The Coalition announced before the election that it will undertake a major reform of the not-for-profit sector.

The key components of the new Government’s policy on the non-profit sector are as follows:

Abolish the Australian Charities and Not-for-profits Commission (ACNC)

In the Coalition’s view the ACNC, a Labor Party initiative to provide a central regulatory body for the not-for-profit sector, has increased the bureaucratic and administrative demands on the sector without achieving the desired results.

The new Government proposes to abolish the ACNC and return all regulatory powers to the ATO, ASIC and other bodies that held those powers previously.

Establish the Centre for Excellence

The Centre for Excellence will be smaller than the ACNC and its mandate will be focused on supporting the not-for-profit sector rather than regulating it. The Centre will carry out the following functions:

  • provide educational and support services to registered charities;
  • provide assistance with the registration process of new charities and not-for-profit organisations;
  • provide a ‘one-stop-shop’ for information on the sector;
  • advocate on behalf of the sector by representing its interests to government;
  • facilitate communication and interactions between the sector and government;
  • undertake research; and
  • foster innovation.

Reduce the reporting burden

The Centre for Excellence will work with the sector, the Commonwealth, and State and Territory Governments to reduce the reporting burden on the sector by establishing universal financial and reporting standards through a harmonisation of the relevant acts and regulation.

Tax Reform

Tax reform for the sector will also be considered separately to any regulatory reforms. This includes in particular the application of an unrelated business income test.

Re-establish the Community Business Partnership

The Federal Coalition announced it will establish in the first six months of government a Community Business Partnership between the Prime Minister’s Office and community sector and corporate leaders. The partnership will focus on encouraging a culture of philanthropy and giving within Australian society.

Retain current common law tests

The common law test of what is a ‘charity’ will be retained, as will the current Public Benefit Test for funding approvals.

What does this mean for not-for-profits?

Under the new Government there will be substantial changes to the regulatory scheme for the not-for-profit sector including the abolition of the ACNC, establishment of a new ‘one-stop-shop’ for information as well as new financial reporting requirements and taxation reforms.

This is likely to mean changes for you in your reporting and compliance obligations. .