Australian Charities and Not-for-Profits Commission

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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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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ACNCEarlier this week, the Minister for Social Services, Kevin Andrews reconfirmed his plans to abolish the Australian Charities and Not-for-profits Commission (ACNC). At the Disability Services CEO conference Minister Andrews stated “to benefit civil society as a whole, the Government has committed to abolishing the Australian Charities and Not-for-profits Commission, with repeal legislation to be introduced into Parliament next year”.

This statement is unsurprising as it reinforces the Coalition Government’s stance to abolish the ACNC.

On Wednesday 4 December, Minister Andrews introduced a late amendment to the Social Services and Other Legislation Amendment Bill 2013 to delay the commencement of the Charities Act 2013 until 1 September 2014. The Charities Act is currently due to commence on 1 January 2014. The Act provides a statutory definition of charity and was passed on the penultimate sitting day before Parliament rose before the election. For more information on the Charities Act please see our previous blog.


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ACNCYesterday the Australian Charities and Not-For-Profits Commission (ACNC) launched the new charity portal.

The ACNC charity portal is an online service where you can:

  • access and update your charity’s details immediately on the ACNC Register
  • submit your Annual Information Statement onto the Register
  • print a copy of your charity’s registration certificate.

It is only available to registered charities and is password protected.


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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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piggy bankSummary – The Federal budget which was delivered on 14 May 2013 contained the following announcements that relate particularly to charities and not-for-profit organisations:

 

  1. Not-for-profit sector reforms — introducing a statutory definition of ‘charity’

Statutory definition of charity

Revenue ($m)

2012/2013

2013/2014 2014/2015 2015/2016

2016/2017

Australian Taxation Office

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The Federal budget included an amended start date for the proposed definition of charity which was due to commence on 1 July 2013.

This has now been deferred until 1 January 2014. The long awaited exposure draft legislation was released in April and submissions for consultation closed on 3 May 2013. For more information regarding the proposed definition please take a look at our previous blog. Despite the later start date the Federal Government still proposes to introduce and pass the legislation in the final sitting session before the election, although we question whether this will occur with the limited number of sitting days available. The measure is estimated to have a small but unquantifiable cost to revenue over the estimates period.


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ACNC

Summary –  Legislation to establish the Australian Charities and Not-For-Profits Commission (ACNC) has passed through both Houses of Federal Parliament.

The ACNC has been established as a specialist, national regulator for the Australian charities and Not-For-Profits (NFP) sector.  Its establishment is the cornerstone of the Federal Government’s NFP reform agenda for the implementation of a national approach to regulation of the sector. It will apply initially to charities and in due course to the rest of the NFP sector.

The Legislation comprises two Bills: the Australian Charities and Not-For-Profits Commission Bill 2012 and the Australian Charities and Not-For-Profits Commission (Consequential and Transitional) Bill 2012 (ACNC Bills).


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ACNC

Summary – The legislation establishing the ACNC was not passed during the current session of Parliament.

Legislation to establish the Australian Charities and Not-For-Profits Commission (ACNC) has not yet been passed by both Houses of Parliament during its September session.  The Bills were passed in the House of Representatives on 18 September 2012