New ACNC draft legislation released

The Assistant Treasurer has released the final draft ACNC bill to a Parliamentary Committee for consideration over the winter break.  There have been some significant changes to the proposed legislation. 

Financial reporting changes

The following changes have been proposed:

	The reporting and lodgement tiers are now solely based on turnover.  Whether or not your organisation operates a DGR is no longer relevant to the reporting tiers.
	Turnover less than $250,000: No lodgement of financial statements required
	Turnover of $250,000 to $1,000,000: Financial statements must be audited or reviewed and lodged
	Turnover of over $1,000,000: Financial statements must be audited and lodged.

	There are now major exemptions for "Basic Religious Charities" (see below).
	Registered charities now have six (6) months from the end of their financial year to have financial statements and annual information reports lodged with the ACNC (This was previously four months).
	The first annual information statement to be lodged by 31 December 2013.
	The first audited or reviewed financial statements to be lodged by 31 December 2014.
	Existing charities that currently report under an Australian law on the basis of an existing substituted accounting period (SAP), can apply to have their SAP retained provided they notify the ACNC before 31 March 2013.  All other charities will need to apply for a SAP.
	The ACNC may approve a new type of reporting for a group of entities, known as joint or collective reporting.  This will enable entities to report on a line-of-activity rather than an entity-by-entity basis.
	The auditor or reviewer of financial statements must include in their report whether the financial statements meet the requirements of the ACNC Act.

Concessions for Basic Religious Charities

Basic Religious Charities (see the following definition) will enjoy the following concessions:

	They will not be required to lodge financial statements
	Boards and responsible entities cannot be suspended or removed by the ACNC

However, many churches and religious organisations will not qualify as a basic religious charity.

What is a "Basic Religious Charity"?

A Basic Religious Charity is defined as a registered charity whose purpose is the advancement of religion and cannot be registered as a charity under another category of charity.  However, a religious charity will not be a Basic Religious Charity if it:

	Is established as a company
	Is structured as a state based incorporated association
	Is established under the ATSIC Act
	Is a DGR or operates a DGR gift fund
	Reports on a group basis or
	Received government grants within the last two years.

Religious institutions which are not currently endorsed as income tax exempt and as a charity must notify the ACNC by 30 September 2013 or risk losing their income tax exemption and FBT exemption.

ACNC registration, compliance and Information Portal

	The ACNC has shortened their list of types and subtypes of charities. There is now the four heads of charity as well as public benevolent institution, health promotion charity and child care services.
	The ACNC will have wide ranging powers to investigate fraud and non-charitable uses of funds.  The investigation powers will be similar to those of the ATO.
	The ACNC will have a graduated compliance regime however, the emphasis will be on education and training. But graduated powers will be used should persistent or serious non-compliance occur.  These powers include warning notices, directions, enforceable undertakings, injunctions, suspension or removal of responsible entities and management and revocation of charitable status and tax concessions.
	If an organisation agrees to comply with the rules of another organisation (such as a peak body or denomination), the ACNC portal may require the constitutions of both organisations to be published on the ACNC portal.
	Committee members of unincorporated associations will be personally, jointly and severally liable for penalties imposed on the organisation for breaches of the ACNC bill.
	The information available on the public ACNC portal will include any ACNC enforcement action taken and its resolution.

Governance standards

The final draft of the legislation allows the government to make regulations later this year regarding governance standards which will apply to registered charities.  The detailed content of the governance standards is still being developed and will apply from 1 July 2013.

Published : 16 July 2012