Federal law reform package for not-for-profits and charities
In the 2011-2012 Budget, the Federal Government announced a number of important reforms to the regulation and governance of charities and not-for-profits.
The reforms follow a number of reports and enquiries over the past decade or so, which have highlighted the inadequacies of the current framework.
The reform agenda has two (at times conflicting) goals - that is, to:
- simplify the regulatory framework for the sector and reduce unnecessary red tape, and
- increase public trust and confidence in the sector and encourage greater public support. To achieve this, the reforms aim to improve the sector’s transparency and accountability, and tighten tax concessions to ensure they are only used for their intended purpose.
This page provides information on:
What are the key changes?
Australian Charities and Not-for-Profits Commission
The new Australian Charities and Not-for-Profits Commission (ACNC) has been established as an independent, national regulator for charities (and eventually other not-for-profits). Click here for more information on the ACNC.
Statutory definition of charity
There will be a new statutory definition of 'charity' to remove the uncertainty and confusion caused by the current common law (judge-made law) definition. Click here for more information on statutory definition of charity.
Special conditions for NFP tax concessions
Special conditions for tax concession not-for-profits will be clarified, so that organisations receiving tax concessions must generally operate ‘in Australia’ and be 'not-for-profit', and tax laws will be amended to ensure that charities can no longer apply tax concessions to income from unrelated commercial activities. Click here for more information on changes to NFP tax concessions.
National charitable fundraising reform
A national fundraising framework is being considered, which would aim to reduce inconsistencies and avoid duplication amongst current state and territory regimes. Click here for more information on fundraising reform.
There are a number of other proposed reforms, including changes to the Corporations Act to make it easier for companies limited by guarantee to comply with their obligations. However these reforms are likely to be further down the track.
How will the changes be implemented?
The reforms will be adopted in stages, through a number of separate pieces of legislation. Each of these has a different timetable for consultation and implementation.
A key piece of legislation will be the ACNC Act, which will establish the ACNC’s role and its powers in relation to registration, reporting and enforcement. However the fine detail of the ACNC’s work (including the ACNC's role in relation to a charity's governance arrangements) will be introduced through separate regulations passed after the ACNC has been established.
The reforms have a fairly optimistic timetable and work has begun in earnest. Although the Treasury is responsible for producing the legislation, the implementation is being managed mainly by a specially established ACNC Implementation Taskforce. There is a separate but related process to manage the ongoing relationship between the federal reforms and existing state and territory regulatory frameworks, which is the responsibility of a COAG Not-for-profit Reform Working Group.
Many details of the reforms are yet to be finalised, and their full impact is still uncertain. A number of concerns have been raised about some specific details of the reforms and their potential negative impact on not-for-profits, which have yet to be resolved. As a result of these concerns, some original dates for implementation have been extended (for current dates on each reform, see 'click here' pages above).
As the details of the reform become more certain, PilchConnect will provide information, training and advice to assist not-for-profits to understand the new laws and how to comply. It is important for your oragnisation to keep an eye on the reform process to ensure your organisation meets any new requirements. You can sign up to our e-bulletin for free legal updates, and your group should seek specific advice if you are uncertain about your new obligations.
How can I find out more about the upcoming changes?
These websites have more information about the reforms, and some useful resources:
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This website has information in relation to implementation and impact of the reforms.
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This website has copies of discussion papers and exposure draft legislation.
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This website has general information in relation to the reform package and useful links.