Now that we are nearing six months since its commencement, charities have acquired 'the feel' for how ACNC will operate.
Critical dates past and looming are:
- 2 June 2013 - date by which a charity which has been registered can elect to opt out of registration;
- 30 June 2013 – end of the first period to which an Activity Statement will relate for charities with a 30 June accounting period;
- 2 December 2013 – date by which a religious organisation can "opt in" to the register;
- 2 months from receipt of ACNC letter enclosing form of Confirmation Details statement it should be completed and returned to ACNC;
- 31 December 2013 – last date by which the initial Activity Statement must be filed for those charities with a financial period ending 30 June 2013.
What can be achieved in the next three sitting weeks?
There are several items of legislation which have been introduced but are unlikely to be reached before Parliament rises for the election in September 2013:
- the commencement of the governance regulations (which have been passed by the lower house but are subject to a disallowance motion in the Senate);
- the external conduct standards (ie how a charity deals with overseas activity)
- the unrelated business income tax legislation.
Concerning point 3, if the legislation is implemented, all unrelated new commercial activities conducted by a charity will from 1 July 2014 be subject to income tax. Something is "new" if a charity began the activity after 10 May 2011. Great uncertainties surround whether a commercial activity is 'related', 'ancillary' or 'commercial': it is clear that a charity can run a commercial activity without being taxed so long as profit is paid towards the charitable objects of the organisation.
With respect to the statutory definition of "charity", the Bill has been introduced so may become law in the remaining sitting days. Our April newsletter, ( view here) discussed the exposure draft. The Bill includes some changes but if anything they clarify the exposure draft. The start date for the definition is extended to 1 January 2014.
We refer to two recent applications for registration to the UK Charities Commission and expect the ACNC will keep aware of such matters in discerning applications that are made to it.
What awaits the ACNC if a Liberal party government is formed after September?
Robert Andrews initially announced that he would abolish the Commission, however, his attitude has modified so that its role would be limited to a place of education but regulatory powers would be removed.
Alert for religious institutions
If you are a religious institution (that is, an unincorporated group of persons involved in the advancement of religion, often akin to your canonical entity but distinct from your statutory body corporate and until now have not paid income tax even though you have not been endorsed by the Australian Taxation Office as exempt from income tax, now is the time to apply to be registered as a charity with the ACNC.
This is necessary because with the introduction of ACNC, the ability for your institution to make a self assessment on whether or not it would be liable to income tax, has been removed. Therefor the only grounds upon which your exemption continues and you remain eligible for other tax benefits (most notably uncapped fringe benefits for religious practitioners) is provided you have been registered as a charity with the ACNC and in turn ATO grants you income tax exemption. You must opt in by 2 December 2013 by using the attached form [ Click here to access form]
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.