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Charities & Not-For-Profits Law in Australia

The ACNC is here to stay!

Posted in Compliance, Fundraising, General, Governance, Tax Exemptions & DGR Status

Following two years of speculation regarding the future of the charity regulator, earlier today the Minister for Social Services, Christian Porter confirmed that the Federal Government has decided to keep the Australian Charities and Not-for Profits Commission (ACNC).

The Liberal Government was elected on a platform to abolish the ACNC and a Bill to abolish the regulator was introduced to the House of Representatives in March 2014. The Bill was never passed and whilst the ACNC continue to forge ahead with its operations, the uncertainty of the ACNC’s future remained.

Kelly O’Dwyer, the Minister for Small Business and Assistance Treasurer this morning confirmed that “the government will continue to work with the ACNC, states and territories and the sector to identify areas where we can reduce the burden of red tape for charities and Not for Profit organisations”.

It is hoped that this announcement will allow the ACNC to progress regulatory reform, particularly in relation to cutting red tape and unnecessary regulatory burdens and will hopefully result in a closer working relationship with the States and Territories, many of whom have been cautious to work with the ACNC.

We recommend that charities continue to comply with their current obligations including submitting their Annual Information Statement, notifying the ACNC if you are listed on the register of missing charities, and notifying the ACNC if you wish to withhold information from the online register.

Should you have any questions in relation to the ACNC or any other matters please do not hesitate to contact Bill d’Apice or Anna Lewis in our office.

ABR and ACNC enter into a data sharing agreement

Posted in Compliance, General, Governance

In a further step to provide a user-friendly and reliable source of data for the community, last week the Australian Business Register (ABR) and Australian Charities and Not for Profits Commission (ACNC) entered into a Memorandum of Understanding (MOU) to facilitate data sharing between the two agencies.

Occasionally, there are data discrepancies between the two registers which can create frustration, confusion and an unnecessary administrative burden on registered charities, particularly because a number of registered charities (not all) are only required to notify the ACNC of changes such as change of entity name.

Certain data sets will be shared on a weekly basis and a six monthly data match report will be conducted.

The MOU specifically sets out:

  • the data the ABR and the ACNC will provide each other,
  • the arrangements under which the data is provided, and
  • how inconsistencies between the two registers are resolved,

and is available here

The ACNC Commissioner Ms Susan Pascoe noted “this is a significant step forward” and we look forward to the streamlining of administration this will produce for charities.

If you would like more information in relation to the above or any other charity related matters please do not hesitate to contact Bill d’Apice or Anna Lewis of our office on 02 9233 7788.

Charity Sector Update

Posted in Compliance, Fundraising, General, Governance, Tax Exemptions & DGR Status

Future of the ACNC slowly becomes more certain

Earlier this month, the (then) Minister for Social Services Scott Morrison stated that “there is very strong support for the Australian Charities and Not-for-profits Commission (ACNC) and I don’t believe there would be any support in the Senate for there to be any change.” Many in the sector were quick to applaude the Government on its committment to retaining the ACNC, however, Senator Morrison stopped short of committing to the ACNC in its current form and suggested he would look at shifting the ACNC’s focus away from operating as a regulator and towards being a “champion of the sector”.

With the recent change of Prime Minister, and a new look cabinet, the largely unknown Hon Christian Porter MP has been appointed as the new Minister for Social Services. It is unclear whether Minister Porter has particular views on the role and future of the ACNC, and has just taken paternity leave for the birth of his first child so is unlikely to be making any policy announcements in the short term. Whilst Minister Morrison’s statement was a step towards greater certainty for the ACNC in some form or another, the sector is still waiting for a clear decision in relation to the future role of the ACNC.  For the time being the sector will have to continue to wait for the Government to form a clearer view on the future of the ACNC.

Overseas Aid Gift Deduction Scheme Review

Obtaining Deductible Gift Recipient (DGR) endorsement as an overseas aid fund under the Overseas Aid Gift Deduction Scheme (OAGDS) is notoriously difficult, complicated and time consuming. For this reason, the Department of Foreign Affairs and Trade is conducting a review of the OAGDS guidelines and processes in order to make the OAGDS guidelines and processes clearer, simpler and more robust, while reflecting current international development practice and standards.

Findings from round table discussions and written submissions were collated in June and the key findings are available on the DFAT OAGDS review website.

Some of DFATs key findings are:

  • The time-consuming and highly resource-intensive OAGDS process is disproportionate to the risk of organisations working overseas;
  • The OAGDS has too much red tape and should consider working more closely with the ACNC and Australian Taxation Office;
  • The current guidelines maintain good standards but are too prescriptive; and
  • The definitions and guidance on welfare, development and relief in the current guidelines should be reconsidered.

