Purpose of the ACNC
The Australian Charities and Not-for-profits Commission (ACNC) commenced on 3 December 2012.
The ACNC establishes a national regulatory system that promotes good governance, accountability and transparency for the Australian not-for-profit sector.
Initially the ACNC will focus on charities by, among other things:
- determining charity status for all Australian Government purposes
- maintaining a charity register
- determining whether a charity is a public benevolent institution or health promotion charity.
As its name indicates, the long term view is that the ACNC will expand its responsibility to all not-for-profit organisations in Australia. There is no publicised date for when this will occur, but it will be after 1 July 2014.
It is also anticipated the ACNC will work with the states and territories to harmonise the reporting requirements of the sector.
What happened on 3 December – who is already registered with the ACNC?
Entities that were endorsed by the Australian Taxation Office as income tax exempt charities on 2 December 2012 (approximately 56,553 entities) were automatically registered with the ACNC from 3 December 2012.
Should all not-for-profits be registered with the ACNC?
While registration with the ACNC is voluntary, it is necessary in many respects to maintain tax concessions.
Registration also means that the entity is subject to legislation that places obligations on the entity and brings it within the ACNC's regulatory powers.
What should not-for-profit entities do now?
All not-for-profit entities, including private and public ancillary funds, should find out if they have been automatically registered with the ACNC and determine if this is appropriate for them.
Whether or not it is appropriate to be registered with the ACNC will most likely turn on whether it is necessary for the entity to continue to receive tax concessions.
If registration is not necessary, the entity should consider the reporting and other obligations and benefits that come with being registered with the ACNC and whether this is appropriate for the entity.
Depending upon what is appropriate for the entity, it should opt in or out of the ACNC's regulations as appropriate.
Entities registered or intending to be registered with the ACNC should:
- check what information is on the ACNC register about the entity to ensure it is accurate and appropriate for a publically searchable record
- determine if they are a:
- small charity (annual revenue of less than $250,000)
- medium charity (annual revenue of $250,000 or more but less than $1,000,000)
- large charity (annual revenue of $1,000,000 or more)
- determine if they fall within a designation in the legislation that affords them an exemption from certain obligations, for example, basic religious charities or non-government schools
- consider their current reporting financial year and apply to the ACNC to change it if it is not 1 July to 30 June
- be aware of the requirements for preparation and lodgement of annual information statements and financial reports as it applies to them
- if there are numerous related entities in a group, consider if they should apply to collectively report to the ACNC
- ensure adequate financial and operational records are kept that comply with the new regime
- review the governance and external conduct standards when they are publicised by the ACNC and ensure the entity's governing documents, policies, procedures and operations comply and if not, amend them
- be familiar with what government departments to report to, what to report and when to report
- most importantly, be familiar with the key dates set out in the legislation.
Not all matters relevant to entities registered with the ACNC are reported only to the ACNC therefore an entity should be familiar with their reporting requirements to the ACNC and also other government departments for example, state and territory departments that regulate incorporated associations and fundraising legislation.
There is a current consultation paper titled 'development of governance standards' in circulation. The closing date for submissions is 15 February 2013.
Please click here to view a summary of the main key dates that all not-for-profits should be aware of in relation to the introduction of the ACNC.
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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.