Australian Charities and Not-for-Profits Commission
This page provides information on the Australian Charities and Not-for-Profits Commission (ACNC). This is part of the Federal Government's not-for-profit sector reform package (explained here).
New independent regulator for the sector
The ACNC is a new independent statutory body set up by the Commonwealth Government to regulate charities. The ACNC Bill was by Parliament on 31 October 2012 and the ACNC opened its doors in December 2012. The ACNC will take over many regulatory functions from other regulators like the Australian Taxation Office (ATO) and the Australian Securities and Investments Commission (ASIC) during 2013-2014.
The laws that apply to charities will also change in this period, with charities transitioning to new governance standards and a new reporting framework from 1 July 2013. The changes affect charities incorporated under state-based regimes (for example incorporated as an incorporated assocation) and federal regimes (for example incorporated as a company limited by guarantee) differently.
What does the ACNC mean for my group?
If your group accesses charitable tax concessions it will be automatically registered with the ACNC. This means all charities need to understand how registration with the ACNC will affect them, and what changes apply to them and when.
From 2013 to 2014, certain regulatory and reporting functions will transition to the ACNC from agencies such as the ATO and ASIC.
If you are a not-for-profit organistion that is not a charity, you will not currently need to report to the ACNC (but in future some regulation of not-for-profits will transition to the ACNC).
What if our group is an incorporated association and is registered with the ACNC?
If your group is incorporated as an association under a state regime, and is a charity, it will be registered both with the relevant state regulator (such as Consumer Affairs Victoria) AND with the ACNC.
Your group must still report to state regulator as per usual, and will also need to report to the ACNC. This means that you will still need to comply with the relevant state laws, AND your obligations as a registered charity (discussed further below).
What if our group is a company (eg CLG) and a charity?
If your group is incorporated as a company, for example as a company limited by guarantee, and you are a charity registered with the ACNC, a transitional program applies to your group.
Your group will continue to interact with national regulators such as ASIC and the ATO. However, some reporting obligations are changing, and where your group may have previously reported to ASIC or the ATO, it will in some cases report to the ACNC.
Some reporting transitions have already happened, for example, a registered charity must notify the ACNC of changes to directors or change of address (and groups no longer need to notify ASIC of these changes).
A number of changes will come into effect on 1 July 2013, including the 'turning off' of many obligations charities used to have under federal law such as the Corporations Act, and the 'turning on' of new charity-specific requirements that will be administered by the ACNC.
*Note the above does not apply to Indigenous Corporations that report to ORIC.
Summary of obligations of companies that are registered charities
The following link provides information for charitable companies and includes a table summarising the obligations of companies who are registered charities, key transitions, and timing for when changes have taken or will take effect.
Summary of obligations of companies that are registered charities
This summary of obligations of companies that are registered charities was produced by Clementine Baker, a Lawyer in Mills Oakley's Sydney Not-for-Profit team. Mills Oakley have given PilchConnect permission to reproduce the article contained in the link above - NewsFlash: Directors get out of jail free (dated 20 March 2013).
Who does the ACNC regulate?
Initially, the ACNC will apply to charities only (this includes public benevolent institutions and health charities). However, the Government intends that the ACNC will also regulate other types of not-for-profit organisations in future.
Who needs to be registered?
Any organisation that is a 'charity' will be automatically registered with the ACNC. Going forwards, organisations will make applications to become a charity to the ACNC.
A charity must be register with the ACNC to receive charity tax concessions. An application can be made to the ACNC at any time, and a charity can also apply for tax concessions at the same time that it applies for registration.
If a group has been automatically registered with the ACNC, but does not wish to access charitable tax concessions, it can opt out of registration. There may be other benefits of registration (for example, access to information and having your details on the public database) which might be attractive to your group.
The ACNC will ultimately be responsible for determining an organisation's 'charity' status, including whether an organisation is a Public Benevolent Organisation (PBI) or a Health Promotion Charity (HPC).
The ATO will still be responsible for determining eligibility for income tax exemption and associated concessions (often called Tax Concession Charity status) and Deductible Gift Recipient status (DGR). However, in cases where an organisation must be a 'charity' to access these benefits, the organisation will have to register with the ACNC before the ATO can decide if it meets the other conditions.
Is there be a registration fee?
No. It is free to register with the ACNC.
What do charities registered with the ACNC have to do?
Charities that are registered with the ACNC will have to lodge annual reports (including financial and non-financial information) with the ACNC as part of a new reporting framework.
We expect that charities will need to lodge their first (non-financial) reports with the ACNC from 1 July 2013.
We anticipate that financial reporting requirements for medium and large registered entities will start from 1 July 2013, which means that a charity is likely to need to lodge its first financial reports with the ACNC from 1 July 2014.
Be listed on a public information portal
The ACNC will also maintain a public information portal. At present, this contains only minimal information on registered charities. In time, however, key details of registered charities will be publicly available on the portal (eg, governance structures, purposes, activities, contact details, annual reporting information).
The portal is intended to provide a higher level of transparency for the sector and more visibility for charities. It will help registered charities explain what they do and it will assist donors, funders and the general public to find out about charities and how they operate.
Comply with governance rules
Registered charities will have to comply with certain governance rules that are yet to be finalised (we expect that these will come into force from 1 July 2013). Although the Government has indicated that these are not intended to be more onerous than current governance standards, some organisations may need to make some changes to ensure compliance. Keep up to date with this changing area by signing up to PilchConnect's e-bulletin.
- Existing charities (endorsed by the ATO) have been moved across to the ACNC for some regulatory functions - the ACNC is currently communicating with charities about this process.
- Some reporting and compliance obligations for registered charities started in December 2012.
- Financial reporting and governance requirements for registered charities (that are yet to be finalised) are not expected to come into effect until July 2013.
The ACNC has helpful information on its website, including information on:
For PilchConnect submissions, go to our ACNC reform page. If you would like to keep up to date with legal changes affecting your community organiastion subscribe to the PilchConnect e-bulletin.