Summary - The draft Australian Charities and Not-For-Profits Commission (ACNC) Bill has been released.
The Assistant Treasurer, the Hon David Bradbury MP, has referred the draft ACNC legislation to the House of Representatives' Standing Committee on Economics for an inquiry.
The Minister released the Exposure Draft of the legislation and explanatory materials on 6 July 2012.
The House Standing Committee on Economics has now invited interested persons and organisations to make submissions addressing the terms of reference by Friday, 20 July 2012.
We have reviewed the draft legislation and make the following general comments:
- The proposed Bill is a considerable improvement upon the prior exposure draft.
- In particular, it recognises the special role played by small religious charities in the Not-For-Profit sector and relieves them from some onerous and burdensome requirements. The draft legislation creates a new concept of a "basic religious charity". Section 205-35 of the proposed Bill sets out the criteria required to be satisfied to qualify as a "basic religious charity".
- The monitoring and enforcement powers of the ACNC have been reduced and redefined. However, the trigger for the Commissioner is still based on the undefined and vague concept of promoting "public trust and confidence" in charities. We submit that this should be narrowed to focus on ensuring management of tax payer funds that Not-For-Profit organisations utilise by way of relevant tax concessions. We have not noted any reduction in "public trust and confidence" of charities.
- Until such time as agreement can be reached with the States and Territories, the stated ideal of the reduction in red tape is unlikely to be realised. In fact, in the short term it is likely that there will be an increase in reporting requirements.
- It is no longer necessary for medium registered entities (ie revenue between $250,000.00 and $1 million pa) to have their financial statements reviewed by a registered auditor – these may now be performed by a member of a professional accounting body. This is likely to result in some savings for those medium registered entities.
- The Bill allows for collective and joint reporting for annual information statements, annual financial reports or both.
- Unfortunately, the governance requirements have not been specified in the Bill but will be subject to regulation. When the regulations are made, these standards will apply from 1 July 2013.
- The first financial report required for medium and large entities will relate to the 2013-14 financial year and will need to be lodged by 31 December 2014.
- The first annual information statement will relate to the 2012-13 financial year and will need to be lodged by 31 December 2013. Registered entities may apply to the ACNC Commissioner to report on the basis of the substituted accounting period and some entities which are required to report under an Australian law for a substituted accounting period (eg educational institutions), will have their substituted accounting period grand-fathered.
The Bill is extensive and we recommend that Charities and Not-For-Profits review its contents in detail. Should we be able to assist in this regard, please do not hesitate to contact Mr Bill d'Apice of our office.
Submissions to the Committee can be lodged by email to economics.reps@aph.gov.au by Friday, 20 July 2012. The Committee has prepared a Brochure to assist people in preparing a submission should this be of assistance to you.