Australian Charities and Not-for-profits Commission: draft legislation released
On 9 December 2011, the Australian Government released an exposure draft of legislation to establish the Australian Charities and Not-for-profits Commission (ACNC), - the new national regulator for the not-for-profit (NFP) sector.
The exposure draft, explanatory materials and fact sheets on how the ACNC will operate are available on the Treasury website (go to http://www.treasury.gov.au/content/published_information.asp?ContentID=351and put “ACNC” into the Search box). It is anticipated the ACNC legislation will be introduced into Parliament in the first quarter of 2012 and the ACNC is expected to begin operating on 1 July 2012.
An early task for the ACNC will be to register charities, including public benevolent institutions (PBIs), for all Commonwealth purposes. Existing charities that are already endorsed as income tax exempt by the Australian Taxation Office will be transitioned into the new ACNC regime and will not have to re-register as a charity. The goal is to create a "one stop shop”.
Of significant importance to existing NFPs is the proposed reporting framework. This will apply for registered charities from 1 July 2013, for information from the previous year. The scheme will expand to cover other NFP entities over time.
Reporting requirements will be proportional to the size of registered entity, based primarily on the annual revenue of the entity. There are three tiered categories set out in the exposure draft:
- small (revenue of less than A$250,000 and not a deductible gift recipient)
- medium (revenue of between A$250,000 and A$1 million)
- large registered entities (revenue A$1 million or more).
All registered NFP entities will be required to provide the ACNC with an annual information statement. Medium and large entities will also need to provide a financial report. Large registered entities must have their financial report audited annually. Medium registered entities must have their financial report either reviewed or audited annually.
The new statutory definition of charity is intended to come into effect on 1 July 2013 and from that date the ACNC will register charities based on that definition.
It is intended that the ACNC's role will eventually expand to regulate all NFP entities that receive government concessions and benefits, but not before 1 July 2014.
Submissions on the draft are currently being considered.