Australia’s first Charities and Not-for-profits Regulator
Is your organisation ready?
On 1 October 2012, Australia’s first charities and not-for-profits regulator, the Australian Charities and Not-for-Profits Commission (ACNC), will begin operation.
There has been a lot of coverage about this, but what does it really mean for your organisation in a practical sense, once the ACNC is up and running?
In light of the release of an Implementation Report by the ACNC Implementation Taskforce and with 1 October looming, we highlight the latest news concerning this regulator and some of the practical implications for organisations so that you can be certain concerning what is in store for your particular organisation.
To recap, at the moment charities in Australia are regulated by Federal, State and Territory laws. The ACNC is intended to be a one-stop shop for charities to streamline their regulatory and reporting interactions with Government agencies. This will reduce the red-tape for charities and also allow the public to access information about charities from the one place, which will encourage transparency and promote public trust and confidence.
The Government has set up an ACNC Implementation Taskforce which has been busily working to prepare for the start of the ACNC’s operation. The Implementation Taskforce has recently released an Implementation Report (Implementation Report) setting out the planned implementation process which will be rolled out in phases over the coming years and also some new details about the registration process.
The Implementation Report looks at 5 key action areas that will underpin the ACNC’s functions:
1. Registering entities – charities will be registered on an online register;\
2. Developing a reporting framework – the reporting requirements are yet to be finalised but the aim is to cut red-tape by requiring charities to report once to the ACNC, so that other Government agencies can access that information, rather than asking the charities for the same information;
3. Going online – charities and the public will be able to access certain information on the ACNC website (live from 1 October 2012);
4. Helping charities and the public – the ACNC will provide charities with guidance and general advice and education about good governance, accountability and transparency; and
5. Engaging with stakeholders – the ACNC has and will continue to engage with various stakeholders about its plans.
What does it mean for your organisation?
There are several practical points for you to be aware of, taking into account the recent information provided in the Implementation Report:
- Who needs to register – From 1 October 2012 to 2014, the ACNC will focus only on charities (including public benevolent institutions and health promotion charities). The Government intends to roll out registration of other not-for-profit organisations over time, but this is not likely before 2014. So if your organisation is a not-for-profit, but not a charity, it does not need to register, although the ACNC may register other not-for-profits in the future.
- Existing charities – If your organisation is an existing charity, already endorsed by the Australian Tax Office (ATO), it will automatically be registered as a charity with the ACNC and you will not need to register again. The ATO will transfer basic charity information to the ACNC. If you’re not sure that your charity is endorsed to access charity tax concessions by the ATO, you can check this by doing a search on the Australian Business Register.
- New charities – If your organisation conducts charitable activities, it can choose to register with the ACNC, but if you are seeking to access certain tax concessions, you must register with the ACNC.
- Applying for tax concessions – The ACNC will not actually be involved in deciding whether charities are eligible for tax concessions, so your organisation will still need to apply to the ATO to seek a tax concession. The ACNC will apply for these tax concessions on your behalf.
- How to register – You will be able to register your charity on the ACNC website or obtain hard copy forms if you cannot access online registration.
- Information you need to provide when you register – Upon registration, your charity will need to provide information to support your charitable status, governance information and financial information. Guidance materials about what is specifically required will be made available on the ACNC website or over the phone once it is in operation.
- Providing non-financial information later down the track – While the reporting requirements are not yet finalised, at this stage, from 1 July 2013, your charity will need to provide certain information to the ACNC in the form of an annual information statement, depending on the size of your charity.
The first statement will be used to collect non-financial information only, and the Implementation Report indicates that the following information may be collected (but that it may be subject to change):
- your charity’s ABN
- your charity’s year end-date for financial reporting services
- how your charity pursued its main purpose in the last 12 months and how your charity will pursue its main purpose in the next 12 months (optional for smaller charities)
- the number of employees working for your charity during the last pay period of the charity’s last year for financial reporting purposes (optional for smaller charities)
- the number of volunteers who assisted your charity during the last year for financial reporting services (optional for smaller charities)
- number of members your charity has (where applicable)
- annual reports (optional).
- Providing financial information later down the track – It is yet to be finalised, but it is likely that the reporting requirements will expand to include financial information in 2014. Of particular note, is that the Implementation Report identifies several key issues that were raised in the public consultations about financial reporting, and the Implementation Report sets out what is being done to address these issues as follows:
- Alternative accounting periods – a repeated concern was whether the ACNC would allow a charity to report against an alternative accounting period, given a number of charities adopt a different financial year. The Implementation Report states that the Government is currently considering the policy settings relating to alternative accounting periods in the ACNC legislation.
- Standard Chart of Accounts (SCOA) and Standard Business Reporting Taxonomies (SBR) – charities expressed concern about the alignment of the financial elements of the annual information statement of both of these data dictionaries. The concerns were about the time charities might need to adapt their current accounting systems to report in accordance with SCOA, and also about the challenges to get agreement and support from all government departments for SBR. The Implementation Report states that it is proposed that the financial reporting data will be collected according to SCOA definitions and that work will continue to align it with SBR. The ACNC will provide guidance about this.
- Activity-based financial reporting – concerns were expressed about accounting by “activity”, given the inconsistent accounting definitions. The Implementation Report states that the ACNC will continue to work closely with the Australian Accounting Standards Board on service performance reporting information.
- Special or general purpose financial reports – there was concern about rigorous general purpose reports being required and submissions were made that special purpose reports should be allowed to be submitted by charities. The Implementation Report states that the ACNC will continue to work with the sector on what reports will be suitable, given that the first financial reports are not required until 2014.
- What happens once you are registered – The ACNC will set up a free and searchable register of charities for the public to access certain information about a charity. There will be some information, however, that will only be provided to authorised Government agencies on a need-to-know basis.
- If your charity wants to fundraise – The ACNC will not be responsible for fundraising laws. Your organisation will still need to make sure it complies with the fundraising laws in the State or Territory it conducts its activities. This is the same for incorporated associations and cooperatives – your organisation will still need to deal with the State and Territory governments.
Information in this article was obtained from the Charities and Not-for-Profits commission – implementation taskforce website – www.acnctaskforce.treasury.gov.au and the Australian Charities and Not-for-Profits Commission Implementation Report prepared by the Australian Charities and Not-for-Profits Commission ACNC Implementation Taskforce.
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