Following the Coalition's election win in September, the
Government has continued its rhetoric that it will dismantle the
Australian Charities and Not For Profits Commission (ACNC) and move
all regulatory functions to the Australian Taxation Office
With the ACNC still in its infancy, this has brought great
uncertainty to the NFP and charity sectors. Minister Andrews
indicated in mid-October that the Government would begin
consultations with the sector to discuss the Government's
transition plans, with any implementation unlikely to be in place
before the end of 2014.
On balance, it is our view that the ACNC is likely to survive
due to the complexity in unwinding the legislation connected with
it and the political uncertainty around passing the necessary
amendments. In our view it is likely that some of the current, and
what some in the sector would consider more onerous, obligations
upon charities administered by the ACNC may be relaxed where
legislative approval is not required or can be negotiated.
Charities registered with the ACNC
The ACNC currently regulates approximately 60,000 charities.
These charities are all busy preparing to lodge their initial
Annual Information Statements, adjusting accounting practices to
lodge Annual Financial Reports (if you would like assistance please
see our previous blog
CPA Guide helps ACNC Charity Compliance) and focusing on
compliance with recently introduced governance standards.
Whilst Susan Pascoe (the Commissioner for the ACNC) rightly
states that for the ACNC it is "business as usual" until
any legislation is passed amending the ACNC's role, it is fair
to say that the future of the ACNC is uncertain and it is possible
that any legislated outcome may depend on the views of the Palmer
Although the Coalition plans to consult with the sector, any
proposed changes are unlikely to take place before late 2014.
What is proposed by the Coalition?
Specifically, the Coalition has indicated plans for a Centre for
Excellence which it proposes to play an educative role guiding the
sector in "best practice".
A key problem for the Government in implementing its agenda to
dismantle the ACNC is that it does not, and will not, control the
Senate. Labor, the Greens and at least one independent senator have
indicated that they do not support the unwinding of the ACNC. It is
therefore problematic as to whether any required legislation to
unwind or change the role of the ACNC could pass in the Senate
either before or after the new senators arrive on 1 July 2014.
Following the Federal election, Senator Arthur Sinodinos has
been appointed as the new Assistant Treasurer and is now the
Minister responsible for the Australian Charities and
Not-for-Profits Commission (ACNC). Minister Kevin
Andrews is now the Minister for Social Services and his department
also has significant responsibility for the NFP sector more
Labor Government reforms
During their time in office, the Labor Government pushed for a
suite of reforms in the sector and our view in relation to these is
The proposed extension of the ACNC's reach beyond charities
to other NFPs (of which there are approximately 500,000 in
Australia) appears highly unlikely.
The Charities Act 2013 which was introduced and passed
before the election (please refer to our blog
Statutory Definition of Charity Passed by Parliament) provides
a statutory definition of "charity" and is due to
commence on 1 January 2014. In our view, the legislation is
unlikely to be repealed.
The proposal for taxing non-core activities of charities in
some circumstances (generally referred to as the "unrelated
business income tax" or "UBIT") is unlikely to be
pursued by the Government.
The "in Australia" Bill which was introduced into
Parliament to tighten up tax exemptions for charities that do not
carry on their activities principally in Australia lapsed with the
calling of the election. In our view it is unlikely that the
Coalition will reintroduce this.
What should charities do?
Hopefully the coming year will provide some more certainty to
the sector but in the meantime it is "business as usual"
for compliance with ACNC and other legal requirements.
If charities would like to have a say on changes to the charity
sector we recommend that they contact Senator Arthur Sinodinos or
Minister Kevin Andrews.
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.
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