The summary of findings from the submissions and roundtables will be used to inform revisions to OAGDS guidelines and processes, with the aim of launching revised guidelines in late 2015.

We will continue to keep you informed of developments as they occur.

NSW Charitable Fundraising Conditions Updated

As of 1 July 2015, NSW Fair Trading assumed responsibility for administering the Charitable Fundraising Act (NSW) 1991, which outlines how a charity can legally undertake fundraising activities.

The Charitable Fundraising Regulation 2015 commenced on 1 September 2015. The new Regulation includes a number of amendments, including new exemptions for certain charities, and has been informed by stakeholders’ submissions lodged as part of the Regulatory Impact Statement (RIS) process, which concluded on 24 June 2015. For example, licensed fundraisers in NSW will now only need to have their financial reports audited if they have annual revenue of $250,000 or more (in line with ACNC reporting). Previously it was $100,000. Additionally, the threshold applying to charities that will be exempt from obtaining a fundraising authority has been increased from $10,000 to $15,000, to align with a similar exemption that applies in the Australian Capital Territory. The ACNC Commissioner, Susan Pascoe, welcomed the changes.

Minor amendments were also made to the Charitable Fundraising Authority Conditions which were approved by the Minister for Innovation and Better Regulation on 31 July 2015. These conditions will now apply to new fundraising authorities issued by NSW Fair Trading from 1 September 2015.

Charities in NSW should familiarise themselves with the new Regulation and Fundraising Authority Conditions.

Fundraising continues to be a hotly debated topic, as was recently reinforced at the Australian Charity Law Association (ACLA) conference last month where Bill d’Apice chaired a discussion panel on fundraising regulation. For a number of years many have hoped for fundraising reform, however the States and Territories do not seem to have an appetite for this issue and changes continue to be made in an ad hoc manner.

Useful Resources for Charities

The ATO has recently published three very useful guides for NFP administrators:

  1. Induction package – to introduce not-for-profit administrators to the information and services the ATO has to assist you, and contains an overview of NFP tax issues;
  2. Handover package – use this checklist to hand over your organisation’s tax affairs to the new administrator; and
  3. Self-governance checklist – helps you review your organisation’s status as an NFP organisation, and check how well your organisation understands its tax and super obligations.

Additionally, to assist with the upcoming AGM reporting season, the ANC has produced an annual report template which also includes draft notice, agenda and minutes.

We recommend taking a look at these resources as they are very well prepared and may assist your organisation.

Should you have any questions in relation to the items above or any other matters please do not hesitate to contact Bill d’Apice or Anna Lewis of our office on 02 9233 7788.

Template Governing Document Released by the ACNC

Posted in Compliance, Fundraising, General, Governance

Last week the ACNC released a one page document to be used as a template governing document for registered charities who otherwise don’t have a constitution which satisfies the requirements of the ACNC.

This template governing document is for charities which are created by an Act of Parliament or are governed by  Canon Law and allows these entities to provide a link to where their governing documents are located.

In accordance with section 40-5 (1)(a)(vii) of the Australian Charities and Not-for-profits Commission Act 2012 (ACNC Act), the Commissioner is to retain a register (known as the Australian Charities and Not-for-profits Register) in which the Commissioner includes information in respect of each registered entity including its governing rules. Thus, a charity is required to publicly provide a governing document.

Furthermore, in accordance with Governance Standard 1 (contained in the ACNC Regulations) charities are required to show that they are not-for-profit and work towards a charitable purpose. The ACNC website states that this can be done by “including [their] charitable purpose and a rule requiring them to operate as a not-for profit in their governing document… Once your governing documents appear on the ACNC Register you will be considered to [meet] this standard.” Accordingly, the template governing document for registered charities that are established under an Act of Parliament or are governed by  Canon Law is a useful tool in demonstrating the ACNC’s flexibility for accepting alternate sources of governing rules which may not ordinarily be considered as meeting the necessary requirements.

We recommend that any charity who has not already submitted their governing document to the ACNC ensure that the relevant governing document/s are uploaded to the ACNC Register.

Should you have any questions in relation to the ACNC Register or any other matters please do not hesitate to contact Bill d’Apice  or Anna Lewis in our office.

Tax deductibility for school donations

Posted in Tax Exemptions & DGR Status

Federal Parliament has recently passed legislation that allows tax deductibility for donations to a new education charity called Australian Schools Plus.

For the first time, this will allow donors to receive a DGR receipt for donations for general educational purposes to particular schools.

What are the Opportunities for Deductible Gift Donations for Schooling?

