The Department of Social Services has released an options paper
regarding the replacement of the embattled Australian Charities and
Not-for-Profits Commission (ACNC).
The main driver behind the repeal of the ACNC is to remove
unnecessary 'red tape', with the Australian Taxation Office
(ATO) and Australian Securities and Investments Commission (ASIC)
reassuming the functions of the ACNC.
The ACNC Repeal (No 1) Bill 2014, which was introduced on 19
March 2014, does not explain exactly how the Government will
replace the ACNC, but the options paper outlines a number of new
proposals relating to:
In respect of charity reporting requirements and the need for
public accountability, the options paper proposes that charities be
required to maintain a publicly accessible website that details
the names of responsible persons;
details of Commonwealth, state and local government funding;
The proposals put forward in the options paper would result in
charities that are structured as companies being required to report
to ASIC once again.
Charities that are exempt from certain reporting requirements
under the ACNC regime will continue to enjoy this same treatment.
Further, the Government may consider whether a charity will be
given an exemption from separate reporting requirements where it
also reports to other Commonwealth regulators. Without such a
mechanism, it is difficult to see how the Government could meet its
commitment of reducing reporting.
The responsibility for determining charitable status will be
returned to the ATO, with a dedicated operation holding
responsibility for the determination of charitable status and
eligibility for tax exemptions and concessions. This separation is
to curb concerns that the ATO would be otherwise influenced by its
position of conflict as a revenue collecting body.
It is proposed that organisations will still be able to apply
for charitable status online, as has successfully occurred under
the ACNC regime.
The post-ACNC compliance framework will consist of a mix of
ASIC, ATO and state and territory regulatory bodies, each of which
will rely on their current powers to enforce compliance.
Directors' duties, obligations on charities and compliance
measures existing under the Corporations Act 2001 (Cth)
will be reinstated when the ACNC governance requirements are
As the ACNC requirements for directors are generally in line
with the Corporations Act duties, this is unlikely to have
a significant effect on directors of charities structured as
companies that are currently complying with the ACNC
Compliance requirements that were introduced under the ACNC for
small unincorporated charities will be removed. The Government will
focus on arrangements to support self-reporting, thus focusing its
investigations only on areas of high risk, such as cases of wilful
non-compliance with reporting requirements. This may have the
effect of reducing the reporting obligations on charities.
The ACNC Repeal Bill will allow charities until 1 July 2015 to
ensure their websites are compliant with the reporting conditions,
but successor agencies will otherwise assume their new roles
The current arrangements under the ACNC will remain until the
legislation receives royal assent. However, once this occurs, any
assessments of charitable status being undertaken by the ACNC will
be completed by the ATO.
The recommendations canvassed in the options paper seem
imminent, and it is essential that charities and other interested
parties are aware of the changes set to occur and what their new
responsibilities may be.
If you wish to respond to the options paper, written submissions
can be lodged with the Department of Social Services until 20
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