The ACNC will commence on 1 October 2012. Its main aims are to promote good governance, transparency and accountability to donors, to governments and the public generally, and to minimise regulatory duplication.
The ACNC will provide:
- a one stop shop for reporting: ie it will be the sole determiner of charitable, public benevolent institution, and other not-for-profit status for all Australian Government purposes
- a register of charities in lieu of ATO endorsement,
- a searchable portal with information on entitles including financial reports (not to operate until 1 July 2013),
- an independent commissioner,
- an advisory board, and
- obligatory annual reporting statements.
Registration is voluntary but necessary if an entity seeks Australian government grants, contracts or tax concessions.
Each organisation has the choice of which of its operating "entities" it chooses to register, and some small charities, which make losses, and do not receive grants or government contracts, may choose to remain outside the regime, and not register.
From 1 October, 2012, all existing charities endorsed by the ATO will automatically be transferred to the ACNC register. Over time, the ACNC will "audit" the organisations which were automatically transferred to ensure they satisfy the criteria of a registered entity as identified under the new Act.
For an entity seeking charitable status from 1 July 2013 onward, the following tests must be met:
- It must be a "not-for-profit entity";
- It must meet the governance requirements in the legislation;
- It must have an ABN;
- It must not have previously been a registered entity;
- It must not be a terrorist, criminal, outlaw or similar entity;
- It must have "charitable" or "not-for-profit" purposes, namely:
- charitable purpose as defined by the common law definition of charity (which definition will be replaced by a statutory definition from 1 July 2013); or the purpose of
- promotion of Australian industry;
- encouragement of community entertainment;
- scientific purposes;
- advancement and furthering the interest of employees or employers; or
- community service purposes (except political or lobbying purposes).
The annual statement
Reporting commences from 1 July 2013 based on activities of the entity in the period 1 July 2012 to 30 June 2013, reports to be lodged with ACNC by the 31 October following. The Commissioner has a discretionary power to vary the accounting period, if "the entity demonstrates a genuine need to adopt an alternative accounting period". There is some indication, that notwithstanding this test, entities will initially be able to retain their existing reporting periods
Depending upon size, the level of reporting will be more or less detailed and in addition to financial activity reports, will need to include evidence that governance standards have been met, with explanation of how the entity has fulfilled its purposes. Any entity with a turnover above $250,000 per annum, (and less, if a DGR) must either have their financial accounts reviewed or audited, by a registered company auditor, or in the case of a review, by a member of a professional body set out in the Corporations Act 2001. Due to extensive push back by the sector, it is now likely that initially the ACNC will accept reports in the form already being used by the entity (eg often special purpose accounts), and not require entities to immediately convert to general purpose accounting standards. The Commission can also request special purpose reports where information beyond that contained in general purpose reports is required, but these cannot be required for events more than six years earlier.
Can any information be withheld?
The Register will be searchable and available to the public, but the Commissioner may withhold information if for example it is commercially sensitive, has the potential to cause detriment to the registered entity or an individual, if it is of a personal nature or if it is not in the public's interest if the information appears. The Register can also post warnings if fines have been issued against an organisation by a court for breaches of the ACNC Act.
It remains to be seen if a distinction will be made between reporting by entities that receive public donations and other entities that do not.
ACNC as a compliance reviewer and enforcer
The Commissioner is empowered to investigate, inspect (premises and documents), require entities to give enforceable undertakings, make directions, seek injunctions and remove trustees. Overall, the regime is reflective of that applied by ASIC and ATO and allows extensive discretion in the Commissioner and broad scope in application of the listed powers. ACNC have advised initially its focus will be on educating rather than enforcing.
|The Commissioner is a statutory
office appointed for 5 years and will report to Parliament through
the Assistant Treasurer.
The Commissioner must disclose any conflict of interest and must provide an annual report to the Minister. There is capacity for the Commissioner to delegate to a suitably qualified senior public servant. The Commission will comprise staff from the ATO.
Left: Susan Pascoe, AM Interim Commissioner and Head of ACNC Implementation Taskforce
The Advisory Board
|A board of advisers will make
recommendations to the Commissioner, who is not obliged to take
that advice. The Board will comprise between 2 and 8 people with
expertise in charity and not-for-profit entities, and
qualifications in law, accounting, or taxation. The Advisory Board
will be chaired by Robert Fitzgerald AM and will meet four times
each financial year.
Left: Robert Fitzgerald AM Chairperson Advisory Board
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.