For many in the charities sector, the actual transition to the ACNC and its register has been straightforward. "What was all the fuss about?" you might even say.
Well, there is about to be "fuss" as charities are soon required to complete their first Annual Information Statement (AIS). The ACNC begins consultation on its financial reporting requirements for the 2014 AIS while in Parliament this week, the Federal Government tables the governance standards it intends applying to charities registered with, and intending to be registered with, the ACNC.
AIS AND REPORTING
Completing the 2013 AIS – just around the corner
Most charities will have to complete their first AIS after 1 July 2013 and it will be due at the ACNC by 31 December 2013. We emphasise "most charities" because a charity is required to submit an AIS within 6 months from the end of its reporting period, and the majority of charities report on a financial year basis.
An AIS is the primary method by which charities will report information that they are legally obliged to report to the ACNC on an annual basis.
The inaugural 2013 AIS will not require financial information; however that is to come with the 2014 AIS. There is a step by step guide available on how to complete the 2013 AIS on the ACNC website (www.acnc.gov.au).
In addition to ensuring accurate information is submitted on the 2013 AIS, charities must also provide all information that is mandatory. It is important that all information supplied is true and correct, as the AIS needs to be signed off by a nominated member of the charity or the charity's authorised agent.
2014 AIS up for consultation
As noted above, financial reporting included within an AIS will commence in 2014 and the ACNC has commenced consultation with the charities sector as to those reporting requirements.
As you may recall, charities earning annual revenue:
- under $250,000;
- between $250,000 and $1m; and
- over $1m
will have different financial reporting and audit requirements.
Consultation with the ACNC on the 2014 AIS commences 26 April 2013 and charities can access an online survey as part of this process on the ACNC's website.
GOVERNANCE STANDARDS SHOULD APPLY FROM 1 JULY 2013 – ARE YOU READY?
This week should see the Federal Government table the Australian Charities and Not-for-profits Commission Amendment Regulation 2013 (no 1) (Regulation) for parliamentary scrutiny as provided for under the Australian Charities and Not-for-profits Commission Act (2012).
The Regulation contains the governance standards and they are not negotiable if a charity wishes to remain, or be registered with, the ACNC and therefore operate as a charity within Australia and benefit from its tax concessions with the ATO.
The governance standards deal with:
- purposes and not-for-profit nature of a registered charity;
- accountability to members;
- compliance with Australian laws;
- suitability of responsible entities; and
- duties of responsible entities.
Charities should note that the governance standards are not just a litany of requirements that can be simply added to existing articles of association, constitutions or other governance documents and charters.
Charities need to consider what they individually have to do in order to adhere, and demonstrate that they adhere, to the governance standards. For many this will likely be a combination of amending existing documentation (as referred to above) and revisiting and amending policies, practices and procedures and any standing orders or minutes by way of example.
As with the proposed financial reporting obligations to come in 2014, governance standards do vary depending on the size of a charity.
Subject to the parliament's scrutiny, the governance standards are proposed to commence on 1 July 2013, so Charities should start looking at what they have to do in order to be compliant and to implement action plans that ensure compliance by 1 July 2013.
SPECIAL DISABILITY TRUSTS
For those members of the sector involved in assisting and supporting people with severe disabilities, the Special Disability Trust (SDT) should be a familiar term. The benefits of establishing a succession planning vehicle by way of an SDT for present and future needs of the severely disabled, and tax concessions for both beneficiaries and immediate family contributors would also be well known to many.
It is always timely to remind those who have established SDT's and charities who support the severely disabled that if your SDT trust deed:
- was created before 1 July 2011 and has not been updated; or
- is otherwise non-compliant with legislative requirements
then the tax concessions available for both immediate family contributors and beneficiaries may not be available or otherwise disallowed.
If you think there may be an issue with your SDT trust deed then you should have it reviewed and a deed of variation executed in order to bring the trust up to compliance requirements and maintain its tax effectiveness for immediate family contributors and beneficiaries alike.
SCHOOL BUILDING FUNDS
The ATO released Taxation Ruling 2013/12 regarding school building funds in February 2013 (Ruling). The Ruling, which applies from 13 February 2013 sets out factors for determining:
- what constitutes a school or college;
- whether a building is actually used as a school or college; and
- if a school building fund has been established solely to provide funds for the acquisition, construction or maintenance of a building used as a school or college.
Stakeholders will be aware that the old 50% rule has gone, however the Ruling provides further guidance on mixed use of school buildings which are the subject of such funds whereby:
- use of a building as a school building must be substantial; and
- any non-school use of such a building must not materially limit, detract or be incompatible with the use of the building as a school.
The Ruling also deals with:
- allowable disbursements from school building funds;
- confirmation of the sole purpose test in regards the establishment and maintenance of a school building fund; and
- requirements for loans by school building funds.
School Building Funds which are committed to acquisition or construction arrangements before 13 February 2013 are not subject to the Ruling.
Trustees and managers of school building funds should obviously be mindful of the Ruling in regards future school building projects but should also be clear and check as to whether any current proposals or even established School Building Funds are subject to the Ruling.
To complete your 2013 AIS, simply visit the ACNC website, or to discuss this and any other compliance queries (including complying with the ACNC governance standards), please contact a member of our Charities and Not-for-profits team.
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.