Up until this point, donors were only able to obtain tax deductions for donations to endorsed school building funds, school libraries and scholarship funds. Whilst these provided some avenues for donations, there was not previously the opportunity to obtain a tax deduction for donations for general schooling purposes.

With the naming of Australian Schools Plus as a deductible gift recipient in the tax laws, there is now the opportunity for donors to make tax deductible donations for schools that may be considered by the board of Australian Schools Plus to be disadvantaged.

What Opportunity Does this Present for Schools? 

Schools seeking funding for a project can apply as a potential recipient by application to Australian Schools Plus through its website.

Australian Schools Plus aims to support projects that have the greatest impact on student success. These are likely to include projects that increase student engagement and their readiness to learn, improving teacher effectiveness or increasing the involvement of parents in the school community.

The charity is designed to help schools that are likely to benefit most from additional resources. Its criteria are based around the school’s ICSEA value, with a current focus on schools with an ICSEA value below 1,000.

(ICSEA stands for the Index of Community Socio-Educational Advantage and was developed for the My School website. It takes into account factors such as parents’ occupation and education level, socio-economic characteristics of an area and the proportion of students from non-English speaking or indigenous background.)

What Opportunities Does this Present for Donors?

Donors who want to support a project at their own child’s school and those who are passionate about a strong education system will be attracted to donating through Australian Schools Plus.

Although donors can nominate a particular school or project as their preferred beneficiary, donations to Australian Schools Plus must be voluntary and unconditional. Australian Schools Plus says that where possible discretionary grants will be made taking into account the donor’s wishes.

We applaud this initiative to allow tax deductions for donations to Australia’s most disadvantaged schools. More information can be obtained from the Australian Schools Plus website.

For more information please do not hesitate to contact Bill d’Apice or Anna Lewis.

 

Time is running out for Public Ancillary Funds: You have until 1 July 2015 to comply

Posted in Compliance, Fundraising, General, Governance, Tax Exemptions & DGR Status

On 2 March 2012, we reported that new laws had been introduced regarding the way public ancillary funds are structured, operated and wound up.

What is a Public Ancillary Fund?

A Public Ancillary Fund is a type of fund that is entitled to deductible gift recipient (DGR) status and provides a link between charitable organisations that are endorsed as DGRs and donors.  A Public Ancillary Fund is different from a Private Ancillary Fund in that it must invite the public to contribute to the fund.

You can check whether an organisation operates a Public Ancillary Fund by searching the ABN lookup at www.abr.business.gov.au.  Under the heading Deductible Gift Recipient Status for the entity’s ABN see the note “it is a public ancillary fund covered by Item 2 of the table in section 30-15 of the Income Tax Assessment Act 1997″.

The Public Ancillary Fund Guidelines

The Public Ancillary Fund Guidelines set out a number of requirements for the fund and its trustee to comply with.  Compliance with the Guidelines is essential to remain endorsed as a DGR.  The Guidelines include:

  • rules for establishing and maintaining Public Ancillary Funds as DGRs;
  • rules for minimum distribution;
  • the requirement to have an investment plan for the funds held;
  • a requirement regarding the keeping and auditing of accounts;
  • providing certain documents to the ATO including an annual Public Ancillary Fund return; and
  • transitional rules for Public Ancillary Funds that were endorsed on or before 31 December 2011.

The Transitional Rules

Transitional arrangements apply to Public Ancillary Funds that were endorsed as DGRs on or before 31 December 2011.  The transitional rules will ensure that these funds:

  • will be taken to be endorsed as Public Ancillary Funds from 1 January 2012;
  • are taken to have agreed to comply with the Guidelines from that date;
  • do not need to replace non-corporate trustees with corporate trustees; and
  • are not subject to the ATO’s power to suspend or remove trustees if they continue to have non-corporate trustees.

Where a fund’s governing rules are not compliant with the Guidelines, the fund is exempt from those requirements until 1 July 2015.

Non-Compliance

The Guidelines will be enforced through a system of administrative penalties.  These will allow the Commissioner to suspend or remove a corporate trustee of a Public Ancillary Fund and also allow the Commissioner to charge financial penalties for failures to comply.  In addition to compliance with the Guidelines, all Public Ancillary Funds are also required to comply with obligations to the ACNC including submitting Annual Information Statements.

How to Comply

We recommend that all Public Ancillary Funds review their governing document and distribution process to check whether they are compliant with the Guidelines and ensure that all necessary changes are made prior to the 1 July 2015 transitional deadline.  We note that this amendment process may take some time and for this reason we recommend that the trustees prioritise a compliance review to ensure that penalties are not imposed or the fund’s endorsement as a DGR is not revoked.

