Australian Charities and Not-for-profits Commission –

What’s in store at the one stop shop?

Murray Baird Assistant Commissioner General CounselAustralian Charities and Not-for Profits CommissionUniting Church in Australia Queensland SynodApril 2013

The Churchwardens’ complaint…

“[the Trustees] have omitted to distribute, yeld and deliver unto the poore, sicke and nedye paryshyoners of the said poore paryshes… and the poore prysoners in Newgate… eight shillings.. to be bestowed in good newe and sweete bread”

Sir Nicholas Bacon Lord Keeper 1558–1579

An Act to reforme Deceits and Breaches of Trust 1597

“[Charitable Funds] have bene…most unlawfully and most uncharitably converted to the lucre and gayne of some few greedy and covetous persons contrary to the true intent and meaning of the givers…”

Elizabeth I 1533 –1603

Charitable Uses Act 1601

“Commissions to inquire into any breach of trust, falsity, non employment, concealment, mis-governance or conversion of charitable funds”

The Milkmaid Vermeer 1658

An Australian Charities Commission

a new independent statutory agency, the Australian Charities and Not‑for‑profits Commission (ACNC), by 1 July 2012 and related structural changes required to the Australian Taxation Office

Federal Budget May 2011

Dedicated and focused regulator

“The lack of an independent national regulator with a dedicated focus on the needs of the sector has hindered more streamlined regulation across Australia.”

Assistant Treasurer David Bradbury Second Reading speech 23 August 2012

Need for reform - Slow Train Coming

• 2001 Definition of Charities

• 2008 Disclosure Regimes for Charities and NFP Organisations

• 2010 Productivity Commission : Contribution of the Not-for Profit Sector

• 2010 National Compact

• 2010 Henry Review

• 2010 Senate Economic Legislation Committee inquiry

Scope of the Sector

• 600,000 not-for-profit groups

• 60,000 charities (welfare, education, religion and other recognised charities)

• 4% of GDP/$43b. • 7.8% growth p.a.• One million employees

– 8% of employees • 4.6m volunteers

Charity sector: Who is in?

• Welfare and disability;• (Non Government) Schools, Universities etc;• Churches, Religious organisations• Conservation, Arts, Childcare, Community

infrastructure

What will ACNC Do?Registration

Information

Compliance

Education and guidance

Trust

Maintain, protect and enhance public trust and confidence in the Australian not-for-profit sector.

ACNC object 1: Maintain, protect and enhance public trust and confidence in the Australian not-for-profit sector

• 56,000 charities from ATO register of tax concession charities• Online charity registration – 100% take-up• 240 new charities registered with the ACNC• Average registration time: 8.3 days• 75 complaints / concerns about charities received by ACNC

Advice Services• Basic ACNC Register established –50,000 visits• Increased public awareness of the ACNC Register• 80,000 visitors to website

The ACNC Register

• free, online, public register of ACNC registered charities at acnc.gov.au.

Initial information on the ACNC Register includes the charity’s:• legal name• Australian Business Number (ABN), which links to their record on ABN Lookup. This record includes basic information such as the types of tax concessions your organisation receives and whether it has the deductible gift recipient (DGR) status• state or territory of registration.

– continued…

The ACNC Register

In future, the ACNC Register will also list:

• business address and contact details • the type of charity it is registered as • registration date • responsible person details (including names and positions) • a copy of the governing rules • the annual information statements provided to the ACNC,

including financial reports and audit reports if the charity is medium or large and therefore required to provide these

• enforcement action taken by the ACNC (such as warnings, directions, or removal of director)

The ACNC Register

Health

Support and sustain a robust, vibrant, independent and innovative Australian not-for-profit sector

ACNC object 2Support and sustain a robust, vibrant, independent and innovative Australian not-for-profit sector

• 13 ACNC open for 12 hours on weekdays (8 am to 8 pm AEDST)

• 2000+ calls answered in 11 seconds (on average)• Enquiries: 457 emails, 159 written queries and

13 faxes responded to in 1 day (on average)• acnc.gov.au 44,877 visitsOn our website:• Factsheets • Guide to the ACNC Act in plain language• Detailed guides, quick tips, frequently asked questions.

How the ACNC can help your charity?

Cut Red Tape

Reduction of unnecessary regulatory obligations on the Sector

ACNC object 3.Promote the reduction of unnecessary regulatory obligations on the sector• ACNC Reporting and Red Tape Reduction Directorate

• ACNC Chair Reducing Regulatory NFP Duplication Working Party with the DPC

• Data Standardisation – adoption of the National Standard Chart of Accounts (NSCOA) and alignment with Standard Business Reporting (SBR)

• Charity Passport – progressively implemented from July 2014 - ACNC collect data from registration and AIS and provide to authorised Cwlth agencies = key element of report-once, use often.

Progress in red tape reduction continued• Streamlined Reporting Working Groups across Cwlth (eg DEEWR, ISCA, ACARA, NCEC for non-govt schools)

• Commonwealth Grant Guidelines have been amended to improve and simplify interactions around grants between the Government and the sector

• Working with other regulators (eg ASIC and ORIC) to remove or minimise duplication

• Collaborating with State and Territory government agencies to minimise duplicated regulatory obligations wherever possible (eg SA)

• Annual Report to Parliament to map progress in achieving meaningful red-tape reduction for charities.

