The times they are a changing…… Last night’s budget heralded some of the most significant changes to the Not for Profit Sector. This Not for Profit Sector – Special Budget Update outlines the key changes announced by the Gilliard government as part of the 2011-12 Federal Budget.
Australia Tax
To print this article, all you need is to be registered or login on Mondaq.com.

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.

Not for Profit Sector- Special Budget Update

Australia Tax

Contributor

Moore Australia logo
Moore Australia part of a global network of offices, providing auditing and financial reporting services, advising local, national and international clients in the public and private sectors. Moore Australia generates annual revenues in the region of $80m. Moore Australia is part of the Moore Global network and has 14 offices with over 450 people nationwide. Moore Australia has extensive experience in state and local government, biotechnology, energy mining and renewables, health and aged care, education, manufacturing, not for profit, property and construction, retail and tourism and hospitality and has a strong presence in the following service lines: Asia Desk, Audit & Assurance, Business Advisory, Taxation, Corporate Finance, Governance and Risk Advisory.
See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More