Tuesday October 2013

Tony Abbott

Following the Coalition’s election win in September, the Government has continued its rhetoric that it will dismantle the Australian Charities and Not For Profits Commission (ACNC) and move all regulatory functions to the Australian Taxation Office (ATO).

With the ACNC still in its infancy, this has brought great uncertainty to the NFP and charity sectors. Minister Andrews indicated in mid-October that the Government would begin consultations with the sector to discuss the Government’s transition plans, with any implementation unlikely to be in place before the end of 2014.

On balance, it is our view that the ACNC is likely to survive due to the complexity in unwinding the legislation connected with it and the political uncertainty around passing the necessary amendments.  In our view it is likely that some of the current, and what some in the sector would consider more onerous, obligations upon charities administered by the ACNC may be relaxed where legislative approval is not required or can be negotiated.

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Completing formCharities registered with the Australian Charities and Not-for-Profits Commission (ACNC) are required to submit an Annual Information Statement (AIS) each year.

To make AIS reporting easier for organisations such as a corporate trustee administrating multiple trusts, or an administrative office for multiple religious charities,  the ACNC released form 4C Annual Information Statement – Bulk Lodgement yesterday.

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CPACPA Australia has just released a new guide “Charities – A guide to financial reporting and assurance requirements” to assist charities registered with the Australian Charities and Not-for-profits Commission (ACNC) to understand and comply with their various reporting obligations.

This resource is the first of its kind and sets out in plain English the range of reporting obligations imposed by the ACNC and how those obligations apply for different types of entities.

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GavelOn 3 July 2013 the Administrative Appeals Tribunal upheld the decision of the Commissioner of Taxation to refuse endorsement of Home Health Pty Ltd as a public benevolent institution or a charitable institution.

Home Health Pty Ltd (Home Health), a mental health services provider is a proprietary company incorporated on 9 June 1997. The Tribunal refused endorsement on the basis that Home Health is not an ‘institution’.

The Tribunal considered the elements of recognising a ‘public benevolent institution’ as set out in Perpetual Trustee Co Ltd v Federal Commissioner of Taxation [1931] HCA 20. Perhaps self-explanatory, but significant nonetheless, a public benevolent institution must be: (i) public, (ii) benevolent and (iii) an institution.

Home Health satisfied the “public” requirement as the relief provided by the organisation was directed to a sufficiently large sector of the community.

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ACNCUnder the Australian Charities and Not-for-Profits Commission Act 2012, certain information must be published by the Commissioner on the ACNC Register for the public to view. This information includes the entity’s name, ABN, sub-type, governing rules, details of responsible entities, information statements, financial reports or any other information the Commissioner is authorised to collect. This is very broad and in some circumstances charities may wish to apply for the information to be withheld from the ACNC Register. The Commissioner may withhold information if it is commercially sensitive or has the potential to cause detriment to the registered charity or an individual. We recommend all charities registered with the ACNC consider whether certain information should be withheld from the ACNC Register.

The scope for withholding information from the ACNC Register was widened by the Australian Charities and Not-for-profits Commission Regulation 2013. Amongst other things, the Regulation offered additional privacy protections for Private Ancillary Funds (PAFs) registered as charities with the ACNC. Typically, these protections were introduced in order to protect the identity of individual philanthropists or donors and to prevent an unreasonable burden being placed on PAFs whereby they might be inundated with donation requests from other entities.

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ACNCCharities registered with the ACNC which solely pursue purposes for the advancement of religion must ensure that the correct corresponding “sub-type” of entity (i.e. advancement of religion) has been confirmed with the ACNC before 3 December 2013.

In accordance with the Charities (Consequential Amendments & Transitional Provisions) Act 2013 from 1 January 2014 there will be 14 possible sub-types of charity:

  1. Advancing Health;
  2. Advancing Education;
  3. Advancing Social or Public Welfare;
  4. Advancing Religion;
  5. Advancing Culture;
  6. Promoting Reconciliation, Mutual Respect and Tolerance between Groups of Individuals that are in Australia;
  7. Promoting or Protecting Human Rights;
  8. Advancing the Security or Safety of Australia or the Australian Public;
  9. Preventing or Relieving the Suffering of Animals;
  10. Advancing the Natural Environment;
  11. Purposes Beneficial to the General Public and Analogous to the Other Charitable Purposes;
  12. Advancing Public Debate;
  13. Institution whose Principal Activity is to promote the Prevention or the Control of Diseases in Human Beings; and
  14. Public Benevolent Institution.

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