This is a follow up article on the ‘Update on the Not-for- Profit Sector Reforms’ article published on 25 July 2012.
The Australian Charities and Not-for-Profits Commission Bills received Royal Assent on 3 December 2012. The Australian Charities and Not-for-Profits Commission (ACNC), which is the national independent regulator for charities in Australia, commenced its operations on the same day.
Organisations that were endorsed by the Australian Tax Office (ATO) to receive charity tax concessions prior to 3 December 2012 have been automatically registered with ACNC and there is no requirement to re-register. Automatically registered charities have until 2 June 2013 to opt-out of registration with the ACNC. Charities that opt out prior to this date will however lose their eligibility to receive any charity tax concessions with effect from 2 December 2012.
Religious institutions that have been self-assessing as income tax exempt have not been automatically registered with ACNC as they were not endorsed by the ATO prior to 3 December 2012. Self-assessing religious institutions may apply to opt-in for registration with the ACNC at any time up to 2 December 2013 and if they do, they will be treated as a religious charity by the ACNC with effect from 2 December 2012.
The ACNC maintains a public database of organisations that have been registered as charities and the register is available via the ACNC website at www.acnc.gov.au.
Registration is voluntary but if a charity does not register with the ACNC it will not be eligible to access a variety of Commonwealth exemptions, benefits and concessions. New organisations that wish to be registered with the ACNC may apply for registration through the ACNC website. To become registered, the organisation must:
- be not-for-profit
- comply with the governance standards and the external conduct standards, which are still in the process of being finalised and are expected to apply from 1 July 2013
- have an Australian Business Number, and
- not be involved in terrorist or other criminal activity.
Currently, registration with the ACNC is limited to charities only. Until a new statutory definition of ‘charity’ is introduced in July 2013, the ACNC will apply the common law definition of charity to determine whether an organisation is eligible to be registered (i.e. it must be not-for-profit, have a charitable purpose and be for the public benefit).
From 3 December 2012, all registered charities are required to:
- notify the ACNC of any changes to their legal name, address for services, details pertaining to responsible persons and governing rules;
- keep financial and operating records and provide such records to the ACNC when requested, and
- file annual information statements with the ACNC from the 2012-2013 reporting period onwards.
In addition, medium and large charities must file annual financial reports from the 2013-2014 reporting period onwards. A medium charity is a charity with annual revenue of $250,000 or more but less than $1 million. A large charity is a charity with annual revenue of $1 million or more.
It is expected that registered charities will be contacted by the ACNC in February 2013 to request more information such as details of the charity’s responsible persons and to inform the charity as to their ongoing obligations and the limited circumstances in which the charity could apply to exclude certain information from the ACNC register.
ACNC and the Australian Securities and Investment Commission (ASIC)
For the 2013-2014 reporting period onwards, charities registered with the ACNC that are also registered with ASIC will no longer be required to comply with some of their reporting requirements under the Corporations Act 2001 (Cth) (Corporations Act) for as long as the charity remains registered with the ACNC. Such organisations will no longer:
- be required to lodge changes to their constitution with ASIC (for public companies);
- be required to advise ASIC of changes to their registered address, principal place of business or contact address
- be required to advise ASIC of retirements and appointments of directors, alternate directors and company secretaries
- receive an annual statement or be required to pay the annual review fee to ASIC (except where the latest annual review date was prior to registration with the ACNC).
For the 2012-2013 reporting period, charities that are registered under the Corporations Act must still provide financial statements to ASIC. This requirement and other obligations such as procedures about annual general meetings and directors duties will continue to apply until the governance and external conduct standards in the legislation come into effect.
The ACNC and ASIC are currently working together to define their respective roles and it is expected that further announcements on this issue will be made in due course.
Governance and Financial Reporting
On 17 December 2012, the Government released its public consultation paper on governance standards for charities registered with the ACNC together with the draft financial reporting regulations under the ACNC legislation framework. Submissions are invited up until 15 February 2013.