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

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

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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https://www.charitiesnfplaw.com.au/files/2014/06/Detective-with-magnifying-glass.jpg

The ACNC has recently released a register of charities that have not responded to communication from the regulator (i.e. no known address/contact details or correspondence has been returned to sender). Charities on this database risk losing their entitlements to charity tax concessions and have until 30 June 2014 to update their details and contact the ACNC. If these charities do not contact the ACNC, the ACNC will commence the process of revoking their registration as charities. If a charity’s registration with the ACNC is revoked it will not be entitled to charity tax concessions from the ATO.


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Government Introduces Legislation to Repeal the ACNC

This morning the Coalition Government introduced a suite of legislation to repeal thousands of Acts, Bills and Regulations in an effort to “cut red tape”.

In line with the Government’s pre-election promise, the planned abolition of the ACNC has been tabled as part of the Australian Charities and Not-for-profits Commission (Repeal) (No. 1) Bill 2014 (the Bill). The Explanatory memorandum to the Bill states “the abolition of the ACNC is part of the broader Government red tape reduction and deregulation agendas.”

The proposed abolition of the ACNC is intended to occur through a two stage process; the initial Bill to repeal the ACNC has been introduced to Parliament but (if it is passed) will not take effect until a subsequent Bill regarding replacement arrangements is introduced in the winter sitting period.


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AbolishmentThe Coalition Government has stated that it will seek to abolish the ACNC along with more than 8000 federal laws on 19 March as part of its plan to reduce red tape. This confirms the Government’s pre-election commitment to abolish the ACNC.

Although Minister Andrews has said that the ACNC would be replaced by a National Centre for Excellence “as a fount of both innovation and advocacy” there is still much uncertainty regarding the scope and operation of this Centre. Minister Kevin Andrews has suggested that an evaluation model based on the US Charity Navigator could replace the educative and registry functions of the ACNC. This model is best known for its comparative lists of charities such as 10 super-sized charities, 10 consistently low rated charities, 10 charities overpaying their fundraisers and so on. Much debate regarding the merits of a system which ranks charities has followed and without further clarity regarding the Centre’s objectives, purpose and scope to collect data such a proposal is difficult to assess.


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ACNCACNC Deadline Approaching

Have you submitted your 2013 Annual Information Statement?

Regardless of size or purpose all charities registered with the ACNC must submit an Annual Information Statement to the Commissioner each year. The first AIS will need to be completed for the 2012-2013 financial year. If your charity has a financial year calendar (ending 30 June), its first Annual Information Statement (AIS) is due on 31 March 2014.


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