Registered Charities:Obligations to the ACNC

The situation at 3 December 2012

ATOACNC

On 2 Dec 2012, 56,000 charities automatically registered with ACNC

Applicant for charity

From 3 Dec 2012 orgs apply to

ACNC for charity status

From 3 Dec 2012 ATO applies tax

law only

56,000

Obligations to the ACNC

To maintain ACNC registration, all registered charities need to:• notify us of certain changes, such as:

– service address, legal name, governing body members, governing rules

• keep records – financial records, operational records

• report to us each year• meet governance and external conduct standards from 1 July 2013.• Some exemptions for basic religious charities and non-government schools.

Reporting Obligations to the ACNC

Obligations vary depending on the charity’s size• Small charities do not need to provide as much

information as medium or large charities.

A charities size is determined by its annual revenue• small – annual revenue less than $250 000 • medium  – annual revenue between $250 000 and $1 million• large – annual revenue is $1 million or more.

Reporting to the ACNC

Annual information statement (AIS)• All registered charities have to submit an annual information

statement • The AIS will be brief and cover information that charities already

know, such as:– how the charity works towards its charitable purpose– the number of volunteers and paid staff– the type of people (or animals!) who benefit from the

charity's activities. • Where we already have information we will

pre-populate the AIS• The first AIS is due six months after the 2012–13 reporting

period (for most this will be December 2013)

Regulatory approach

• Light-touch, risk-based, evidence-based approach

• Provide information, guidance and education

• Use graduated powers, provide opportunity for self-correction

• Regulatory Principles: relevance, proportionality, consistency, transparency, timeliness

• Currently finalising our regulatory approach, following public consultations

Guidance

Assistance

Investigation

Graduated Sanctions

Deregistration

More work to be done

• Governance Standards now in Regulations subject to disallowance. Effective 1 July 2014.

• Financial Reporting Requirements – consultation closed 15 February 2013. Regulations not yet published

• External Conduct Standards to be released for consultation and regulations

Five Governance Standards

• Purposes and character of an NFP entity

• Accountability to members

• Compliance with Australian laws

• Suitability of responsible entities

• Duties of responsible entities

Basic Religious Charities

• Registered entity• Advancement of religion• No other sub-type (eg Education, Relief of

Poverty);• Not Association or Corporation• No funds >250K revenue;• No government grants >100K• No grouping

Benefits of BRCs

• No Governance Standards• No financial reports

ACNC Mailout

Staged mailout to 56,000 charities previously registered with the ATO• First quarter 2013• Form to capture information from you in one interaction• The form is also available online as a fillable pdf• Information we receive will help us update the ACNC

Register• Bulk lodgement process• Please call us if you do not receive the letter

Three Hotspots

• Unregistered charities for advancement of religion

• Funds operated by entities

• Part PBI/HPC

Who came across to ACNC Register?Schedule 1 ACNC (C&T) Act 2013

• If endorsed as TCC with ATO 2 December 2013, you are automatically registered

• 1.1 Endorsed Charities automatically became registered charities

• 1.2 Self Assessing Religious Institutions did not come across

• Therefore, not registered charities and no longer entitled to tax exemption unless…

The Remedy

Schedule 1 ACNC (C&T) Act 2013

• If a self assessing entity for advancement of religion notifies ACNC within 12 months that it was a charity 2 December 2012, it will be registered as a charity from 3 December 2012.

• Otherwise, need to apply and there may be a gap in exemption.

Funds operated by entitiesTax Exemption ITAA 1997

The old provision

• S.30-B Table of recipients for deductible gifts

• Examples: School Building funds, Scholarship Funds, Necessitous Circumstances Funds, Library Funds etc

• 30-17 requirements to deduct a gift you make to a fund;

• No requirement to have a separate ABN or be a charity

The new provision

• Fund must be a registered charity

• Do you need to apply for ACNC registration for each fund?

The Inquiry

• Seeking view of ATO as to whether it will require the fund to be a separate entity or if sufficient that a Registered charity operates the fund

• Watch this space.

Part PBI or HPCThe old arrangement• Public benevolent institution

could be contained within the structure and governance of another entity

• For example, a church denomination could have a welfare department

• To demonstrate “institution”, needed to show quarantine of operations and deductible gifts

The new arrangement• Treat the parent as if it didn’t

have a PBI/HPC and retain its ABN;

• Treat the PBI/HPC as a separate entity and within 12 months have a new ABN

• ACNC will register PBI/HPC as a separate entity in its appropriate subtype and deem registration from 3 December 2012

Charities Bill 2013 - New definition of Charity

• Not for profit• Charitable purposes for the public benefit• Ancillary purposes in aid of charitable• No disqualifying purposes• Not individual, political or government

See draft Bill and Draft EM – consultation until 3 May

Charitable Purpose

• Advancing health;• Advancing education;• Advancing social or public welfare;• Advancing religion;• Advancing culture;• Promoting reconciliation/mutual respect/tolerance;• Human rights;• safety of general public;• Suffering of animals;• natural environment;• Analogous purposes;• Change or opposing change in the law to to aid the

above purposes

Finding out more: www.acnc.gov.au

Providing you with access to information is a priority for us• Weekly Commissioner Column (sent to 6,193 subscribers)• Media alerts and releases and newsflashes• Aboriginal Liaison officers• podcasts and videos – coming soon • Phone: 13 ACNC (13 22 62) 8 am to 8 pm AEDST• Email: advice@acnc.gov.au• Social media:

facebook.com/acnc.gov.au twitter.com/acnc_gov_au

youtube.com/ACNCvideos

Questions