We would be pleased to provide advice and assistance to ensure that your Public Ancillary Fund is compliant with the Guidelines and eligible for endorsement as a DGR.

Please do not hesitate to contact Bill d’Apice or Anna Lewis of this office for more information.

The ACNC’s Future Becoming More Certain

Posted in Compliance, General, Governance, Tax Exemptions & DGR Status

The ACNC’s Future Becoming More Certain

Barely 7 weeks into his new role Minister for Social Services, Scott Morrison declared on Friday that scrapping the Australian Charities and Not-for-profits Commission (ACNC) is not a priority in his new portfolio.

His statement to Fairfax Media demonstrates a clear and decisive policy shift away from his predecessor, former Social Services Minister Kevin Andrews’ hard stance to abolish the ACNC.  On Friday Senator Morrison said to Fairfax Media “My top priority is addressing the development of a families package including child care which will help parents of young children get back to work so they can better support themselves and their families.  I have advised key stakeholders in this area I have no immediate plans to be progressing that issue while I focus on higher order priorities.

Unsurprisingly, ACNC Commissioner Susan Pascoe has welcomed a push to retain the body and Community Council for Australia chief executive David Crosbie urged Senator Morrison to give the ACNC an opportunity to prove its worth at least until its review in 2017.

It has been almost one year since the Bill to disband the ACNC was first brought before the Federal Parliament and although the Bill had been debated in the House of Representatives in early December, it is likely that no further action will occur for some time.  This announcement does not mean that the ACNC is certainly here to stay, but it is a clear move in that direction.

For now charities will need to continue to comply with the ACNC’s requirements including submitting their Annual Information Statement.  In fact charities that do not lodge for two consecutive years (2013 and 2014) face losing their charity status (and associated tax benefits).  Accordingly, we recommend all charities review their status with the ACNC and confirm that their compliance and reporting obligations are up to date.

Should you have any queries regarding the ACNC please do not hesitate to contact Bill d’Apice or Anna Lewis of this office.

For more information on the legislation to repeal the ACNC please see our previous blog here:  www.charitiesnfplaw.com.au/2014/03/19/government-to-repeal-the-ACNC/.

NSW School Funding: Changes to Not-For-Profit Requirements

Posted in Compliance, General

The NSW Government has amended the Education Act to strengthen the not-for-profit requirements for non-Government schools.  The rules have got tougher and non-compliance could result in a loss of funding.

What organisations does this affect? 

These changes affect all non-Government schools in New South Wales in receipt of funding from the NSW Government.

What other changes

Those in the sector will be familiar with the provisions of section 21A of the Education Act which provided that NSW Government funding would not be available to schools that operated for profit.  Section 21A(3) detailed what payments by a non-Government school would not affect its “non-profit” status.

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ATO releases Draft Special Conditions TR2014/D5

Posted in Compliance, General, Governance, Tax Exemptions & DGR Status

The ATO has released the Draft Special Conditions Ruling TR 2014/D5 – Income Tax: special conditions for various entities whose ordinary and statutory income is exempt

 

 

 

 

 

In August the ATO released draft ruling TR 2014/D5 regarding the proposed application of special conditions inserted by the Tax Laws Amendment (2013 Measures No. 2) Act 2013.
The special conditions require that:
  • An entity must comply with all the substantive requirements in its governing rules (Governing Rules Condition); and
  • An entity must apply its income and assets solely for the purpose for which the entity is established (Income and Assets Condition).

What organisations or entities does the ruling apply to?

The ruling applies to a number of income tax exempt entities (but not all) which are listed at Section 50 of the Income Tax Assessment Act 1997 (ITAA).

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The Future of the ACNC Remains Uncertain

Posted in Compliance, Fundraising, General, Governance


The Future of the ACNC Remains Uncertain

On 16 June 2014 the Senate Committee delivered a divided report on the Australian Charities and Not-for-profit Commission (Repeal) (No 1) Bill 2014 (No 1 Bill).

No 1 Bill

Unsurprisingly, the Liberal Senators supported the abolition of the ACNC, however, the Labor and Greens Senators offered dissenting reports appealing for the ACNC to continue. The dissenting reports noted that the ACNC is preferable to returning to the previous regime of regulation by the ATO and ASIC.

The No 1 Bill was introduced into the House of Representatives on 19 March and now will return to the House of Representatives where it is likely to be passed by the lower house. Part 1 of the Bill contains the necessary provisions to repeal the ACNC and Part 2 provides for transitional arrangements, importantly, allowing for the Minister to specify a successor agency.

If passed, the Bill won’t come into operation until the Australian Charities and Not-for-Profits Commission (Repeal) Bill (No 2) (which has not yet been introduced) is successfully passed.

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